ForumsStarting a Business

The recent decline in start-ups in my area has been about 1 percent. (For instance, in my city, 3,602 start-ups were registered from 11/1/08 through 1/31/09, compared to 3,641 from 11/1/07 through 1/31/08.)

I think it has always been the case that a lot of people "interested" in start-ups do not get past the funding part. People who are committed to starting up a business, however, will continue to do what's necessary to put together the funding -- and "what's necessary" often involves a series of formal preparations, learning activities, lifestyle changes, networking initiatives, and other actions that those who are merely interested in starting a business are not willing to do.

I agree that there are fewer people willing to start-up businesses that require a lot of capital or that are capital intensive to operate them. Funding for them is tough to find and frankly, if the entrepreneur has the cash to fund it themselves, they need to look very hard at the type of business they plan to start to make sure it can weather the current market/economy ... a wrong choice will burn through what capital they have very quickly. If they have capital on hand; one thing I suggest is that they think about buying an existing business versus starting one. There are ways for them to use their capital wisely to buy a good solid business and additional funding/financing is easier to find for an established business as opposed to a start-up. But whether a start-up or acquisition, they have to be very sharp in their thinking to work through what makes the most sense, what is "doable", and what will meet their objectives.

On one hand though I am seeing an increase in people contacting me that are interested in low-cost (both for upfront capital and ongoing operations) start-up businesses based on proven business models. With all the layoffs, job cuts etc. I am seeing those with severance packages look at ways to start their own business instead of entering what is proving to be a terrible job market. And for many that have had their job "yanked" from underneath them without any cushion or severance package to ease the landing ... they are scrambling to come up with something to do or start that can lead to income.

There are some options out there for them that are worth considering. And there are some business markets that are going to be active, offering opportunity, even during the current rough economy we are dealing with. Bottom line ... there are still people starting or buying businesses but now its even more important to be smart about how you do it.

Dennis Lowery
Adducent, Inc.

Good points about funding. I'm seeing small community type banks in my areas reaching out to small business owners. Hopefully that trend strengthens and that they draw more business accounts and capital begins to flow from those type sources.