Why Tough Times Are Good Times to Start a\!http://www.bottomlinesecrets.com/images/drop_caps/blue_t.gif!
he weak economy is making jobs harder to find. One option for frustrated job
seekers is to stop looking for employment and start working for themselves.
A recession is an excellent time to launch a small business. Larger companies
rein in their advertising and expansion plans when the economy slows, making it
easier for new companies to get noticed and capture market share.
Newer, small companies also tend to have lower fixed expenses than older,
larger ones -- and that allows them to underbid their competition. That’s very
important during a recession, when customers are particularly price-sensitive.
The trouble is that starting a new business is risky. Sinking all of your
savings into a start-up or taking out a small business loan could leave you in a
deep financial hole if the business fails.
There’s no way to eliminate all the risk from entrepreneurship, but you can
greatly reduce your downside if you keep your business’s expenses to a minimum.
Here’s how to launch a business for less than $5,000...
The service sector offers the best opportunities for low-cost business
start-ups. Unlike retail or manufacturing businesses, service-sector
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Rarely require major up-front outlays of cash* for
inventory or materials.
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Often can be run out of the home,* eliminating the need
to rent an office, factory or storefront.
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Tend to be local,* so there’s no need for expensive
nationwide marketing campaigns.
Four ways to come up with a low-cost service business idea...
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Keep lists of the things that frustrate you* and the
things that you wish you didn’t have to do for yourself. Consider both your
personal life and your previous professional career. Perhaps other people would
pay you to help them avoid these annoyances.
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Find out which service-oriented businesses* (and other
low-cost businesses) are thriving in big cities. Trends tend to begin in big
coastal cities, such as New York and Los Angeles, and only later work their way
to the rest of the country. Read the business and lifestyle sections of
magazines and newspapers from major coastal cities to find out what new business
ideas are thriving there. Consider whether similar businesses would be
successful in your region.
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Target a growing demographic.* Open a business that
serves a rapidly expanding demographic, and the odds of success are in your
favor. Currently the fastest-growing demographics are seniors and children.
(Make sure these national trends apply to your local region before launching
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Search for service opportunities related to your professional
experience.* If your new business is in a field that you already know
well, your learning curve will be shorter and your Rolodex will already be full
of potential customers and other useful contacts. Make sure that your new
business does not violate any noncompete agreements that you might have signed
with former employers.
AVOID UNNECESSARY COSTS
Start-up expenses that your business can live without...
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Renting an office.* Work from your home if at all
possible. Meet with potential clients and other business contacts in their
offices... at the local coffeehouse... or in the lobby of a hotel.
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Buying office furniture and business equipment.* Try to
make do with the furniture, phones and computers you already own. If you must
purchase business furniture or equipment, search for used items. One advantage
of starting a business in a recession is that other companies are going out of
business and selling off their business furniture and equipment at low prices.
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Expensive marketing efforts,* such as direct mail and
television ads. Their high cost makes them too risky for your start-up.
FOUR EXPENSES WORTH PAYING
Not all start-up expenses should be avoided. Do try to do the following...
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Incorporate your business.* A lawyer might charge about
$2,000 to help you set up a Limited Liability Company (LLC) or corporation, but
it’s money well spent. If your business is not an LLC or a corporation, your
personal assets could be at risk in a lawsuit.
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Launch a Web site.* A Web site does not need to be
elaborate, but it must look professional. This is particularly important if your
company doesn’t have an office or a long track record. To learn more about how
to start a Web site for your business, go to www.allbusiness.com and type “Web site” into the search
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Arrange for health insurance.* Obtaining health
insurance at a reasonable price can be a major problem for those who are
self-employed. Find out if you are eligible for COBRA benefits from your last
job or if you can get coverage through your spouse’s health insurance plan. If
you are past your 50th birthday, you should be eligible for health insurance
through AARP (888-OUR-AARP, www.aarp.org). Or find out if a health insurance plan is
offered by a trade association that your business makes you eligible to join.
!http://bottomlinesecrets.com/images/bullets/blue_bullet1.gif!*Buy Business Plan Pro.* If you don’t have experience
writing business plans, this software is the cheapest, easiest way to do so.
(Palo Alto Software, $99.95, 800-229-7526, www.bplans.com.)
Business plans are like road maps. They help you lay out your route to get
from where you are to where you want to be. Good business-plan software prompts
you to think about factors such as competition, pricing, staffing and marketing.