With the heady smell of economic downturn and rolling financial crises in the air there are not many odours of optimism about new ventures wafting around.
These are not economically the best of times but too much attention to drama and negativity can potentially cloud your vision of exciting opportunities that emerge in this type of a bear/bare market.
I’ve assembled my very best selection of reasons to start up a small business right now together with some of the risks and mitigations to consider.
It’s time to readjust your thinking and turn the downturn around – one small, micro and mumpreneur business at a time!
So firstly, why would you do it? Quite simply, like all dualities, the economic downturn presents opportunities.
Purse-string contraction equals consumers looking for better deals and different ways of solving old problems.
The digital economy similarly continues to make micro and small businesses relatively cheap to start up and visible to the market using free social media tools and the extensive networks they bring.
Small businesses are nimble, with lower overheads – they thrive where larger firms are slower and more restricted by management and investor conservatism.
Fewer risks usually mean less innovation and less engagement with a reflexive response to market needs.
You can take on small work in a small business and you don’t have to chase bigger clients, bigger accounts and bigger dollars.
In doing so you can provide great service and in the process you can create a niche operation as well as building a brand that you are passionate about.
But mostly it’s exciting. A redundancy or a job contraction might provide you with the opportunity to follow a dream.
What are the key risks to consider when taking the challenge of entering a market in the current climate?
If you are migrating into your own business from a larger firm or finally going to market with something you are passionate about it is important to do the usual planning and skills audit to make sure you and your ideas are commercially sound and market ready.
You can be lean but start-up costs are undeniable and put pressure on new business without cash flow.
Acquiring start-up capital from traditional sources is always hard and more so in an economic contraction.
You need to know how/where to get leads and how to convert them to customers, and in the spirit of optimism you need to know how to manage the scalability of you firm when your great idea meets market acceptance.
Some mitigations to those risks are easily achievable.
In terms of being commercial and market ready you need to know enough about business to make good decisions and to see the risks coming.
There are lots of services to help you to get deeper knowledge, many of which are free or low cost and specific to your industry.
As with starting a business at any time, planning, planning and more planning is a key mitigation, as is investing in advice early on.
Work out what your strengths are and look for partners with complementary skills. Partnerships are a great option for spreading the risk, with the usual caveats.
Find an accountant who understands your industry early on and work out a budget and build in a contingency.
Cash flow and cash is king and you ideally need to have 6-12 months operating expenses, with family, fools and friends prevailed upon if you can show that you have the planning to support your venture.
Use lean tools – collaborate, share space, work in the cloud, fake it and keep it lowbrow while you are in start-up mode.
Scrutinize the condition of the market and the economy to anticipate coming issues but be sure to use your size and difference to traditional business models as a strength.
Most critically however, the call to arms in this blog is to not be swept away by fear and pessimism.
Look for market opportunities and follow your gut. Be in the right place at the right time and take a well-calculated risk for (hopefully) a well-deserved reward.