NOTE: I wrote the original version of this article which ran in the Employment Press Newspaper when I was their Managing Editor back in 1992 during this country’s last big recession. I found it so relevant in today’s world of work that I decided to update it and make it available here.

STARTING A BUSINESS DURING A RECESSION is not impossible and, with the right set of circumstances, may very well be the perfect time in your life to give it a shot. When you start, you don't have to set out to change the world…not just yet anyway. Though you may wish to spend your energies on developing something entirely new, think in terms of doing something customers will pay you for because you can do it better than others in your field. (If you are an innovative person and you know of a need that has not been met in your field and have the wherewithal to make it happen, by all means make it happen!)

There is only one key element you must have to start a business, and that is customers. Once you find customers who will pay for your product(s) or service(s), everything else will fall into place. "The degree of difficulty in obtaining customers is grossly underrated by most people starting out," states Jack Falvey, author of After College: The Business of Getting Jobs. Assuming something will sell is the thinking behind what makes more companies fail than any other factor.

Creating both a company and a market at the same time makes the challenge to start a new business more challenging. Entering an existing market within which you are already familiar reduces start-up time, required funding, and risk. Thinking in terms of improving odds rather than going for long shots if this is the first time you are starting a business will make it easier for you.

HERE ARE FOUR STRATEGIES you can use to help you minimize the risk of a new business and provide a safety zone within which to work:

1.Starting directly out of school, you may have the advantage of low overhead and high energy and enthusiasm. And if you are living with family or friends, you probably have a low overhead. Services you previously performed on a volunteer basis or as part of a school committee can now be taken to new heights and at a profit without costly overhead which cuts into your profits.

2.Starting your own business while being unemployed puts the element of time on your side. Freelancing your skills or hobby on a consultant basis can start you on the threshold of a new business. Performing this type of work for various companies on a part-time basis is a method of becoming self-employed. To your advantage, many companies use the services of freelancers as this cuts down on their overhead. Also, with so many people out of work today, companies are able to obtain very skilled resources without having to pay the high cost associated with employment agencies—which tacks their fee onto your hourly wage.

3.Starting up while working for a company in the same field puts experience in your favor as well as contacts (so long as you did not sign a contract with your previous employer that disallows this). It can be an ethical and realistic strategy that allows you to maintain your lifestyle without suffering from funding problems. Constraints of working within a too structured environment or for someone whose competence may be in question, may provide the level of frustration you need to get out on your own.

4.Starting out part-time with what you know you do well and have already done for others can also be fruitful. What you’ll accumulate in your favor is a proven track record—important to building a clientele base and/or securing a new position when/if you are ready. This avenue may work well for those accustomed to staying home and wish to try their luck at something slowly. If you start a business on a small-scale basis and know how it works, it's possible you'll be able to scale it up to make it work on a full-time basis. Once you have one client, the services you’ve provided him/her can be used as an example to obtain the second, and so on, until you’ve built up a portfolio.

HAVING YOUR CUSTOMERS TO PROVIDE FUNDS up front by selling your product or services and collecting all or a portion of the cost up front will allow you to put your energies and funds into producing additional products or services. This recycling will provide the necessary funds needed to help you operate without additional outside funding. Keep in mind that material things that are not integral parts of the business may not be necessary up front. Customers and incoming funds are the only essential elements. Once you’ve started up your business, the material things can follow when you’re better equipped to purchase them.

Since you will be operating without a boss or corporate structure as in a conventional job, you will be directly responsible to the marketplace, customers, suppliers, backers, and other support people who must somehow perform to enable you to run your business. Having the ability to convince others of the merits of your product or service is most important of all. The same communication skills that play a big part in a job search become even more important in starting a new business. Getting what you want done through other people requires a talent for being able to attract people to your side. Don't worry though about having to perform using high-pressure sales techniques. Instead, if you can convey your product or services factually, assertively and with confidence, enthusiasm, and conviction, you can get customers to believe in you and your product(s) or service(s).

And most important, what many a businessperson forgets after having obtained that customer—is bending over backwards to keep him!  It costs five times more to obtain a new customer than to keep an existing one.  So, if a customer isn’t completely satisfied or you expect that might be the case, be sure to go out of your way to service him/her—even if that means providing the product or service at a discount this particular time around! This will keep your customers coming back and referring you to others, knowing their satisfaction is important to you.  Word-of-mouth referrals is highly important and often one of the main ways self-employed individuals get their consumer base.

One distinct advantage of a low-risk start-up is that if it fails, you will somehow survive and be able to find an organizational home with no more difficulty than if you hadn't tried working for yourself in the first place. You also have the option of trying again. One strike doesn't mean you're out. The degree of potential financial loss to which you commit up front is important. Committing every resource you have isn’t wise. Instead, keep an untouchable reserve to get going again if need be.

Because being on your own can be risky, lonely, and exhausting, a partner could be the answer. Someone who is equally committed and driven with complementary talents has often made the difference. Since degrees of commitment vary, be sure to draw up a thorough written agreement addressing who brings what to the partnership and (definitely) an “out-clause”—since it is often exercised for better or for worse. These things are best addressed right up front.

The possibilities are almost infinite. There are so many rules, there are almost no rules. In retrospect, everything becomes clear. If this is your choice, good luck on your venture!

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Self-employment Strategies During a Recession

By Evelyn U. Salvador, NCRW, JCTC