Starting your own business in a recession

Is your high street becoming like a ghost town? Watching The Specials on TV performing their famous hit at Glastonbury the other week, all I could think of were the empty buildings and whitewashed shop fronts to be seen on many of Britain’s high streets at the moment. Last night I even saw an advert for the VW Passat which poked fun at this aspect of the recession. So, it may surprise you to hear that the European Commission is hoping to set up a new microfinance facility worth Euro100 million to help people start their own businesses. The thought of starting up a new venture at a time when many established firms are failing might seem ludicrous. Surely you’d have to be off your rocker?

Not necessarily. Believe it or not but experts say that, despite the risks, a recession can actually be a good time to set up a business. True, times are hard and many people are being laid off from firms all over the country. But if you’ve been sitting on a great business idea and longing for years to go solo, being made redundant could actually provide you with the starting point you need. First of all, it takes away some of the risk involved in leaving your job to become self-employed – you don’t have to make that tough decision yourself because your former bosses have made it for you. And secondly, if you’re lucky enough to have worked somewhere for years, you may get a good financial package which may help you launch the business and provide you with funds before your venture starts making money.

What’s more, according to Business Link, during a recession entrepreneurs tend to focus on business basics and don’t waste money on the kind of schemes they might throw cash at during the boom times. Plus an economic downturn can make business people more inventive – necessity is the mother of invention, as the saying goes. And, if these aren’t convincing enough arguments for you, you may be as surprised as I was to discover that some large corporations, such as Microsoft, Apple and Tesco, began their lofty careers as recession start-ups.

But besides the satisfaction and freedom of being your own boss, being self-employed can be really tough. Unlike a salaried job, there are no health benefits, sick pay or paid holiday and you need to be highly motivated and prepared to put in a lot of hard work to make your business succeed. You will face plenty of setbacks along the road and have to rely on your own self-belief and the support network of your friends and family to help you keep going. That’s not always as easy as it sounds. Plus, you’ll need to ensure that your business plan is sound and that you have enough cash to keep you afloat until your venture starts generating income.

So, before you rush into spending your redundancy package on setting up the next Apple Inc., make sure that you’re really suited to starting your own venture by doing plenty of soul-searching and getting as much information about your target market as you can.

Here are some useful websites which may point you in the right direction:

Business Link – has some great information on grants, networking and also general information on what to think about in terms of your business plan and market research etc. before you dip your toe in the water, plus interviews with real business people who have made the leap themselves. – great blogs, guides and information from established entrepreneurs on how to get started, business ideas and the pitfalls to watch out for.

HMRC – what you need to know tax-wise when going self-employed.

Federation of Small Businesses – a lobby group for the self-employed and small businesses which may be worth joining once you get established.

MSN Money’s small business message boards

Have you thought about setting up your own business/done so already? Have you found it tough doing so during the recession? Leave a message and let me know.

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2 Responses to Starting your own business in a recession

  1. Christine says:

    Of course it\’s a good time to start a business. Jobs are scarce. Anyone with a idea that is a bit different to the general run of things and the guts to give it a go has a good chance of succeeding. There\’s plenty of help available and it sure beats signing on at the job centre. Whatever happens to you, you will come out of the experience wiser. If you succeed then the world is your oyster. If you don\’t, then you are richer in experience. You know yourself better. In America you are respected for making the effort to be your own boss which is as it should be.

  2. Bill says:

    Hi there, Girls! Sadly, we are not yet officially an American State. Therefore there is little or no respect for anyone attempting to start a business. It would possibly be so much easier to set-up a new "pyramid" system, so called e-commerce. We only need to sit at our lap-top, 30 minutes per day, to "earn" fantastic sums, simply following a menu, as an agent, just taking a percentage of someone else\’s cash. Such a system simply inflates the retail/consumer price of the end product or service.For those genuine technicians needing extensive space to literaly grow/service our own product, there is no hope. As the price of real estate continues to escalate way beyond control, this continues to inflate the consumer price of the end product. Butchers are no longer able to purchase British beef, at a price of £1,000/head they have no hope of breaking even. Foriegn beef is so much cheaper. Kiwi lamb has long since been only half the price of any British. Tesco are currently selling American lettuce, at twice the price of English, simply because there is no British available, we are prevented from producing it.They continue to build more new slums, sorry, homes, on more green-belt, at an idiotic price that no one can afford. Only those civil service on salaries of at least 6 figures can buy/rent such expensive/inflated monstrosities. Thus technicians, with no more than £30,000/annum gross, have no hope or chance of a mortgage for such a new, unused, slum. This is all caused by the price of real estate, the conversion of green-belt to brownfield.We technicians are all effectively redundant, as also destitute. We have no hope of starting a business, & will soon all be in "social" slums. My own cave is a social, council owned slum, the £8,000,000 refurb will not change this. It will always be a slum.

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