Six tips to recession-proof your startup
There are some businesses considered to be recession-proof. Service businesses such as accounting, debt collection, education, and auto repair. Other businesses in the food and drink industry, healthcare, and pharmaceuticals. Others, like luxury goods businesses and travel companies, don’t tend to fare so well. But most still survive to resume growth when the economy turns up.
Whatever your business idea, you can start it and be successful in a recession. It’s not so much what you do or what you sell that recession-proofs your business – it’s how you do it. It’s how you plan and manage your business, and the help and guidance you receive.
With the economy ravaged by COVID-19, here are my top tips for starting a business in a recession.
1. Have a plan
You can’t start a business today and think it will take off overnight. It’s imperative that you have a serious plan. You cannot simply step into entrepreneurship because you cannot find a job, for example.
2. Consider franchises
Franchises offer a tried and tested structure, in a bigger business that trades off its brand value. You’ll get training, support, a business model that has survived previous recession, and the opportunity to succeed right out the door.
3. Partner with existing businesses and entrepreneurs
If you’re starting your own business rather than buying a franchise, look for other businesses with whom you can partner. These will bring customers to your door, reducing your reliance on expensive marketing strategies.
Sole proprietorship is tough. Don’t think it is the only route to success. It could leave you frustrated and bankrupt if you don’t have a business concept that creates revenue right out of the gate.
4. Develop a great network
Networking is about who you know and what those people and businesses do. A valuable network can deliver customers, sales, and expertise to your door.
5. Don’t think you have all the answers
You never get off the learning curve, and when you first start out – no matter your skills and experience – you are starting on the first rung of the entrepreneurial ladder. ‘Know what you don’t know’ is a favorite saying of mine.
By knowing what you don’t know, you’ll know who to surround yourself with. You stay curious, and continue to learn. You’ll use your strengths to their full potential and fill the gaps with the expertise of others.
6. Get the financial side of the equation right
Make sure you have a strategic plan to finance your business, and hit the ground running. Finance is expensive, especially if you aren’t producing sales. You won’t survive for long if you don’t work immediately to repay your funding.
Here’s what I know
The number one reason for businesses failing is that they don’t know what they are doing. They start out with a great idea, but they don’t formulate a strategic plan to put that idea into action. Or they lose sight of their plan, and start to move away from the course they have set.
Entrepreneurs who start a business with a real plan, with backup and support, and who understand their own limitations and fill those gaps with expertise will be more successful. Even when starting a business in a recession.
Have you laid out your roadmap to startup success? What do you think are you biggest challenges when starting a business now? Ask your questions in the comments below, and I’ll address them in upcoming articles.