Starting a small business in tough economic times

Part of your success depends on the kind of business you intend to start, so choose a structure that can thrive when times are tough. Before we look at some of the steps, you’ll need to take to get your business off the ground, remember that you can find success—even at moderate levels—during turbulent economic times. Here are a few reasons why:

You may find a lot less competition during this time. That’s because most people tend to start a business when the economy is flourishing. If you’re determined and focused, you may even be able to do it without having to share your profits with third parties.

Customers you gain during this time are more likely to stick with you when the economy changes for the better. This is especially true if you’re able to offer them more affordable options than your competitors.

Established businesses tend to curb or halt innovation during a downturn. You can use this time to come up with fresh ideas that may be missing in the market, giving you a better position when you open your real or virtual doors.

You may find things are much cheaper, namely things that contribute to your overhead costs. Think of things such as your rent, furniture, and materials—all of which you may be able to get at a discount. Of course, in an economic downturn, like the one caused by the Covid-19 pandemic, finding things or even places to rent out are not necessarily cheaper. The pandemic-related supply-chain issues, an inflated real estate market, lockdown rules, and social distancing requirements made it very difficult for small business owners, especially those in the hospitality industry.

Before applying for a loan, ask trusted friends or professional advisors to review your business plan to ensure you're not overlooking anything critical or making inaccurate assumptions. Often credit unions offer lower interest rates and fees than commercial banks, so don't narrow your search for financing down to only big banks.

Starting a new business when the economy is taking a nose dive takes creativity and ingenuity. Marketing is vital to getting ahead of the game and your competitors. Take your business plan and flesh out the marketing components: What exactly are you going to sell? Who are your target customers? How will you price your products or services? What is your plan for promoting your business?

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