Many people are afraid to consider starting a business during times of recession. However, some of the greatest businesses have navigated those difficulties and became successful during times of economic disasters. The Great Depression brought us Disney, Hewlett Packard and General Electric. The Great Recession brought us companies like Uber, Airbnb and Venmo. These companies were successful because they looked for opportunities outside of the norm as times changed, coming up with products and services the world needed. What are some important steps to consider if you want to open up a business during the COVID-19 economy?
Research What Types of Businesses are Needed Today
It is extremely important to look at a variety of data sources and trends that show categories that are ripe for startup and innovation. For example, with grocery stores having empty aisles of goods, many people have started their own gardens and are even raising livestock to provide food for their families. Businesses selling items to support these efforts are thriving, such as Home Depot. Also, with people staying home and social distancing, there has been a big increase in home improvement and repair items. The entire home and garden category has seen a 140% increase in page views in the last few months. Other areas showing great increases are in pet products (as people are adopting more pets while stuck at home) and home hair care and beauty care items as people are unable to get to hair salons and spas. Families are purchasing video and board games and home work-out equipment to occupy themselves while at home. It is important to research trends to develop where demand is greatest, have a focused service or product, and a distinct target customer.
Develop a Business Plan
Create a detailed plan that covers all parts of your business, like administration, marketing, selling, and staffing. Make sure each element of the plan is “SMART” – specific, measurable, achievable, relevant, and time-based. You must decide what legal form you want your business to take: corporation, partnership or sole proprietorship and you must know the legal ramifications of each type. It should include your target market, your competition, your differentiation, your team, and how you will operate. You will need your business plan to be detailed as it will be needed for any type of funding you may request. It is important to learn how to prepare balance sheets, future income statements and cash-flow projections.
Financing
All new businesses have start-up costs before they can operate and become profitable. It usually takes time to develop a customer base and establish a regular cash flow. Money is needed to get you through the start-up period until the business can cover day-to-day costs. One very important plus during times of recession are special types of funding offered through the government. Look for funding for small businesses through the Small Business Association and note if you are a minority business. If your start-up is related to any type of government need, look into winning government contracts, if you can. There is bureaucracy, lots of paperwork and internal processes–but if a startup is far enough along, it can be a great source. The government will help companies raise additional capital and de-risk their companies with investors. If you are a family and first-time entrepreneurs, you may decide to risk your own money as start-up and bring in a partner later on. You can consider family, friends, and angel investors. The important key is to think outside the box of regular bank loans and be creative with possible funding ideas. Also consider establishing PayPal and Venmo accounts.
Find a Mentor
A mentor is a teacher and a trusted advisor that a budding entrepreneur can turn to with questions and get valuable advice, tailored directly to their industry and specific business situation. The right person will not just magically appear. When you start thinking about how to find a mentor via networking, think about building connections, rather than finding “the one.” Focus on expanding your network, and making connections with others in a variety of industries whom you can learn from. It can include former colleagues, employers, and even clients who have at one point or another offered particularly salient insights. Turning to a site like Meetup.com offers a vehicle for anyone to start any kind of group in your city, and with that comes a variety of networking groups, small business groups, and so on. Go to happy hour events, networking events, and speaking panels that are within your scope. Attend local conferences within your field to make contacts. If you’ve completed college, your alumni network may be worth looking into. Join professional associations and look for someone who is not a competitor in your market, and who has achieved the level of success you are aiming for. Look to the U.S. Small Business Administration, your local Small Business Development Center provides businesses with financial, business planning, and others for advice. While it may be more specific advice and less of a close-knit, mentor/mentee relationship, it may be a good starting point.
Develop Your Marketing and Find Your First Customers
Start-up companies during the Great Depression and Great Recession benefited from marketing, while their rival companies cut back on any spending. What you need to do is carefully test different approaches with small amounts of money. The last thing that you want is to spend your precious cash on a marketing strategy that is generating no revenue whatsoever! Questions to ask yourself when developing a marketing strategy include: How can you reach your target market? What is your goal? What’s your budget? What’s your message? What are your channels? What are your creatives? By answering these questions, you will be well along your path to creating a winning marketing plan that will succeed in pulling in customers. As a business owner, you likely have to do at least some type of selling. You may well be the first sales person for your business. You will need to create an organized sales process. The critical steps are finding your sales points, preparing your sales materials, searching for prospects, reaching out to them and then following up. If you do it well, you could make a lot of money.
Success in business will require more than hard work and good luck. It also requires making the best decisions from the start. In addition to these key steps, there are many other issues and things to do when starting a business. During these difficult financial times, it is imperative that you learn about each step in starting a business. Remember, first “plan the work” then “work the plan.”