I saw a segment on this evening’s national news entitled, $tarting Over.
It was about people who were forced to start their own business after being laid off. The segment featured a woman who, after returning from maternity leave, was informed that her division was closing and everyone was getting laid off.
While the manner in which she was going about starting a business was not exactly the way I suggest in, How To Start A Business From Scratch…Without Having Any, it did point out what many people have overlooked about starting a business.
A lot of people, who are concerned about starting a business in an economic downturn because the business climate is bad or we are in a recession, fail to realize they may not have any choice. And, unfortunately, many do not prepare themselves for a day where they need to rely on their own skills to bring home the bacon.
Even if you think you have a sound and secure job, take the steps now to prepare yourself. Your house may never burn down or get hit by a tornado but you need home insurance. Consider this “Career Insurance.” At a minimum you will learn a lot about yourself, business and maybe decide to take the plunge regardless. Take the time now to do your homework so you will not be under pressure to rush through the process if you have to.
At least start by asking yourself what you are passionate about.
Close your eyes and ask yourself this question: If money were not an issue, and I could do any job I wanted, but I had to work, what would I do? There is a good chance this is what you are passionate about. When you are passionate about something, time and work do not matter. The price you pay in practicing and honing your skill is a labor of love, and time flies by.
You may say, “I am not passionate about anything.” I don’t buy it. You just might not want to admit out loud or to yourself because it just sounds like a hobby or an interest you have. That’s your source for your best ideas. When you have a strong interest in an area, you know it. You read the magazines and journals dedicated to that interest, and you could talk for hours about it. That’s passion. It will provide energy and motivation for your business.
I am not saying you have to be passionate to start a business. But it helps. You are going to spend a lot of your waking (and dreaming) hours in your business. It will much more enjoyable if those hours are spent doing something you like. And if you’re good at what you are passionate about, you are way ahead of the game.
There are a lot of other factors to consider when starting a business from scratch, but your passion will guide you through the tough choices.
At the conclusion of the TV news piece I was glad to see it was pointed out that Microsoft, Johnson and Johnson, Compaq, HP, and other successful companies were started during a recession. And they all started with one person’s passion.
Showing posts with label recession. Show all posts
Showing posts with label recession. Show all posts
Monday, October 20, 2008
Tuesday, October 14, 2008
You have a business and the recession is upon you. Oh, crap.
Business has been good, so you’ve hired a few more people, expanded into larger facilities and even started giving perks to the employees. All of a sudden things start to slow down. You watch the news but don’t see a mention of anything slowing down. You start to panic – what am I doing wrong? Everything was working great. I just expanded!
Don’t ever forget you are a small business. Small businesses play in different sand boxes than big businesses. (And they very rarely play well together.) As the economy starts to slow big business notices it very slightly, and you catch a cold. As the economy goes into a major downturn, big business catches the cold and you have pneumonia. Bad news in the economy will always hit small businesses first. The irony is that the majority of the people in the world are employed by small businesses.
I always stress as a small business you need to remain flexible, not only when starting a business, but even as your business grows. It’s very tempting and ego-gratifying to expand. But, you are better off being a little late to get in on a growth spurt than be saddled with payroll, leases, etc. that continue to be due each month, even when there are no sales. Your vendors don’t really care about your sales. They care about theirs.
As of this writing, the U.S. and global economy is very, very slow. It doesn’t matter if you call it a recession or not. You aren’t getting the sales you need. Before I give you a few tips on how to deal with it let me make one point I learned a long time ago from a really smart economist: The economy goes in cycles. It always has and probably always will. It has been as consistent as the tides going in and out, since we began keeping track of the economy. So, regardless of how bad it is right now, it will change. It always has and it always will. Your goal is to survive until it does.
Tips:
Cut early and cut deep – Let’s start with the most difficult issue first. As much as you love having your staff you cannot let your generosity put you out of business. This doesn’t help your family or theirs. Maybe you can hire them back when things get better. Adjust your staff level as if the downturn were to last for at least six months. Listen to me when I tell you this – I learned this lesson the hard way.
Review ALL your expenses – Make sure what you are spending is a necessity and not a nice-to-have. Free soda in the break room is a nice-to-have.
Stick with marketing programs that work – and ditch the other ones. I do agree that you need to keep a direct response program in place. But, go back and find one or two that delivered the best results and stick with those. Also, go to those vendors whose marketing programs you do use and explain what you’re doing. See if they’ll work with you on price, terms, added-value, etc. Chances are they are slow too and will be willing to work with you to keep your business.
Offer promotions – It’s time to give a little to get new customers and keep the customers you have. If you can give something two-for-one or offer a, sign up for one year and get one year free, do it. If you have extras that really don’t cost you anything, now’s the time to bundle them into your product.
Keep your employees informed – You aren’t the only watching the news. Your employees watch it and worry just as much as you. They probably worry more because they have no say whether you keep them or not; whether they get a raise or not. Their future and the future of their families can rest in your hands. Be as honest and as forthcoming as you can without scaring the pants off them. They will appreciate it, they will be more productive and it’s the right thing to do.
I ran into a friend of mine recently whose home remodeling business went from $100 million a year in sales to $30 million, in 18 months. You might say that’s still a lot of money. It is, unless your expenses are $35 million. He said something interesting to me. He said, “I can’t downsize quick enough.” He had invested in large facilities and equipment that came with contractual leases. He still needed to make the monthly payments on those leases regardless of his sales volume. He’s learning the flexibility lesson the hard way. Don’t you.
Don’t ever forget you are a small business. Small businesses play in different sand boxes than big businesses. (And they very rarely play well together.) As the economy starts to slow big business notices it very slightly, and you catch a cold. As the economy goes into a major downturn, big business catches the cold and you have pneumonia. Bad news in the economy will always hit small businesses first. The irony is that the majority of the people in the world are employed by small businesses.
I always stress as a small business you need to remain flexible, not only when starting a business, but even as your business grows. It’s very tempting and ego-gratifying to expand. But, you are better off being a little late to get in on a growth spurt than be saddled with payroll, leases, etc. that continue to be due each month, even when there are no sales. Your vendors don’t really care about your sales. They care about theirs.
As of this writing, the U.S. and global economy is very, very slow. It doesn’t matter if you call it a recession or not. You aren’t getting the sales you need. Before I give you a few tips on how to deal with it let me make one point I learned a long time ago from a really smart economist: The economy goes in cycles. It always has and probably always will. It has been as consistent as the tides going in and out, since we began keeping track of the economy. So, regardless of how bad it is right now, it will change. It always has and it always will. Your goal is to survive until it does.
Tips:
Cut early and cut deep – Let’s start with the most difficult issue first. As much as you love having your staff you cannot let your generosity put you out of business. This doesn’t help your family or theirs. Maybe you can hire them back when things get better. Adjust your staff level as if the downturn were to last for at least six months. Listen to me when I tell you this – I learned this lesson the hard way.
Review ALL your expenses – Make sure what you are spending is a necessity and not a nice-to-have. Free soda in the break room is a nice-to-have.
Stick with marketing programs that work – and ditch the other ones. I do agree that you need to keep a direct response program in place. But, go back and find one or two that delivered the best results and stick with those. Also, go to those vendors whose marketing programs you do use and explain what you’re doing. See if they’ll work with you on price, terms, added-value, etc. Chances are they are slow too and will be willing to work with you to keep your business.
Offer promotions – It’s time to give a little to get new customers and keep the customers you have. If you can give something two-for-one or offer a, sign up for one year and get one year free, do it. If you have extras that really don’t cost you anything, now’s the time to bundle them into your product.
Keep your employees informed – You aren’t the only watching the news. Your employees watch it and worry just as much as you. They probably worry more because they have no say whether you keep them or not; whether they get a raise or not. Their future and the future of their families can rest in your hands. Be as honest and as forthcoming as you can without scaring the pants off them. They will appreciate it, they will be more productive and it’s the right thing to do.
I ran into a friend of mine recently whose home remodeling business went from $100 million a year in sales to $30 million, in 18 months. You might say that’s still a lot of money. It is, unless your expenses are $35 million. He said something interesting to me. He said, “I can’t downsize quick enough.” He had invested in large facilities and equipment that came with contractual leases. He still needed to make the monthly payments on those leases regardless of his sales volume. He’s learning the flexibility lesson the hard way. Don’t you.
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