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START-UP: BUILDING A BUSINESS TO LAST THROUGH THE RECESSION AND BEYOND

  • "Don't max out your financial resources (such as personal savings, investments or assets) to start a business, [especially if your] business plan is not strong, [you] have no previous business ownership or management experience, [or you] have very little capital to invest or match with a loan," says Bernell King Ingram of the South Carolina Women's Business Center. "Don't start a business above your means or just at your means: Start under your means to leave room to maneuver through change and unexpected occurences.
  • Beth Smith of the USC Small Business Development Center in Columbia recommends the following:
    1. Understand your financials (both personal and business)
    2. Consider ways to first keep and then grow the business
    3. Learn how to recruit and retain employees
  • "New businesses that find opportunities during this recession need a focused business plan, a solid cash flow plan and ongoing market strategies," says SCORE, Counselors to America's Small Business.
  • Make sure the business you're planning to start is recession-proof. Ask yourself what products and services are necessities and therefore in demand even during a downturn.
  • Consider starting out of your home.
  • Use your current expertise, such as pest control or electric work, suggests Pat Cameron of the USC-Beaufort Small Business Development Center in Bluffton.
  • Pat Cameron also offers this advice, which works in both the good times and the bad, like the current recession.
    1. Be prepared to give something up: time, money, hobby, second home, new car, vacation and sleep are examples of things that new business owners may need to give up.
    2. Be prepared to pledge your personal assets if you are going to a bank for a loan. Over 70% of entrepreneurs pledge personal assets for loans and around 32% put up their personal residence for a loan to start their new business.
    3. Be prepared to have the door slammed in your face. Some of the largest, most well-known and profitable companies were initially turned away by banks and lending institutions when applying for their first business loan. Tenacity is a must for those starting their own business.
    4. Be prepared to wait and be patient. Success does not happen overnight. If you are weak in the core area of your business venture -- meaning no direct work experience in the proposed business venture -- then your learning curve will probably be longer than someone who has many years of direct work experience in the core business. During a learning curve, mistakes occur and those mistakes can be costly -- thus the need for sufficient working capital and/or cash.
    5. Be prepared to change. Keeping up with trends and being willing to change is a requirement for long term success in business.


Stay tuned for more expert advice!  In the meantime, check out SBA's free online training tools, which include courses on how to start a business.