Guest post from BusinessWings, a business resource for budding entrepreneurs, and where, in their own words, you can "find useful business articles providing advice, tips and guides, and read recent posts on real life business issues such as running a small business, buying a franchise, financial advice, tips on recruitment and guidance on starting a new business."
It's difficult to know where to put your money right now. Hitherto reliable stocks and shares have been tumbling over the past 18 months. Bricks and mortar is no longer the cast-iron investment many of us assumed it always would be.
Even accruing interest in a savings account is futile, as swingeing interest rate cuts, combined with the billions of pounds pumped into the economy by the Bank of England, mean your money will likely devalue in real terms.
Starting a business hardly seems like a safer option. You're hardly guaranteed success if you start one at the best of times, so isn't it a folly to start one in the depths of recession?
Not at all. Believe it or not, if you saved some cash in the good times - and you will need more up-front capital post-credit crunch - there are several compelling reasons:
- You'll scrutinise your idea more closely and devise your business plan more carefully. Banks used to lend generously even sometimes to entrepreneurs with a lack of market research and the flimsiest of business plans. A bad idea, poorly thought through, will fail even if it's backed up by substantial capital in benign economic times.
- Staff, raw materials and office space are all cheaper during lean times.
- Forced to be frugal at the outset, you'll learn vital discipline when managing costs.
- The need to keep costs down also drives innovation.
- Fireproofed by recession, both you and the business will emerge stronger, more durable and less susceptible to complacency than would otherwise have been the case. Next time a recession comes round, you and the business will be ready to face it.
- It's easier to recruit quality staff, as rising unemployment ensures a deeper and broader pool of candidates.
- And if you buy in a recession-proof sector, such as food retail, healthcare or maintenance services, you can negate many of the recession's worst effects.
Read more about starting a small business in a recession.