It’s funny that one of the side effects of a recession is often that more new businesses are created than in good economic times.
There are several reasons for this:
Firstly, people who are made redundant may use their redundancy money, and newly found free time, to launch a business idea they had been thinking of for a while. Whilst they were in employment they did not want to take the risk of leaving their safe job to go into the more risky world of self employment. But once the safety net was gone they were prepared to give their new idea a go.
Secondly, as they say ‘necessity is the mother of invention’. People can become more creative. In a world of constant change and instability entrepreneurs can take advantage of others’ indecision to take advantage of opportunities.
Also, people who have been out of the job market for a while and need more flexibility than traditional employment can offer, look to start their own business to enable them to have the flexibility they need. Examples of this are parents returning to work after looking after their young children, or other carers. When the economy is buoyant and jobs plentiful it is easier to find flexible employment opportunities – these opportunities often fall by the wayside when times are hard.
However, just because there are more businesses starting out does not mean that they will be successful. In my experience there are several reasons why a business will succeed:
1. The business owner has properly investigated their chosen market and taken the time to understand what their customers are looking for. They have a properly thought through business plan investigating all areas pertinent to their business.
2. The business owner gets proper professional advice in areas they are not expert in. This means they do not make the wrong decisions through lack of knowledge/skill.
3. The business is properly funded. In the days when banks are very reluctant to lend money it is foolish to start a new business unless the money is available to do it! Using own funds first is the cheapest and safest way of starting a business. If bank funding is needed it is important to make sure it secure is before spending starts!
4. The business owner is passionate about their business. There are much easier ways to earn a living than running a business and it is passion and drive which will ensure momentum is maintained in the early days. If a business owner is not passionate about their business proposition it is very difficult to keep up the energy required to see it properly established. Also it is much more difficult to get any one else interested.
Running your own business is by no means an easy option but it can be completely liberating.