To Startup or Not To Startup? Five Things to Consider Before Launching Your Own Company
Why start your own business? After all, it may be one of the most masochistic decisions any individual can make.
To begin, startups come with financial risk, and impact of failure on one’s finances can be severe. Moreover, starting a new business is a sure-fire way to distance oneself from friends and family. Startups can be all-consuming, leaving little time for much else—including personal relationships. Finally, starting a business can take a heavy physical and emotional toll. Late nights and meals at one’s desk are not a healthy lifestyle, and the highs and lows of the startup game can drive a person mad.
Here is why I love being an entrepreneur. In short, starting a business is one of the most exciting, challenging, and rewarding ways to spend my working years. Yes, it can be hard and cruel, but six years into it, I haven’t experienced a single day of boredom.
Startups are not for everyone. Here is some advice if you are considering whether to get into the game:
(1) Get some experience first
Some recent academic literature has concluded that the ideal age for entrepreneurship is 40. This is no doubt because can help to have working experience before you start a business. For one, it provides an opportunity to save up some potential capital to invest. Moreover, you will inevitably pick up some useful skills and knowledge along the way—some of which could prove handy, even if your new business is in a field outside of your expertise. In addition, as you work, your network of contacts will grow. This can prove useful in a variety of ways, including client development, recruiting, the pursuit of capital, to name a few.
(2) Analyze your opportunity costs
If you have nothing to lose, it is easier to take the leap into entrepreneurship. If you are the sole breadwinner for a family of 5 with a limited nest egg, it probably makes sense to save up some cash first, and think very carefully about the impact that a bombed startup would have on your life. One other word of caution here in a different vein: Be aware of the risk of your opportunity cost rising too high. Although an increasing employee paycheck is generally a good thing, the higher your salary rises, the more difficult it can become to quit your job and scratch that entrepreneurial itch.
(3) Build a detailed financial model for the business and test your assumptions thoroughly
Once you begin reducing the business to a spreadsheet, the realities of the numbers will begin to emerge. Taking into account all of your expenses and revenues, as well as when they should occur, will give you a sense of whether the business can make money. It will also give you a sense of how much capital you will need and by when. While there are always financial surprises in the startup experience, waiting to build your projections until after you commit to a business is a dangerous proposition.
(4) Speak to potential clients
Treat your new venture as a sophisticated investor would treat a new potential investment and determine whether your idea can be monetized. Do some due diligence and explore whether there is interest in your product or service. Ask client prospects whether they like your value proposition. If you are entering a competitive industry, ask what it would take for clients to switch providers. Knowing what potential clients want and need is critically important to know if there is room in the marketplace for your business.
(5) Ask yourself whether you have the right DNA
Jumping head first into a startup is not for everyone. If you are the type who needs others to motivate you, or who has trouble staying focused when times get tough, starting a business is probably not be the right move. But if you have self discipline, a fair amount of confidence, passion, and a good deal of intestinal fortitude, you may well be the perfect fit for entrepreneurship.
Keep in mind that starting a business is not for everyone. But for those who have what it takes, becoming an entrepreneur may be the most fulfilling professional path.
About the Author: Paul Mandell is a Founder and the Chief Executive Officer of Consero. In this role, Mr. Mandell provides strategic leadership for the company with a rigid focus on excellence at every level of the business. Prior to founding Consero, Mr. Mandell founded and was the President of a national legal support company that was acquired in 2007. The successor entity was recognized as one of the world’s top legal process outsourcing companies during his continued tenure as President the following year. Prior to entering the business world, Mr. Mandell practiced law at Arnold & Porter LLP and Sullivan & Cromwell LLP in Washington, DC, and New York, New York, respectively, where he focused primarily on antitrust and pharmaceutical litigation. Prior to his law firm experience, Mr. Mandell clerked for the Honorable K. Michael Moore of the U.S. District Court for the Southern District of Florida.
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Start Up Don’t Shut Down
As people have lost their jobs and struggled to find employment, many of the more spirited professionals have struck out on their own to create the jobs that they cannot seem to find. Read more
5 Lessons Learned From My First Business
It seems like a lifetime ago that I started my first business, maybe that’s because it is. I learned a lot of lessons from that first venture, most about what not to do.
My First Business
The year was 1984 and I was 7 years old. I was the sole proprietor of a newspaper distribution company, call it old media, but newspapers were my game.
This was back in old days, before the internet, when people would get their news by reading words written on actual pages – don’t laugh, but many people would actually pay to get their news this way, including my parents.
At 7 I knew enough to know that I wanted some money, I was sure if I could get my hands on some cash I’d be out on my own in a couple years living the good life.
I also knew that these things called “papers” would stack up for a couple weeks before my parents finally took them to the trash.
An Idea is Born
I thought if my parents were reading these papers, and paying for them, the neighbors probably were reading them too, but maybe not all the neighbors.
I asked my mom how much a paper cost, then asked her if I could have the old ones, she said ”you can have the old ones, but don’t go leavin’em laying around the house!”
My business is born! I would go door to door with the old papers my parents had and see if I could sell them for less than a new paper to any of the neighbors.
I thought maybe they didn’t get the paper so would happily pay for mine, or possibly they missed an issue and would want to catch up. If they didn’t have this thing called a “subscription”, heck maybe I could sell them a paper everyday.
My distribution mechanism was simple. I loaded up the papers in a duffel bag and headed out, knocking on every door within the neighborhood within my limits.
At that time I had boundaries set by my parents that I wasn’t supposed to cross. I was the paper czar of nearly 5 square blocks – I was in business!
5 Lessons Learned from My First Business
So that is how I spent everyday after school the two weeks I was in business. Knocking on doors trying to sell yesterday’s paper (or sometimes yester-weeks paper).
As I think about it now, it seems silly. As adults, we all can spot the flaws in my thinking, and even though I wouldn’t try something similar today – I made money!
Being able to make money selling old news taught me a lot about business, here’s five things I learned:
Lesson #1: When You’re in Business People Buy You as Much as Your Product
I was a moderately cute kid, with tons of ambition, and nothing but confidence in my paper business. When I talked to people at their door step they felt that. When they bought a paper from me, they were buying me, not the news that happened 6 days ago.
This lesson is as applicable today as it was then. Although we may not all be fresh faced kids anymore, people will sense when you are passionate, confident, and believe in what you are doing – and that’s what they’ll be buying a good portion of the time.
Lesson #2: Great Entrepreneurs Think on Their Feet
I learned quickly that in order to sell these papers, that weren’t as desirable as I thought they’d be, I better have answers to their questions – which mean’t thinking on my feet.
I remember on that first day being asked, “Why would I want to buy yesterdays paper, that stuff’s already happened”…I replied with “Well, today’s paper is filled with stuff that already happened too, but mine’s cheaper.” He bought a paper. My mom said I was being a smart aleck, I politely disagreed.
If you want to be a great entrepreneur you need the ability to think quickly on your feet. Responding to demands, making quick (good) decisions, and dealing with the numerous curveballs are essential to success.
Lesson #3: Competing on Price Alone is a Tough Game
My only selling point, and the only way I could sell even one of the old papers was to give discounts. At the time I thought this was shrewd, now I think it’s dangerous.
I had no competition in my neighborhood, and probably never would have selling old news, but what if another 7 year old (or a super bright 6 year old) had of come up with the same idea? We’re both knocking on doors, how do we compete with each other? Most likely price, which means it wouldn’t be too long until the pennies I was making didn’t justify the trouble, and I’d have a hard time making it up on volume.
Same goes later in life. You may be the only game in town now, but what happens when you’re not. Will you be competing on price alone, or do you bring something to the table your competitors don’t?
Lesson #4: Think About Scale Early in the Startup
I gave this absolutely no thought. I just wanted to sell some papers, and beat myself ragged going door to door I guess. If this venture had been a huge success I would have had no way to meet the demand – shoot, my parents only let me go about 5 square blocks, I would have been sunk right there.
The lesson here is that early on begin to think about how you may scale up if you’re business becomes successful. How will you reach more people? Who will do the additional work? Can you scale? If you charge per hour, there are only so many in a day – how do you get more revenue without raising your price? If you sell a physical item, how many can you get and how can you distribute to more people? Just ask yourself these questions early, and prepare for growth going in.
Lesson#5: It’s Hard to Overcome a Flawed Business Model
We can all see the problems with my business model. Yeah, I sold some papers, but long term the flaws were going to bring my business down. If you’re not going into a venture on solid business foundations, you’re house is going to start leaning, and eventually fall over.
The Long Defunct Newspaper Distribution Company
I’ve been out of the newspaper distribution business now 25 years, but some of the lessons I learned back then are still with me today.
The real lesson in all of this is it doesn’t matter if you sell newspapers when you’re 7, lemonade when you are 10, or run a multimillion dollar company when you’re 40, the fundamentals of business don’t change.
Keep moving forward while learning from the past and you should be okay. And for anybody thinking about it, I can’t suggest you getting into the newspaper distribution business!
Photo Credit: Meanest Indian
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Keep Moving Fourward Entrepreneurship Competition
Frank Carnevale, of Keep Moving Fourward, has an exciting announcement in this guest post for High School students intereseted in entrepreneurship. Take it away Frank…
Attention High School Students Nationwide…
The Keep Moving Fourward Entrepreneurship Competition is officially under way!
Have you ever thought about what you’re going to do with your life after high school or after yougraduate college?
Have you ever thought about working for yourself, while doing something that you love? Even if you haven’t, now is the perfect time for you to find out if being an entrepreneur is right for you!
The Competition has Two Main Goals?
1) To show high school students that they do not necessarily have to work for someone else for the rest of their lives… They do have another option: They can be an entrepreneur. In other words, they can be in business for themselves, doing something that they truly like (or hopefully, LOVE) doing.
2)To give the competition winner the tools necessary to successfully get their business idea off of the ground.
Where Should I Start?
“So what kind of business should I start though?” a student might ask. Well, what are some things that make you want to keep moving fourward? What are you passionate about? What subject or topic can keep you interested for hours on end? What kinds of things make you the happiest? Thinking this way plus constantly asking yourself good questions, will usually lead to an idea you can run with.
Other Questions to Get You In the Entrepreneurial Mindset
Here are some more questions one might ask themselves to get their entrepreneurial juices flowing:The point of all these questions is that one question will lead to another question, and another question,and another question. At the end of your series of questions lies some type of solution.
What is it about X that you love so much? Is there anything you could think of that would make you love X even more? If so, do you think it would do the same for other lovers of X?
What is the one thing that annoys you most about X? Why does it annoy you? Do you think it annoys others as well? What two things could you immediately do to make X less annoying? And so on…
Now for a dose of reality: Just because you’re passionate about something, and have a good idea related to it to pursue, does not necessarily mean that it would make a worthwhile business.
You need to also ask yourself whether the idea has the potential to generate revenue. Can this improvement on X put some money in your pocket? Can you make money consistently from a business in X? How much money will it take to get X going?
Ready To Get Started?
Get the picture? Good, enough of these questions.
For more information on the competition, and to sign up, go to http://keepmovingfourward.com/.
If you have questions or comments please email me at: frank (at) gofourward.com
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The Anatomy of an Entrepreneur
The word Entrepreneur holds a certain level of mystique in our society.
On a daily basis we are reminded of the entrepreneurs who have started with nothing only to rise to celebrity status. Or maybe we see our next door neighbor who, while not a celebrity, has done very well for themselves starting and running small businesses.
The mystique comes from believing these individuals have something different in their genes, or a predisposition to business that has made them a success. Perhaps they were just lucky. Who knows?
The Anatomy of an Entrepreneur
Today, thanks to The Ewing Marion Kauffman Foundation, we are one step closer to understanding the make up of an entrepreneur.
In their July 2009 report, The Anatomy of an Entrepreneur, The Ewing Marion Kauffman Foundation attempt to gain a little more clarity into what makes an entrepreneur tick.
They surveyed 549 company founders in a variety of industries, including aerospace and defense, computer and electronics, health care, and services. They asked the founders detailed questions about their backgrounds, motivations, and experiences in launching companies. Here’s what they found.
Key Findings
Below is a sampling of the key findings within the report, for detailed statistics and charts please find the full report linked at the bottom of this post.
- Company founders tend to be middle-aged and well-educated, and did better in high school than in college
- Most entrepreneurs are married and have children
- These entrepreneurs tend to come from middle-class or upper-lower-class backgrounds, and were better educated and more entrepreneurial than their parents
- 71.5 percent of respondents came from middle-class backgrounds (34.6 percent upper-middle class and 36.9 percent lower-middle class). Additionally, 21.8 percent said they came from upper-lower-class families (blue-collar workers in some form of manual labor).
- 52 percent of respondents had some interest in becoming an entrepreneur when they were in college, but 34.7 percent didn’t even think about it, and 13.3 percent had little or no interest. Those from lower-upper-class backgrounds were more likely to have been extremely interested in starting a business than the average (25 percent vs. 18.5 percent)
- The majority of the entrepreneurs in our sample were serial entrepreneurs. The average number of
businesses launched by respondents was approximately 2.3; 41.4 percent were starting their first businesses - 74.8 percent of respondents indicated desire to build wealth as an important motivation in becoming an entrepreneur. This factor was rated as important by 82.1 percent of respondents who grew up in “lower-upper-class” families
- 60.3 percent said that working for others did not appeal to them
Get the Full Report
The Anatomy of an Entrepreneur – PDF, 24 pages
Conclusion
I found this report fascinating and I think you will too. What I saw were some people who “looked” like me and others who did not. It reinforced the idea that entrepreneurs are as diverse as the companies they start, but education and a desire to pave their own way, build wealth, and capitalize on businesses ideas are a consistent theme throughout.
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Passion Isn’t Static, Neither is Your Business
The other day we discussed the traits most often associated with a successful entrepreneur.
Anytime you have a conversation about what it takes to be successful, you inevitably end up agreeing that passion (or a close relative of passion –> desire – heart – will) is a must have in order to be successful.
If you’re late to a meeting and just want to scan this post for the answer – sorry, it’s just full of questions…thought I’d save you a minute or two.
Passion Isn’t Static…
But my experience has been that passion changes somewhat over time. What I was madly passionate about 10 years ago, doesn’t seem so important anymore. And things that take up none of my time today, may dominate my waking moments in 5 years.
Maybe there is that one true passion in life, but more realistically I believe our passions change over time as we as people change and develop.
…Neither is Business
Business is constantly changing too. Markets shift, customers come and go, and you need to be nimble in order to react and survive. But during these natural changes what if you have to concede some of what you are passionate about?
With any business there are things we have to do that we don’t necessarily love. Comes with the territory. But what if your business turns into 55% something you love and 45% “other”, just something you do?
How far can you bend and still be doing something you love, have the passion, heart, will and desire to succeed at it? What if the 45% you currently not jazzed about something you used to love?
A Marriage of the Two?
Possibly the only hope is to create and sustain a business that incorporates your passions over the course of many, many years. That would be extremely fortunate but probably rare. If you love to paint houses for a living, but after a few years you loose your passion for it, you’re pretty much sunk, right?
I’m certainly not the same person I was 5 years ago, yet I am still running the same business – what will I be like 10 years from today? And will I still love what I do or be able to adapt a business to fit?
This all reminds me of a quote I heard from a woman who had been married to her husband for 30 years, she said:
“In the past 30 years I’ve been married to 5 different men, luckily I’ve loved them all”.
I think businesses are like that –you hope you stay in love with them as you and your passion changes, or just hope you love what you both become.
What say you? Would love to hear your thoughts on this…
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Photo Credit: David Reece
Adapt or Die!
Below is the sixth article of six in our $100 competition, submitted by Jennifer who you can find at http://innerlight.nsedreams.com Good luck to everyone who contributed an article!
A consistent characteristic of all entrepreneurs is adaptability.At this time in history it has never been more important to make the most of opportunities, jobs are disappearing at an alarming rate and job security is a joke. This is precisely why I have never had a real job. For years I have worked for myself and when I got married we started working together. It has been a pleasure and a struggle, like anything in life, with up’s and down’s.
We are watching our particular industry crash and burn in the recession, and just like other creative professionals we can’t see a light at the end of the tunnel. My husband and I have had a photo studio for ten years. As Artists it has been especially hard to survive. Even with a business in place with the studio we have had to be creative and come up with new markets over the years. In our case diversifying our services has been essential, but that also adds to the challenge of staying focused.
We shoot primarily food and beverages now, but have worked on just about every type of project. We have had a nice business but recently we have been discussing what to do next to compensate for the scarcity of good paying photo jobs these days. Having exhausted most of the areas we could in Photography we are now thinking about adding something new to the mix. Change can be scary but not taking a risk can be scarier.
We are all born equally capable, it is just a matter of how we use our skills and take advantage of opportunities.
“Your big opportunity may be right where you are now.”
-N. Hill
Whether you think you have it or not, chances are, if you are willing to take a risk and want it badly enough you will succeed.
I have spent the last few years writing and marketing my cookbook, which my husband also was involved in. We took skills, interests, and what was happening in our lives with raising a child and created a source of income with a book. It has been a huge learning experience, mostly fun and rewarding, and relatively profitable. I always thought of us as artists, but have come to learn we have other hidden talents. I learned that I love marketing, connecting with people and networking. As a result, I now feel confident enough to apply these skills to whole different business.
So now is the time where we need to make a decision about our future and the future of our child. Do we stick with what seems comfortable or do we take a risk and use newfound talents? There are a million opportunities out there; it’s just a matter of deciding what you can be passionate about.
We have recently researched and found a business that fits our interests and skills. It’s fun, has huge potential for growth, and we don’t have to re invent the wheel either. When a friend first told us about her success with a new anti aging skincare technology product we scoffed. However, our ability to never ignore an opportunity has paid off again. We are on a quick road to building a whole new business that is filling the gaps in our other careers.
Sure, there is still a lot of risk in jumping into something new, but there is a lot of risk is not jumping these days too. Never be careless, always do your research, and don’t be afraid to jump!
http://innerlight.nsedreams.com
Jennifer Carden
jen.carden@gmail.com
Gary Vaynerchuk Follow Up
I received quite a number of questions in response to the inspirational video from Gary Vaynerchuk at the Web 2.0 Conference in New York, that I thought I would post this follow up interview from FastCompany.com from September 18, 2008 .
I really think you can learn a lot from how Gary brands himself and his company, and how he approaches business and life in general. For those wanting to know even more, there is a great Wikipedia page about him here…
Selling Wine the Web 2.0 Way
Forget about essence of black currants — this wine tastes like a dead deer with cherries sprinkled on top. This is the kind of candid review uncorked by Vaynerchuk as host of Wine Library TV [1], an offshoot of his family’s New Jersey retail business. His daily webcast is quirky, opinionated (he described one wine as tasting like “a gremlin who hasn’t taken a shower in a while”), popular (80,000 viewers and growing) and inevitably digresses into the fortunes of his beloved New York Jets. Vaynerchuk will be a keynote speaker at this week’s Web 2.0 Expo in New York. His advice: hustle, connect with your community, be honest and be yourself.
What have you learned about building a successful web show?
You have to feed your community. That’s your differentiators from somebody that’s on television. One of my key successes at first was answering every e-mail. I’m way behind, but I still do. You’ve got to spend so much time on the community part and less time on the content. So many people are so focused on the product or the content — for example, with video bloggers it’s the lighting, the graphics and editing. I have taped all 600 shows of Wine Library TV without ever, ever taking another take.
No second takes?
It’s been one take every time. If the phone rings, so be it. No special graphics, nothing. I want to spend every minute of time working the community. Way too many people spend nine hours a day finishing an episode. That’s absurd to me. As a small business trying to build viewership, you can’t do that, no matter how great a show is. The big differentiator, and the big weapon, that people in new media have, is that they can be touchable and connected to their fan base. I want people to focus on that more.
Did you get into web TV because you wanted to have fun or because you thought it was a strategic business move?
Both. Something triggered in my mind that said I’m probably better off being Oprah than Target. I would say it was 90 percent business, and 10 percent fun. But it’s so fun. What gets me excited in the morning is building businesses.
Did your shows help sales?
At first, sales decreased substantially. I was the CEO and it was culture shock for this company to lose me. I wasn’t spending 15 hours a day trying to build Wine Library retail. My day used to be calling on CEOs and six figure clients and selling them tens of thousands of dollars of wine every day. That just stopped on a dime. But it’s climbed back up. That’s the kind of business you love, right? It doesn’t rely on you at all and is still growing.
Almost 70 percent of the wines that have been on Wine Library I’ve panned. At first, I knew people would think I was just shilling wine. But what they didn’t realize I had a much bigger global thought: I was trying to build personal brand equity. There are people driving four, five or six hours just to see where I tape the show and coming to Wine Library.
How big is your business?
We stopped reporting sales in 2005, but we were a $50 million company in 2005 and we’ve grown since.
You say you want to change the wine industry. What’s wrong with it?
The global brand of wine is positioned as something people are intimidated by. Wine has been put on pedestal. That’s what I want to change. I want people to really get excited by wine and know they have a good palate. I want to build wine self-esteem.
You described one wine as tasting like a pile of stinky clothes in college dorm room infested by loose hamsters. Not the kind of tasting notes we see in The Wine Spectator!
It’s authenticity. If a wine tastes like a Rubik’s cube to me — because I’ve gnawed on one or two in my life — then that’s what I’m going to call it. Or Grape Big League Chew. I just want to be real, because when people taste it they’re like, “Oh my god, this does taste like a Tootsie Roll!” The lesson there is authenticity trumps tradition.
What wine would you serve to the New York Jets?
I’ve been on record thousands of times — including my fourth grade yearbook — that I want to own the New York Jets. That’s actually what I’m working towards. I’d love to host them. Obviously every player is different. Brett Favre, he’s a good old country boy so he may need a rustic Barolo. Other players like Kerry Rhodes, he’s very into Hollywood and nightlife, may want a good bottle of Cristal. Different people have different palates so every Jet player would have to be individually dissected.
Why would you rather have a million friends than a million bucks?
That’s one of my favorite lines of all time. I’d rather have social equity than private equity. The ways a person can communicate have exploded. The biggest socialite in the world, how many people could she have possibly told to watch my show 10 years ago? Now you’ve got tens of thousands following on Twitter, blogs read by hundreds of thousands of people, texting, StumbledUpon, Pownce, Jaiku, video blog sites. Word of mouth is on steroids. If a million friends like what you do, they’re going to absolutely build your brand or your business to a totally different degree than what has ever been done before. Look at personal brands like Oprah — there is substantial business to be done by having brand equity and leveraging social media right now.
Why do you call this the golden age of personal branding?
There’s going to be a lot of people defined and built through the Web and through these tools. Look at Perez Hilton — he’s the gossip guy, right? He’s taken it. Where are the movie critics? Where is the sports center? Where is the financial show? There is wide-open space for a lot of genres to be built. I still don’t think we’ve had our first celebrity chef built through the web. Where’s the chef who’s got the skills and personality to set up a camera, tape a show five days a week, interact with a community, build a brand and then the Food Network is knocking at the door? That is going to happen. Now it’s a gold rush. Eventually it’s not going to happen quite as easily.
You’ve gotten consulting gigs at places like Facebook and Google. What do you tell audiences about social media?
This is not stopping. This is going to be part of society. People need to embrace it, understand it, figure out how to leverage it, and recognize they’re no longer in control of their message. The people now decide what the message is. That’s very disheartening and scary for many people. Many brands want to control every aspect of what goes on in their world. That is no longer possible.
Big brands can no longer control their image with PR.
Those days are over, my friend. You need to figure out how to be more transparent. You know what’s great about this? The good is going to win and the bad is going to lose. How great is that?
Why do you warn people against trying to be the next Facebook?
That’s such a warning sign to me. So many people see something successful and want to recreate it. If you take all that energy and focus on doing something your own way, something you’re passionate about, you’re always going to win. To really build a business you have to work super duper hard. You’ve got to have obnoxious passion for what you do. If you’re not passionate, you’re dead.
What’s a Small Business Entrepreneur Look Like?
Male: 62.6%
Female: 37.4%
Average Age: 37.6
Average Salary: $39,000 – $61,000/yr
Minority Owned: 18%
Average Small Business Loan Size: $152,000 (all SBA data), $13,000 (All Micro Loans)
According to the United States Small Business Association (SBA), small businesses in this country:
- provide approximately 75% of the net new jobs added to the economy
- represent 99.7% of all employers
- employ 50.1% of the private work force
- provide 40.9% of private sales in the country
- account for 39.1% of jobs in high technology sectors in 2001
- account for 52% of private sector output in 1999
- represent 97% of all US exporters
Small Business Openings & Closings:
Sources: U.S. Dept. of Labor, Bureau of Labor Statistics; U.S. Dept. of Commerce, Bureau of the Census
http://www.sba.gov/services/financialassistance/sbaloantopics/microloans/index.html
http://www.whitehouse.gov/omb/expectmore/detail/10002346.2007.html
Good Business in Bad Times
No doubt times are tough. The consumer is pinched, Wall Street is hurting, bankruptcy and bailouts seem to be the norm. Pretty daunting times for anyone considering starting a business, or any small business owner for that matter. So the question is, are there any good businesses for bad times? And can economic downturns actually be good for small business entrepreneurs?
Are there good businesses?
Well, if you started a business in today’s ecomomic turmoil you’d have something in common with Hewlett Packard, General Electric, and Sun Microsystems all of which were started during economic downturns.
Also, many industries are actually considered “recession proof” so if you’re operating in any of the following capacities, or thinking of starting a business in one of these industries you’re probably going to fair okay
- Medical Services / Health care
- Pharmaceuticals
- Necessities: food/grocery stores/chains
- Cosmetics
- Entertainment
- Home & vehicle repair & maintenance
- Debt collection
- Tax preparation / simplification
- Career/Job search/Life coaching
- Energy
- Security/Alarm services companies
- Vices
Some of those industries lend themselves better than others to small business and entrepreneurs, but there are a lot of possibilities none the less.
Could an economic downturn actually be good for small business?
An argument could be made for…YES! When the economy is down, there could actually be opportunity for the astute small business owner.
The truly successful business owner gets in the habit of seeing opportunity in the face of doom, gloom, and hopelessness!
- Reduction in cost
- Deals with suppliers
- Reduction in rent
- Labor cost reduction
- Provide Value = Get more Sales
- Companies are looking to save, if you can give them the value you’ll get the business
- Greater Pool of Qualified Labor
- You cold be able to hire great people for a fraction of the cost during boom times
- More Bang for your Creative Buck
- If you can offer customers a creative way to save they will appreciate it more than when times are good, and reward you with more business.
This is by no means a comprehensive list, but opportunity is there to make good in a bad time. It takes creativity, networking, a flexible strategy, and ability to expand to fit a market niche, but that should come easy to all of you as business owners and entrepreneurs.
What do you think? Are there opportunities in downturns? Share your ideas in the comments section.
Photo Credit: procsilas
A Page from the Inventor’s Notebook
Corrie Wilder is founder and Managing Partner of Grippies, and she graciously took time out of her busy schedule to share with us a day in the life of a small business entrepreneur. And actually she didn’t even need to share a whole day to give us an idea of of what goes through the mind of a small business owner countless times a day. Below is a glimpse inside Corrie’s diary, or as she calls it her “Inventors Notebook”, which gives us a first hand look at just one of the many challenges that face small business owners…managing customer expectations! We owe a big thanks to Corrie for sharing, so if you have a minute stop by Grippiesonline.com and check out her products!
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Each day is different, each day brings its successes and challenges, some days are easy and stress free when it comes to my business, some days are dark and scary. There is no day I could categorize as “typical,” other than the days I worry that my clients don’t get what they need the minute that they need it. For me, and for many small business owners, that’s typical.
One day in particular comes to mind when asked about what a day is like for an entrepreneur/small business owner. I’ve decided to share with you pages from my diary, my Inventor’s Notebook: (I highly recommend everyone to carry one around with them and jot down ideas any time they come to mind.
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“The little red light is blinking again. Generally I would stop whatever I am doing to get to my beloved BlackBerry, to answer the call, loving that someone out there truly needs me immediately. Or at least to learn about the new sale at Piperlime.
Only this time, I know deep down that is not another retail order on my site. It is not a 20% off coupon to my favorite children’s clothing store or the latest feed from my growing reading list. It is my very first “big client,” who placed our first OEM order, looking for their custom product. I don’t want to open the email because there is no answer for my client yet. I haven’t gotten confirmation from overseas regarding my artwork, and I truly have no idea when their product will reach the states for QC and shipping.
My client is a mom-owned small business like mine, but everything we have in common and the lovely relationship we’ve built over the past 4 months will go up in smoke if I cannot deliver their product for them to use at their trade show.
My face is getting warm. Thankfully for me, this client has never met me face to face—if this was an in person meeting rather than a follow up email she would see me ruddy, hear my voice crack and notice me shifting in my seat stumbling for the right words.”
This is a common challenge: eager clients (who pay!), the need and desire to satisfy the client, but not always having complete control of every step along the way. Taking my clients’ needs and goals to heart is good, but at what point should I take the emotion out of it? How do I calm this anxious client without coming across as insensitive, or worse, patronizing?
“I press ‘reply.’
‘Hi [client],
Your product will be in-house any day. I am awaiting confirmation paperwork, and as soon as that information arrives I will notify you immediately. In light of your upcoming tradeshow we will be sure to ship your product overnight through our account to give you as much time as possible to prepare for the show.
We appreciate your continued patience with production of your custom product. Please know we are working diligently to provide you…’
The red light starts blinking again. I click ‘save as draft’ and toggle to the inbox.
It’s the AWB. Overnight shipment from the factory to arrive on site by Tuesday.
I let out the breath I have been holding, and toggle back to my client’s email. I erase the original and start fresh.
‘Hi [client],
Your product will be in-house for final QC checking on Tuesday. In light of your upcoming tradeshow, we will ship your product to you using our express shipping account to give you as much time as possible to prepare.
We know you will be pleased with your product, and look forward to our continued relationship with your company.
Please share any feedback (and pictures) that you can of your experiences with the product and at the trade show. Your opinion is paramount to the growth of our business and evolution of our product.’”
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Maybe one day I’ll be able to let go of the things I can’t control and allow myself the satisfaction of harnessing those things I can. But for now, I’m just happy my client is happy.
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Small Business Owners vs. Working Stiffs
Ever wonder how small business owners match up against their “working stiff” counterparts in terms of pay? Here is some recent data from Payscale.com comparing those jobs identified as “Owner, Small Business” vs their non business owning counterparts. I was surprised at that there wasn’t a bigger separation in pay between the two groups. However, the statistics hold firm that about 50% of millionaires earned their wealth by building their own business.
The following is from Payscale.com as of 09/09/2008 (all data for the United States):
Median Salary by Years Experience – Job: Owner, Small Business
Median Salary by Employer Type – Job: Owner, Small Business
Median Salary by City – Job: Owner, Small Business
Median Salary by Job – Country: United States
Median Salary by Employer Type – Country: United States

Median Salary by Years Experience All Jobs- Country: United States
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