Crazy Times, Conservative Practises

We’ve been watching the economy closely since the start of the year, and the economy has looked more like a basketball game than a predictable trend. The brightest Ph.D.’s have resorted to educated guessing in their economic forecasts as the variables associated with this downturn are unpredictable and new to trendsetters.

Regardless of the messages we’re given by the media or forecasters, business owners need to prepare. While the stock market may have crashed weeks ago, the effects of that crash will not be known until early 2009 or later. Planning for “worst case scenarios” now will prepare you and your business for what may or may not happen in the future. Amongst the planning you’ll engage in, take stock in the connections and hidden opportunities that you may not have taken the time to investigate.

The Duct Tape Guru offers the following advice for harvesting new business in hard economic times: 

1) List the people you know now. What professional communities, networks, and social groups are you part of? Make a list of contacts. If they’re close, talk to them about your business goals. If they’re more distant contacts, send them an email or phone call to remind them of who you are and what you do. Ask around if anyone needs what you have to offer. Your core networks often harbor unexpected opportunities.

2) List the people you knew in the past. Dredge up old clients, leads, colleagues, schoolmates, and other contacts you haven’t talked to in a while. Send them a brief hello and blurb about your business. If possible, offer them a service or product discount that they can either use themselves or pass on to other people they knows.

3) Seek the strangers you don’t know yet. Do you blog, Twitter, podcast, or use any other form of media to broadcast the contents of your brain into the vast world of the Web? If so, this is a key time to promote you. Leave intelligent comments on blogs you admire with a link to your homepage. Create a new or unexpected form of media—a video, for example—to enliven dormant fans. Promote yourself in discussion forums. Update your Facebook and LinkedIn profiles. Drive organic, quality attention to yourself and your business.

4) Understand the things you need. Are you connected in any way to products that people need, no matter what? For example, household cleaning supplies? Personal hygiene supplies? School and office supplies? These industries will stay steady through a bad economy. If you sell these supplies, think about beefing up your stock of bargain supplies or generics. If you own a website, think about how you could monetize the promotion of recession-proof supplies. If you provide a recession-proof service, think about how you can improve your market position and drive the kind of business you want your way.

5) Know the things that hurt. What is your client’s “pain,” and how do you address it? Chances are, people will hurt more during a recession. How can you improve your services to address pain even more effectively? For example, if you’re a therapist losing your client base after marking up your prices (by necessity) to $95/hour, think about the alternatives you could offer. Could you facilitate a support group for $40/session/person? Could you offer mini-tune-ups to cash-strapped clients for $25/20 minutes? Could you offer package discounts? What about a cheaper email or IM counseling service?

Recessions don’t have to dictate an end to your fortunes. In fact, if you stay flexible and creative, opportunity abounds. 

NO FREE GRANT FUNDS

Opening a business and being one’s own boss is as much a part of the American dream as owning a home. In fact, being self employed or an entrepreneur is gaining a great amount of attention in this country’s economy. Citizens of this country are blessed with the freedom to start a business and enter an endless number of markets.

However, opening and running a business is not as easy as many make it seem. If you have flipped channels in the middle of the night, a funny looking man with question marks on his clothes lure others into the idea that there are numerous funds available for people to start their own businesses or that you can earn thousands working from home. This gentleman along with other copy cats are selling you untruths in order to sell their own books or services.

Business service providers, like the Innovation and Entrepreneurship Center or the Small Business Development Centers, wish there were easier ways to finance a business like the infomercials suggest. However, the reality is there are no free grant funds for people to start or grow their businesses. There are a small number of technology grants available to companies willing to engage in research and development for departments of the Federal government. These grant funds are highly competitive and come with many strings attached to the funding.

Moving forward on a business, the entrepreneur needs to be prepared to address the financial needs for the business. He/she needs to be able to sustain their personal finances first before moving toward opening the business. Rarely is a business profitable as quickly as the entrepreneur may think. Planning to sustain personal finances is the first step in starting the business.

In the planning process of opening the business, the entrepreneur should prepare conservative financial statements. These financial statements should identify how much capital is needed to start the business. If the company requires more funds than the entrepreneur has, then he needs to seek outside financing to help open the doors. Usually, a business will seek out a business loan to help pay for the materials, inventory or equipment needed to operate the business.

The first place an entrepreneur should look for additional capital in starting their business is through what is commonly called “friends, family and fools (fff).” This form of capital is the easiest to find and obtain. After seeking support from friends or family, bank loans are then sought out for the business. If your business is entering a fast growth industry and your capital requirements are great, then venture or angel funding may be necessary.

Regardless of the type of capital source the business seeks, the entrepreneur needs to prepare a business plan, sound financial statements, and form a solid management team for the business. In addition to preparing the business for capital, the business owner must prepare their own financial worthiness. A good credit score or a cleaned-up credit report will be needed for the business.

Before jumping into a business idea, the first step towards understanding business capital comes with learning as much as possible about the options, opportunities and the requirements of money and one’s business. Utilizing resources like the Small Business Development Center or the Innovation and Entrepreneurship Center are good places to start.