Navigating The Business Start Up In A Recession

Filed in archive Start Up on July 17, 2009

© TheGirlsNY

On June 29, the Bureau of Economic Analysis of the U.S. Department of Commerce reported that U.S. gross domestic product declined by 5.5% in the first quarter of 2009. This follows declines in the third and fourth quarters of 2008 of around 6%. Yes, Virginia, there is a recession and a pretty serious one at that.

On the bright side, to put things in perspective, during the 1930's, in the "Great Depression" real GDP declined by some 33% in the first four years of the decade and then another 18% dip near the end of the decade.

Upset and un- or underemployed workers across the country are asking whether now is the time to break out on their own and start their own business. Recessions can be a good time to start a business. Why?

• Office Space is Cheap and Plentiful - In most markets, retail, commercial and office space is at the lowest level in decades. Even in boom markets like Washington and New York.


• Your New Business does not Have Your Competitors' Overhead - Established businesses are locked into leases, suppliers, employees and a myriad of commitments made during years of plenty. Your new business has much lower overhead having been established in a buyer's market and you have greater control of overhead. For example, consider refurbished computers and laptops instead of new. Sites like Dell's online outlet site even offer warranties on such equipment.


• Businesses Looking to Lower Costs and Increase Service Will Consider Your Company - It is called a flight to quality. Long-term, buddy-buddy, relationships based more on nepotism and malaise will give way to relationships built on price and service.

Fox Business had a great article a few weeks back discussing some of the reasons and the consideration to be given to starting your own business. Bottom line: find a niche, make sure you can do it cheaper and better, market, work, sell, market, and sell more.

Finally, consider a few companies that started back during the depression:

• Advance Auto Parts - 1932, and in 2003 part of the Fortune 500.


• Geophysical Service Incorporated - 1930, forerunner and in 1951 renamed to Texas Instruments.


• Westin Hotels - 1930, today it owns over 120 hotels worldwide.


• Ryder - launched in 1933 by three brothers in Miami to haul cement.


• National Allied Publications - 1935, later evolving into DC Comics.

There were failures too, and some great companies have not made it to today, but the point is it can be done.