By The Sloan Brothers, StartupNation?
Thursday, September 26, 2003; 12:00pm EST
If you?ve read the paper or watched the news lately, you?d think that it is the worst possible time to start a business. Au contraire!
A closer look reveals that it?s actually the best of times to put the ?open? sign on your door. While everyone is moaning and groaning about a bad economy, we?re not, and you shouldn?t be either. There are far too many reasons why now is a great time to start and grow a business, and here are just a few.
Technology levels the playing field
The Internet and other communications technologies allow us ?little guys? to essentially act like much bigger players and easily and efficiently market and sell to a global audience. You can do business with anyone, anywhere, at any time and have more control over the information that customers receive. Remember, when people surf the Web, they often don?t look beyond your website to assess the credibility of your business. Your company size, location or age used to rule the day, but now the quality of your website can significantly influence perceptions and decisions. Don?t let the crash-and-burn fate of the ?dot bombers? fool you.
Technology is a game-changing resource, and it?s here to stay. Beyond the Internet, cellular communications, mobile emailing, a slew of highly efficient software solutions all add up to a big plus for small business. Corporate workers-turned-entrepreneurs, enterprising homemakers, ex-retirees, and college students are using it to their advantage to start their own successful businesses, and you can too.
Outsourcing from and to
This sweeping trend bears great opportunity for small businesses. ?Outsourcing? is when you contract with third party service vendors to provide business functions for your company instead of conducting those functions in-house.
Outsourcing ?from? your business
One thing we always talk about is ?focus.? It?s a discipline that can mean the difference between success and failure, especially in small businesses where resources are typically scarce. To aid you in focusing on your core capabilities?the aspects of your business that are unique and strategic?today you can take advantage of numerous service providers that allow you to outsource non-core functions such as logistics, accounting, IT services, payroll, public relations and more. It really helps you keep your eye on the ball! But here?s a word for the wise. Since you can?t just walk down the hall to oversee the quality and timeliness of outsourced work, be sure you continue to tightly manage whatever functions you outsource. Arrange for regular reporting to ensure accountability and effectiveness.
Outsourcing ?to? your business
The rigors of this economy are forcing corporate America to shed non-core functions. After all, corporations must find ways to maximize profitability, and with revenue down, they are forced to reduce their expenses. Outsourcing allows big companies to move ?fixed? costs to the ?variable? side. In essence, they pay for the outsourced functions only when they need them. This represents a trove of opportunity for your business. You can develop an entire business model centered on providing services that used to be in-house at big companies.
People, equipment, facilities are more affordable
For a few years, it was hard to find good people and even harder to afford them! But did you know that today, according to a recent study by the Economic Policy Institute (EPI), we are experiencing an unprecedented white-collar unemployment rate ? a whopping 20.1% of the total unemployed population. With the economy sputtering along as it is, there are more qualified people roaming the streets looking for work than there have been in a long time. It?s a complete flip-flop from the dotcom era. The same applies to office space. ?For Lease? signs are posted everywhere. Landlords are scrambling for tenants. It?s a buyer?s market and this puts you in the driver?s seat when negotiating your lease. Lastly, the new federal tax plans allow small businesses to claim a higher deduction for new equipment expenses. So what does all of this mean? You can hire better people, locate in nicer facilities, and utilize equipment LESS EXPENSIVELY than during the booming late 90?s.
Job security is at an all time low
Did you know that the average life of a corporate job for workers between the ages of 25 and 36 is now at an all time low of 2.7 years? And about that cushy retirement you might have heard your dad talk about? Well, it may not be the sure thing you expected ? put the recent corporate ethics debacles aside, and still, anytime a ?higher-up? is responsible for making decisions about your career, your future is more in someone else?s control than in your own. Don?t know about you, but that?s not our idea of ?security.? Take control of your future by starting up your business and putting job security in your own hands.
There?s less high-tech competition
In the aftermath of the dotcom era, we?re finding that there are actually fewer online and high-tech businesses vying for the same customers. Don?t get us wrong - we?re not saying you can just waltz into a deal without having to fight for it. But the fact is, only the fittest enterprises of the late 90?s survived. The Darwinian competition was so intense during that business cycle that you couldn?t even get a prospective customer's attention. These days, though, you can get peoples? attention, get in the door, and maybe strike a business deal. It might be a smaller deal than you?d like, but if you want our advice, we say, grab market share now! Things are going to heat up in the months to come and it won?t be this easy to make your business pitch when the competition has grown strong again.
Companies must adhere to fundamentals
In this tough economy, you have to generate revenue and cash flow through a solid business plan. It?s no longer the 90?s era when you had venture capitalists pouring money into your company even if you didn?t have the fundamentals in place. As we say on StartupNation? Radio, ?don?t buy into your own hype.? This economy forces you to be disciplined but in a very healthy way; you must do things the most inexpensive, efficient and effective way possible. It makes you try harder and really commit yourself to your business. Companies built on this kind of culture are the ones that have a more secure, long-term future?a stark contrast to the destiny of those ?here today, gone tomorrow? (or maybe more accurately, ?here yesterday, gone today?) high-flyers born in the dotcom era.
Play the business cycle to your advantage
As you can see, we feel very strongly about the many opportunities that exist in today?s economy. Some of our fellow entrepreneurs are already seizing the day. According to the Small Business Administration, new small businesses increased by approximately 2.7 percent in 2002. But if all the reasons we?ve provided here still don?t compel you, then consider this: Some of the nation?s fastest growing businesses were launched during downturns in the economy, just ahead of growth spurts?like Microsoft, for example?and were poised for significant benefit when the volume of commerce revved up.
One thing you can be sure of is that business goes in cycles. The companies that establish themselves with valuable, streamlined products and services and strong customer relationships in a down economy are in prime position once the economy kicks back into gear.
So, don?t delay. If you?ve been thinking about pursuing that great business idea, now?s the time to start it up!
Source of Article
Jeff and Rich Sloan are successful entrepreneurs, venture capitalists and two of the country?s top entrepreneurship experts. They founded StartupNation, LLC to provide information and coaching services to entrepreneurs on a nationwide level via various media venues. For more information please visit, http://www. startupnation. com/ or write to info@startupnation. com.