7 Tips for Starting a Business During a Recession

By Miranda Marquit

Maybe you’ve been thinking of starting a business, but you’re not sure now is the right time. After all, there’s been a lot of uncertainty recently, and you might be concerned that if a recession does come, you’ll lose out.

The good news is that a recession might be a great time to start a business. If you are careful about how you move forward, you might be surprised at what you can accomplish. Here are several tips for starting a business during a recession.

1. Focus on Solving a Problem

Your best bet is to start by finding a problem to solve. Even during a recession, there are needs. If you can find an issue that people are facing, and meet that need, your business is likely to thrive — no matter when you start it. When you focus on solving a problem, you’re far more likely to succeed and make it through any economic conditions.

2. Look for Good Deals

During a recession, just about everything is on sale. People are trying to save money, and prices are being cut left and right. Now is a good time for you to focus on finding good deals and negotiating better prices. Whether it’s a cheaper office space or lower-cost supplies, you can probably find better deals. Use this as a way to save money.

3. Take Advantage of Cheaper Debt

While you don’t want to go into deep debt when starting a business, it doesn’t mean that you can’t benefit from using a little leverage to move forward. During a recession, there’s a good chance that interest rates have been cut. The Fed is trying to stimulate the economy, and creditors are just trying to make money.

You can take advantage of this fact by borrowing at much lower rates. You do want to pay off your loans and credit cards as quickly as possible, no matter what, but if you need a little extra liquidity, now is the time to take advantage of low-cost debt.

4. Hire the Best

During a recession, you likely have more people to choose from. The talent pool for workers increases quite a lot. If you’re starting a business during a recession, this can benefit you. You might have access to talented people that otherwise wouldn’t be available in better economic times.

While this isn’t an excuse to underpay your employees, it does offer you options you didn’t have before. If you can offer fair pay, you’ll have more applicants during a recession, and this can be a big benefit to you and your fledgling business.

5. Turn to Family and Friends

You might be able to get funding for your business from family and friends during a recession. This is because some investors aren’t interested in keeping their money in the stock market — or even the bond market — during a recession. As a result, they might be willing to provide you with some funds, as long as you offer some equity or hope of a return.

This is also a possibility with some crowdfunding platforms and other investment opportunities. If you’re starting a business now, and you have a solid business plan and a good chance of success, you might be able to attract funding from those looking for alternative investments.

6. Focus on Productivity

Productivity is especially important if you start a business during a recession. You need to get the most out of all the time you spend on your business. With the right approach, this could mean a more cost-efficient approach.

As things pick up later, you’ll see better growth effects down the road. Do yourself a favor and figure out which actions account for the best results. Improving efficiency in your time use, as well as your financial decisions, can make a big difference when you’re starting a business, no matter the economic conditions around you.

7. Don’t Put it Off

When the economy is in the midst of a recession, it’s tempting to put off your dreams of starting a business. You might think that it’s better to wait until the time is more convenient or the economic environment has improved.

The truth is that there is no perfect time to start a business. There will always be challenges and downsides. You can always find an excuse to put it off. However, a recession can be a good time to get moving because you might feel more motivated to succeed, or you just might not have a choice.

No matter your circumstances, if you want to start a business, anytime is a good time to start. Don’t let a recession stand in the way of your success.