To be an entrepreneur in any market is a brave move but to be someone who starts and grows a new business in an uncertain market is even more impressive. While some might say that it’s easier to start a business in a recession, the truth is that you can do it in any economic climate and why it can be worth checking out very bad credit loans direct lenders depending on your situation.
If you’re considering starting your own business or are already in the early stages of growth, here are seven strategies that can help you succeed:
1. Have a Strong Business Plan
A detailed business plan is essential for any new business, even more so in a recessionary climate. Your business plan should be clear and concise, outlining your unique selling proposition (USP) and how you intend to take advantage of market opportunities.
It should also include financial projections and contingency plans if things don’t go as expected. Review your finance regularly and consolidate them where necessary.
If you’re already trading, but things have slowed down, take a look at your business plan and make sure it’s still fit for purpose.
2. Get the Proper Funding in Place
Start-ups often struggle to get loans from banks, which can significantly hinder growth. However, other options are available, such as crowdfunding, UK government loans and commercial loans from specialist lenders. More on funding is below.
3. Don’t Underestimate the Importance of Marketing
To succeed, you must get your business seen by as many potential customers as possible. This means having a well-thought-out marketing strategy that considers the current economic climate and how you can stand out from the competition.
Luckily marketing doesn’t have to be a massive part of your budget. Thanks to social media, your campaign can take on a life of its own, given the right content and audience.
Using your USP, research current trends and combine them to create a unique marketing strategy to help you reach your target market. Then be consistent.
If you’re posting on Instagram and Tiktok, do it daily and don’t forget emerging marketing tools available at Meta that use augmented reality to reach millennials and GenZ.
4. Focus on Cash Flow
In any business, but particularly during tough economic times, it’s essential to monitor your cash flow closely. Monitoring means knowing what money is coming in and going out regularly.
Keep track of receivables and payables and ensure you have enough cash to cover unexpected expenses. And know who to turn to if you need some money to keep you going in the short term.
5. Keep Overhead Costs Low
Keeping your overhead costs as low as possible when starting or growing a business is a sensible strategic move. Low overheads include office space and staff salaries, advertising and travel expenses.
One way to keep costs down is by working remotely or using co-working spaces instead of renting your own office. And if you do need to travel for business, look for creative ways to offset the cost, such as bartering your services.
Once established and your business is doing well, invest in proper financial advice and an experienced tax accountant.
6. Review your Pricing Strategy
If you’re starting a new business, it’s crucial to have a pricing strategy that aligns with your costs and the current market conditions. Research is vital when setting your fees. By doing a competitive analysis, you know how much others in your sector are charging, and from there, you can work on your competitive edge.
Many businesses feel obliged to lower their fees or price structure to stay competitive in an economic crisis or recessionary climate. However, this isn’t always possible or desirable.
Assess your costs carefully and price your products or services accordingly. Always offer some added value, deliver earlier than expected or add something to your service that makes you stand out.
7. Make Use of Loans and Other Funding Options
Several loans and other funding options are available to businesses, including start-ups, but often strings are attached. Start-up funds may only be available in specific business sectors. Currently, these are green energy and sustainable businesses.
In the UK, the government offers loans for businesses with low credit scores through the Enterprise Finance Guarantee Scheme. And in the US, the Small Business Administration (SBA) offers loans and other assistance to small businesses.
Even if your credit score is poor and you find it difficult to secure finance, make a list of options that are available to you, for instance:
- Business loans through high-street banks
- Direct finance through specialist lenders
- Government-backed schemes
- Bank of mum and dad
Once you know the available options, you can concentrate on the business.
Be Prepared to Fail
No one likes to think about failure, but it’s better to be prepared for it nonetheless. In fact, many successful entrepreneurs have failed numerous times before achieving success.
What makes them unique is their capacity to grow from their mistakes and push on forward. Therefore, if you fail, don’t give up; instead, take it as a chance to improve.
While there are no guarantees in business, following these seven strategies can help you navigate a recessionary climate and come out on top.
In Winston Churchill’s words, “failure and success are not final; what matters is the fortitude to move on.”
What other strategies have you used to grow your business during tough economical times? Share your thoughts in the comments below.