Tuesday, February 24, 2009

Starting a new business in a recession?

Is it a good idea to start a new business in a recession?  I'm sure there are dozens of reasons to just do it and dozens of reasons to not.  What I have noticed, during the this recession, is that people flock towards where the money is, but where the money is, isn't necessarily where innovation or even best breed are.

The companies that thrive in a down economy are the ones that are most needed, the ones that provide the essentials of business.  One industry sector that is a conundrum, is information technology and especially the service providers.  Everyone nowadays is hopelessly dependent on their PC and the internet.  These tools are just about as vital as the phone.  You can't do business without it.  If you have an IT business or are one of those people in the back office that run the company, chances are you are some degree of job stability.  It's all relative, and this idea loses water when you get into big companies with a lot of bloat (unless you are lucky enough to be the government, which gets to print more money on demand from their tax in the form of credit ATM).

So if you have that business plan in your back pocket, just make sure that it fills a tangible need.  If you expect to survive in this economy, the name of the game is customer acquisition.  And if you don't already know this, to acquire a customer is to steal a customer from another vendor.  So don't worry so much about "innovation" or "break-through technologies."  With the financial markets at 10 year lows, competence will suffice.  Just make sure you are in the right field.

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