YES, it is a good idea to start a business in this economy!
October 5th, 2008 | Business Strategy,Start-up Help
In spite of the liquidity freeze and market scare we hear on TV, one thing we need to remember that small businesses are still the foundation of the US Economy. Here are some facts (source SBA Office of Advocacy):
- Small businesses make up more than 99% of all employers
- Small businesses create more than 50% of the non-farm gross domestic product (GDP).
- Small businesses employ about 50% of all private sector workers.
- Home-based businesses account for 53% of all small businesses.
- Four (4) years after start-up, half of all small businesses with employees remain open.
- Small businesses create 75% of the net new jobs in our economy.
Our current economic state may mean that banks will be much tighter when approving loans or may not provide loans for small businesses at all, but we need to remain cool headed and realistic. Banks never liked to give money to unproven entrepreneurs and it was never really that easy to get business loans with an unproven business model and shaky credit anyway, so this time is no different. Bottom line is that if your business is sound and you have excellent credit you’ll likely be able to get a loan now, as you were before.
When it comes to starting a business the first thing you need to rely on is YOURSELF. Do you have the drive? Do you have the will? Do you have the means? Do you have the idea?
At TSC we were never too crazy about jumping into VC and Bank loans right away. First off, VCs like to see that you have truly put in every last penny into your idea, because if you’re not behind it 100% then they are unlikely to risk what they have either. Second, with debt financing of any kind, there is a lot of pressure to start turning profit quickly so not to get into default and a quick bankruptcy, so initially any money you make goes to pay off debt. The truth is that any small business that needs to borrow on a monthly basis to remain open isn’t very healthy anyway.
In this uneasy economic state when even the titans and stalwarts of our economy, who should not be on the verge of collapse, are failing, it is not only sound, but also necessary, to think about how you will take charge of your future. Our great country started with the great entrepreneurs, and this financial crisis is a wake up call and a push to start taking matters into our own hands. For some it’s a job loss, for others uncertain future, for others is that drive to be their own boss. Whatever it is, make a declaration and promote yourself TODAY to be the CEO of your own dreams!
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