Starting Up a Business During The Recession
The UK recession has impacted upon a number of different economic variables, including employment, interest rates, inflation, VAT, plus much more. Today I’m going to cover the effects of such variables on start-up businesses, and shall also address the question of whether or not it is wise to start a business during the economic recession. But firstly, we need to know exactly what we are referring to when we talk about the UK recession.
What Is A Recession?
Although there is no solid definition of a recession, due to the vast amount of contributing factors and subjectivity of opinions, it can be identified as a period of negative economic growth. Obviously there are a series of UK recession which have occurred throughout history, for example, post World War II. However, the most recent UK economic recession officially began at the end of 2008, and it has resulted in both radical and devastating effects.
So why would anyone want to start up a business during an economic downturn? If you have an excellent idea for a new business then the economic climate does not necessarily have to be a barrier. There is no need to give up on your dream. All you need to do is review your business plan again, do some research and think smartly; take into account the factors which are likely to directly affect your business and act accordingly. For example, you may need to reduce the prices you were planning on charging for your products / services, so they will be more affordable for your target audience. During the recession people will be looking for value for money, and their product / service preferences may even alter completely as their priorities may change. Providing affordable luxury products / services would go a long way during the recession.
The extent of the variables which may affect your business start-up will depend on the type of business you want to start up and which area of the UK you will be based in, so you may want to look at demographic data too. For example, what is the level of unemployment like within the area you are going to be located? This may have lead to consequences where your recruitment and selection process is concerned.
You will also need to review your start-up financing strategy. Interest rates during this time may affect your obtainment of a bank loan or overdraft. And essentially, you do not want to be in a position of financial vulnerability once the recession is over! It may be a good idea to look into alternative sources of finance wherever possible, such as personal savings or loans from friends / family, as interest would not typically be an issue here.
The Future of Your Business
In essence, as well as planning accordingly for the economic factors which may affect your business during the economic recession, is it also important to bear in mind that this recession will not last forever. You must be prepared for our emergence, so that your business will continue to run efficiently. Effective adaptively to external forces and change is key here.
Does anyone have any advice on which external forces may affect certain types of businesses? Or maybe even tips on how to prepare for our emergence? Comments are welcome!