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Tuesday, November 2, 2010

Starting a Business in a Recession

Starting a business in a recession might seem counter-intuitive. However, history shows that economic slow downs have been fertile ground for new business start-ups. Many companies started in economic downturns including Google and General Electric. A good idea is a good idea. A recession might just be the right time to bring that idea to market.


Financial need is a strong impetus. Maybe you are unemployed or underemployed. You’ve been mulling over a business venture for years but you never had time or you felt tied to a secure paycheck. The recession might just be the push you need.

Getting started is cheaper. Prices often drop in a recession. You’ll find or be able to negotiate good prices on equipment and supplies. Office space is plentiful and less expensive. To keep costs low you might want to start your business in your home.

With high unemployment, qualified talented people are available. They, like you, will be highly motivated to make the business work.

It is easier to find partners. Maybe you don’t want to go it alone. There are others like you who would savor the opportunity to start something new. A partner would spread the investment risk and could complement your talents.

Friends and family may be looking for investments other than the stock market. Returns on money market accounts and other saving vehicles are extremely low. If you have a clear, viable business plan, your family and friends may help finance some of your venture.

Competitors are weakened. The status quo may not be working for companies. Operating companies are more willing to look for changes in suppliers, seeking more cost effective and innovative partnerships. A new company will have a chance to step in.

You’ll face less competition. Most people are reviewing why they can’t or shouldn’t start a new business now.

Starting in a slowdown shows your faith in business. Your optimism will help sell your product. Laying the groundwork in a recession will position you to take advantage of the inevitable upturn.

IRS Circular 230 Disclosure

Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender or Sandra G Johnson, CPA, P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.


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