Would You Go Into Business For Yourself During This Recession?

by Jacques Sprenger on January 16, 2009

The recession is in full swing. Do you have the guts to go into business for yourself?

I recently read a magazine article that surprised me, although I should be surprise-free after so many years. In the middle of one of the worst economic downturns, with jobless rates above 7%, several people have made a ton of money by designing applications for the iPhone. What’s even more interesting is that Apple itself is participating by taking a share of the profits (they allow the products to be sold in Apple stores).

Many of these inventors are of course software designers, but their creations are relatively small stuff, such as, believe or not, imitating the sound of sloshing water when moving the iPhone (there are other sounds they’re imitating, but let’s not go there).

Now, if you, the consumers, are willing to pay $1 for my application, I receive about 70 cents after paying Apple. More than 5 million of these technical marvels have been sold, so multiply 70 cents by, let’s say, one hundred thousand — that’s $700,000 smackeroos for a silly little program! Why bother to work at a desk pushing paper around when all I have to do is wait for more customers and ride the coattails of Apple’s fabulous advertising?

go into business for yourself, entrepreneurship

Would You Go Into Business For Yourself?

OK, so most of us are not tech savvy; I have trouble connecting the DVD to the TV (much less worry about a Blu-Ray DVD Player) and the modern electronic jargon and high-tech toys are way over my head (Nintendo Wii anybody?). But have you ever considered leaving the warm and fuzzy comfort of your humongous corporation to fly solo, especially during this unpredictable economic recession? Do you have a talent or skill like the aforementioned iPhone engineers have, that may enable you to capitalize on opportunities such as those Apple has presented?

Could now be a good time to think about it? Given the cost cutting going on in companies these days, you never know if your company has plans to downsize. Who knows…your company just might make you an ex-employee, so why not have the upper hand and jump ship first?

Here’s an interesting story about Google and one of its employees who has left on his own volition recently: “Jason Shellen says he left Google because the chance to build something new outweighed the need for stability,” says a recent CNN story on the Web. Shellen added: “Being an entrepreneur is all about risk and innovation, not timing the market.”

There are people out there leaving their comfortable jobs to take risks, despite the economic environment. Well, they’ve got courage… and maybe a tidy sum of money to tide them over while they go “do their thing”.

The Risks and Rewards of Starting A Business During This Recession

So is there ever a right time to start a business? Recession or no recession, each year in the U.S. 600,000 new small businesses are formed. Of these, 40% last for only 4 years, according to the Small Business Administration. But the numbers don’t actually take into account individuals who work from their homes (like me) who haven’t yet filed their income tax forms after incorporating their perfect hobby as a business. It seems that a good number of us are willing to take the risk to be our own bosses. Glad to know that the recession isn’t about to stomp on the dreams of so many just yet.

Now those entrepreneurs who are prospering despite the downturn have a few things up their sleeve. What do we know about them? “Some businesses founded this year are prospering because they are in a niche that’s in demand in a downturn,” says an article online by the Salt Lake Tribune. They proceed with several examples of brave people who opened their own businesses during the last 3 months of 2008. One courageous lady who got laid off earlier in the year opened a used teen clothing store (!) in Dallas and is doing well. A year ago it would have been sheer lunacy, but with the severe downturn, even well-off families are not ashamed of buying used clothing. The key, obviously, is to find your niche, an elegant French word that is also used in architecture (recessed space in the wall). Find out what people need under the new economic conditions and what their new financial behavior is going to be.

Some Small Business Ideas

Take a look at “Best Small Businesses to Start,” where you can learn from successful small entrepreneurs; you will find out that these pioneers are following trends very carefully to determine what kind of business is likely to succeed. For example, more and more baby boomers require home health care, an ideal niche for a small business that has qualified personnel. The area of freelance web writers is also included, and from what I see on the Internet, the demand is rising because you can get cheaper prices by auctioning your writing needs. With some luck and lots of hard work, your ideas can make you successful!

If you are going to invest in or already have started your own business, please drop us a line. Let’s share our experiences and learn from each other.

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{ 6 comments… read them below or add one }

1 poor boomer January 16, 2009 at 11:38 pm

I would if I could.

2 Tom January 18, 2009 at 1:53 pm

If you’ve been let go and received some kind of package, it could be a great time to start a business.
Now that other businesses are going broke, there’s less competition – if you’re fairly savvy, it could be the time to take advantage of this.

3 Jacques Sprenger January 20, 2009 at 12:36 pm

Tom, you are absolutely right; I should have thought of that. People under 50 who receive some kind of generous severance pay should seriously consider opening their own business. As you accurately state, there is less and less competition, as the crisis is weeding out the poorly run small businesses. Just do your homework and take advantage of your specific skills.

4 Susan (5 Minutes for Mom) October 26, 2009 at 12:28 am

Starting a business is not for everyone, though. Before you start a business, take an honest, hard and very long look at yourself and your strengths and weaknesses.

5 Duncan November 13, 2009 at 7:58 pm

I did this successfully. Granted, it takes a lot of hard work and dedication to your product or service, but it is certainly achievable and the benefits far outweigh the fear of failure or uncertainty.

Age, experience, etc. are in my mind, excuses for not trying — granted I had 17 years experience in senior marketing roles before going on my own, but I have seen people of all ages develop successful businesses. It is more about attitude and desire than age or experience.

6 Jess June 9, 2010 at 7:09 am

If you’re planning on going into business for yourself, for whatever reason, get some formal business training at the very least. Maybe you have passion for something and that is essential but you’ve got to learn about the nitty gritty aspect of running a business too. A business won’t survive on passion alone.

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