First, if you are putting capital at risk, you absolutely, positively need to create a business plan (see http://bestbizpractices.org/2009/05/20/is-a-written-business-plan-really-necessary/). By creating a thorough business plan, you will usually discover problems BEFORE putting your capital at risk rather than AFTER, when it is too late to do something about it.

Second, there is great help available from experienced and skilled advisers free of charge for those that don’t already know everything (see http://bestbizpractices.org/2009/08/03/small-business-scores-big/). You can lead a horse to water but you can’t get him in a swimsuit. :-)

1) Everyone is more conservative with their money, including banks. If you don’t have near perfect credit, you will have a hard time finding a traditional bank to loan you a significant amount of money. Venture capitalists are looking for near guaranteed ROI’s before they are willing to get involved.

2) If you have never started a business before, you are more than likely going to underestimate everything. The amount of time needed, the amount of money needed and the amount of work needed. During these times, you need at least 6 months of working capital if not more before you start your business. What ever you have in mind, double it!

3) Make sure that you are not building a business with the mindset of a “bull market” like the past. People are not buying into ideas and widgets like they did over a year ago. Customers are more critical, and conservative. If one is to build a business now, I would recommend aligning your business model to what is happening now in the market, and not what made your friend successful 10 years ago.

4) Networking, marketing and public relations are the most important key aspects to your chance of success. Make sure you or an individual within your team has the skills/talent to woo the right people.

1. It gives a company the longest possible time between market slumps to gain value, market share and capital.
2. A company can perfect customer experience and systems during the slower and rebound phase of the economic cycle, i.e. when it is boom time you are ready to go, and not trying to fix systems and manage growth at the same time.
3. Like you mentioned, it can be easier to recruit ‘A’ players in a slow economy.
4. Customers are more likely to be on the look out for less expensive and easier ways of doing things, meaning (depending on what you offer) growing your market share is ‘potentially’ easier.
5. Many ‘Big’ companies are scaling back, reducing marketing, sales, and front line staffing budgets, and more importantly innovative projects meaning they could be even slower to react to a new innovative player in their market.

I agree that a recession can be a double edged sword and one needs to be extra cautious about cash flow. As a budding young entrepreneur I take yours and others advice on board, but for the reasons above and the positive ones you outlined I am excited about the next 5-8 years ahead of me.

Thanks again
Josh Mackey
Passionate about innovating, communicating, and executing great customer experiences.
josh.mackey@ymail.com
http://twitter.com/joshmackey

Thanks again for the resources.

Have a fantastic rest of the week!