Home Bad time to start a business? Bah! Humbug!

Bad time to start a business? Bah! Humbug!

AzCentral is suggesting that right now, the “times are too risky to start a business.” I couldn’t disagree more.

Look, the economy might not be that great, but the last company I started was founded in May of 2001. Anyone remember the state of the economy a few months later? Say around September of 2001? As they say, what doesn’t kill you makes you stronger… and I firmly believe that businesses started in a less than ideal economic climate– if they survive the first year– have a much stronger chance of prospering in the long run. The reason? Because they learned right from the start to keep costs down, and not let their plans for growth outstrip their available resources. They learned to run lean, and they tend not to take on a bunch of long-term expenses as a result of short-term prospects. (When those short-term prospects dry up, where are you? Your expenses are higher, but your revenues are right where they started!)

It’s funny to me, especially when the economy is good, how many people forget a simple equation:

Profits = Revenues - Costs

Everyone spends time trying to increase revenues… but there’s not enough focus in many small businesses on the other variable: costs. Reducing costs automatically increases profits– and it’s usually easier to do than increasing revenues. Companies that start when times are tough have a built-in conservatism that can last the life of their business. It’s like the curmugeonly old man who pinches pennies like a miser because he lived through the depression: he never escapes that mindset.

So take the plunge– don’t let the economic climate scare you off from starting a business. Do your homework, know what the risks are up front, and make it happen.

This post is licensed under CC BY 4.0 by the author.