Born In A Storm

Being from Scotland I do enjoy the odd bit of Tartan Rock, and the title of this entry comes from a line in Deacon Blue's first song on their debut album Raintown, and it was the first thing that popped into my head when I was thinking about my dilemma.

I think about and am asked constantly if starting a new business in a recession is actually a good idea. Times are definitely tough as any self respecting reader of Robert Peston's blog will no doubt attest. Its tough for companies and individuals who have been purveying or using debt and their associated partners that use debt as a marketing tool to actually sell their goods like car companies, carpet & curtain shops. Even yesterday with the announcement of US job figures these stories are no longer just economic data - they're real people with families and mortgages, with hope easing out the door with every other day they don't have a job.

I remember a recent study into long term happiness, and it indicating that no matter life's events, people return to an equilibrium of happiness. Time it seems does heal. Except for one thing... long term unemployment...

And the thought of redundancy and unemployment is beginning to enter my world. A friend in the States' job has been made redundant, my company has announced a future cost saving initiative which indicates job losses at some stage, so its all becoming more real.

So how could I ever think about establishing a business in the wilds of a global economic storm?

Actually what better time to start? Have I gone completely mental - here's some thoughts...

Demand will be weaker in a downturn, so any sales during this part of the cycle show that this idea really does work. And if it doesn't work, I haven't built up a false luxury of success just because people have loads of cash spilling about.

The reward is actually greater - Reading blogs & articles on recession, it all seems to be about keeping lean and being keen. Keeping costs right down to the minimum - and I mean the minimum! How can we get away with what we need? Literally questioning and challenging every single pence in the proposed budget. And then fighting hard for every single pound earned - fighting to get it and fighting to keep it! And we all know that winning hard has a better feeling than winning easy.

Investment dries up - Investment will be harder to find, but that actually may be a good thing. If investment was plentiful, as it was 2 years ago when I first had one of these ideas, then my business plan reflected that with spend, spend, spend to build awareness and get scale quickly. Now with money tighter I've worked hard to understand what I can do myself to build small and build up. I'm more likely to sort out all the problems first when its small and not risk losing a fortune, and then once the problems are ironed out make money in the short term, prove that it works, and then once its working & making money then look to scale it up (only if the numbers fit!).

And there's evidence to support the idea that recessions can be a good time to start - Microsoft & Oracle both started in recessions, and both were "revolutionary" companies, bucking the established way of making money in their sectors, finding new, better & more efficient ways to make their businesses work versus the more conservative companies. But that doesn't necessarily prove the rule. Nobody ever celebrates the failures, they just get buried without the fanfare...