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5 Things to Know Before Starting a Business in the UK in Tough Economic Times

April 10, 2020 / Comments (0)

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I am writing this post as we are gripped in a pandemic that has seen us in a virtual global lockdown due to the coronavirus.

It makes you re-think business and actually living life as a whole and it teaches us all to prepare for more than the unexpected.

I have never witnessed anything like this in my life, despite surviving 3 recessions and a few other issues that I am sure would have flattened the most ardent of entrepreneurs.

Still, I have to stick to my entrepreneurial roots to try to overcome what is going on right now and try to help those who still want to get out there and start a business in the UK.

You must think I am mad to talk about starting a business in these times, but I have to think back to when my company suffered after the .com bubble burst and I started a technology software company during those tough times.

Why you might ask?

Well, it was simply a matter of combining what I should have done years before — diversifying and seeing an opportunity to co-found a business that was essentially recession-proof which I will cover later.

Moving on…

My friend Fernando Raymond said to me that he wanted every business owner in the UK to know who he is.

Add to that, a mission to get one-hundred million people online and you have some very strong commitments as well as some serious goals.

He doesn’t care about the economic climate and just powers through whatever is in front of him.

That is exactly what it takes to succeed in business and you must make sure you have your own goals and commitments accordingly, no matter what the economic climate throws at you.

I’ve written other articles on starting a business and in this one, I outline 7 steps to help you, so why am I writing another 5?

There are two reasons and one, is that there are literally hundreds of tips that you can give anyone who is starting their own company and the other is that I want to still inspire people who are/were thinking about starting a company, in really difficult, unprecedented and uncertain times.

#1 — Get those creative business ideas flowing

Life always goes on no matter what.

When the world is in chaos, there are huge opportunities and the saying “fortune favors the brave,” is certainly true.

Inventor-creative-ideas

But in a tough economic climate, how do we begin to even think about being able to capitalize on the numerous business ideas that may flow through our minds?

In simple terms, we need to remain calm and that of course, is certainly easier said than done.

When I experienced my first recession way back in the late 1980s, my business partner and I actually performed better than we did when times were booming.

Why?

Because we were under severe pressure and it brought out the best in us.

Some people crack under pressure and others thrive — why is that?

For me, there is no point succumbing to the inevitable — if you are going to fail, you might as well fail actually doing something and there are many opportunities to do something when people are gripped by fear and panic.

So get the ideas flowing and keep them flowing — as I said earlier about the technology software business I co-founded during a recession was a “no brainer” in terms of a value proposition as it optimized resources and saved money.

Two things that every business needs to do in a recession.

#2 — Get a business plan

You have to act quickly in tough times, but here is one thing that you will get more than in the good times — attention.

People are always looking for opportunities and when times get tough, there are many vultures out there trying to take advantage, but also there are many good opportunists who are willing to back the right ideas — work with the latter.

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If you want to get started with a business plan then take a look at this article from Business Wales.

You must also realize that most business plans lack one thing — passion.

How do you convey passion in what essentially is a formal document?

Write with passion and write in a manner that your investors (if you are writing the plan for investment) can feel your emotion and even if the plan is just for you and the business, you should do the same.

When I was at a low point at the start of my own main technology staffing business, I would often re-read the business plan, which was written for me, to keep me motivated and even re-reading what I had written personally, served to help me keep going through the tough patches that are part of any business start-up.

#3 — Get the finance you need

If you look at the economic landscape, you will realize that there is really no safe haven for investment.

If you have cash today, you need to stop the process of cash erosion and that means some form of investment.

This is why there is so much money floating about for business investment as many entrepreneurs and investors are looking for the next golden opportunity, so you have to look to woo those investors so they back your idea.

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How do you do it?

Well, it is simply a matter of creating a “no brainer” value proposition that shows a nice return for the investment you need.

I am not going to go into specifics here, but give you an overview of the thinking I believe you should adopt and it is a little different to most.

As an investor myself, I am amazed at the number of people I meet who want to offer small percentages of their company, for the money they need to get it started, as, without the investment, there is no company.

So make sure you incentive the investor.

If I as an investor, am taking the majority of the financial risk, then it follows that I take the majority of the financial reward…but…I am not greedy and once my investment has been repaid, I am more than willing to give the operator the lions share of the profits, depending on what role I am playing in the company.

Too many people are hell-bent on keeping worthless amounts of equity when they need money, and that is a big turn-off for investors.

In tough times, there are many investors who will jump on the bandwagon…but, beware of the vultures.

Here is a good article that explains the impact of recessions on investors, so you can get a perspective.

#4 — Recession-proof your business

Is there really such a thing?

Yes, absolutely.

You only have to think about what services and products you need in a recession to find the answers and if you are stuck, take a look at this article.

the article talks about industries that thrive in a recession and gives examples of stocks — you can draw your own conclusions as to where your business ideas fall into the categories and if not, it provides food for thought for further research.

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In simple terms…follow the money!

You absolutely must follow where the money is flowing to and a great way to understand this is to take a look at global stock markets and see where the investment is going and then find the sector that your business idea will fit.

Next, make sure that your business operation is as lean as possible and don’t take on any costs that do not directly benefit the customers that you serve — skip the latest “must-have” technology and bootstrap the process.

You can always add more, but it is difficult to take away, especially if you are committed to a contract.

Recession-proofing your business is about maintaining cash flow, keeping lean and ensuring that your pricing is in line with the market and take a look at this article — “7 strategies to grow sales during the toughest business times.”

#5 — Stay emotionally calm

You have taken a brave step to even consider starting a business during a recession or a tough economic climate.

Now you must make sure that you execute and get that startup off the ground and this is where you are going to run into a boat -load of noise and emotion.

Ignore it — at least as best as you can.

You need to work on two things — your entrepreneurial instinct and pure, cold and hard facts!

Success marries the two.

Ignore the people who tell you that you are crazy and equally be aware of all of the outwardly positive people who assure you of success.

Now here is a point I want to make, having been around the naysayers and the positive gurus.

Live in the real world and embrace reality — think of a battery and it would not function if there were not both negative and positive poles.

Life is the same.

Nature is the same.

And so is business.

I always stay on the side of what I term “positive reality” and that means I embrace positivity…but in the real world and where life is real — that is how I have survived the tough times.

Good luck on your journey and please connect with me if you want any further help or discussion on this or any other issue!

Neil Franklin


Last modified: May 29, 2020

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