Each day, we hear stories about long-term employees who are laid off, businesses that are closing their doors, depleted savings accounts and high unemployment rates. Many times, a laid-off worker decides that now is the time to become a consultant, branch out on his own and build his own business success story. Some of those bitten with the "entrepreneurial spirit" do thrive -- and some just fall flat on their faces.
What exactly is an entrepreneur? Translated from its French roots, it means "one who undertakes." The term "entrepreneur" refers to "anyone who undertakes the organization and management of an enterprise involving independence and risk, as well as the opportunity for profit," according to Young Entrepreneur, which is a social networking forum.
The founders of the forum, brothers Matthew and Adam Toren, offer the following tips for someone who's starting a business on the heels of a rough economy: Have a realistic plan; think outside the box, because you need a fresh angle; time management is a crucial skill; communicate and get your message out there; over-deliver, because going above and beyond helps build strong client relationships; capitalize on the counsel of people who are experienced in business; leverage all of your assets -- including finances, contacts, references and business relationships and associations; use and stay on top of all the technological tools available to you; keep researching your business and field; and never give up, and focus on that tangible goal.
Many would-be entrepreneurs have been forced to "tighten belts" and find more innovative methods to earn a living. Though folks may put off buying cars and clothing, necessary services -- such as dentists, garbage collection, financial consulting and emergency response -- cannot be ignored. Savvy business owners can take advantage of less expensive staff and products to build their own foundations; historically, recessions are short periods (all things being relative) followed by years and decades of economic surges and abundance.
Be careful; many new businesses don't make it through the first year. "Typically, it's because they started the business on a whim and got excited about an opportunity but didn't do the proper research," Adam Toren says. "These entrepreneurs usually run out of money and close down after a few months."
Adam stresses the importance of realistic goals, research and dedication. "A second challenge is getting through year two," he says. "It usually takes three years of hard work to make a business. Year one is all about the excitement of getting started. You're high on energy and ready to take on the world. In year two, entrepreneurs often find themselves still not making much money, and the startup excitement has faded. You'll need to work your way through the downturn and know that the money is coming if you keep at it."
Being vigilant about money during the recession is imperative, whether you have just started building your business or are keeping one from failing. Ideally, you've ensured that you have adequate startup capital or available funds to tide you over. Running the business on a part-time basis with an additional income source (aka a job) may be a viable option. Hiring part-time staff or relying on a pool of workers who typically demand less in salary, such as high-school kids, helps to reduce your overhead costs. Diversify your business; if you can do more, chances are you will get more jobs to do. You may need to "reinvent" yourself and your business. Use downtime to solidify your business and personal relationships and you will find a stronger loyalty base in the long run.
"Compiling a formal business plan can be a daunting task for an entrepreneur," the Torens say. A business plan is necessary, though, to help keep you focused and moving forward. Set realistic goals and timetables; be conservative in your projections; be aware of your business competition; and spend time learning more about your business.
"Forget the hype," Matthew says. "People looking at your business plan want to see hard, solid facts backed up by very reasonable assumptions. Set milestones. Show which tasks you've established. And apply sound logic to your reasoning."
It helps to love what you are doing and have work experience in the field. The work experience will give you knowledge about what works, and the love will help keep you going.