Is it a bad time to start a business?

By: Louise Tillotson

Date: 5 January 2012

The news has been dominated recently by the Government budget and its spending cuts. Austerity measures appear to be in place for large swathes of the population and growth prospects are poor, set in the context of rising inflation, employment and debts.

With this in mind, is it a bad time to set up a new business or are there good opportunities for savvy business people who are prepared to take a risk and capitalise on new opportunities?

Let's examine the evidence. The Government has revised its growth estimates down to less than 1%, with growth rates of 3% not expected until 2015.

More bad news - public sector pay rises are capped and pensions are under review. Additionally, public sector job losses are likely to top 710,000.

So, there is an environment of low growth and high unemployment, which means that potential entrepreneurs may be forced into starting new businesses rather than walking into new jobs!

Yet, there are rays of light on the business horizon. The budget included a credit easing programme for SMEs and start-ups to access new funding and business financing partnerships are to be put in place nationwide. Apprenticeships and young people will have extra funding, which offers opportunities for potential employers.

So, although the economic outlook is grim, there are positive things to focus on, particularly in terms of start up funding, to plug the gap that banks have left.

New businesses will generally look at finance as their first port of call, using their business plans as a basis for raising start-up cash and investment.

With a good business plan and a viable model, along with persistence and a lot of hard work, successful businesses can still be built and are being started up in droves, as more people lose the security of employment.

If you're looking to set up a new business, speak to a Government sponsored finance provider or a listening bank. You'll need to set up accounts for your initial loans and day-to-day transactions and there are a wide range of business bank accounts to choose from.

Speak to advisers about possible grants, as well as the Government sponsored advice schemes such as the national Business Link. There is a range of localised not-for-profit Government partners and privately run organisations that exist to help businesses start up and grow.

Get a mentor or business angel to help coach you in the early days. Network like crazy and build up contacts. Attend seminars, groups, coaching sessions, skills training and anything to build your experience, abilities and network.

Use technology to make your routes to market quicker, more direct and often cheaper than traditional face-to-face or direct print marketing routes. Look at online advertising and social media usage to generate publicity for your product or service.

Get good staff in. It can be part time or contract if you can't afford full-time, or employ young people and train them up. There's a generation of graduates at risk from becoming 'lost' to the economic downturn and they possess enthusiasm and raw talent, as do young apprentices.

Ultimately, there will never be a perfect time to start a new business. Some industries contract and others expand, even in a downturn. Opportunities will still arise. One other good tip is that if you work full time and don't want to risk giving up your job to start a new venture, build it up in your spare time initially until it's successful enough to go full time!

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