How to start a business in challenging times

Although it may seem counterintuitive, turbulent economic times can bring new opportunities. For some a change in employment status, this may bring to fruition an idea that’s been burning. For others a new idea may be born out of a crisis causing changes to consumer behaviour.

Starting a business during tougher times can keep you focused on stepping out on the right footing as more so than ever, proper planning, financial forecasting and future proofing is essential for the business to succeed. The learnings from this difficult period will stand business owners in good stead to tackle challenges they face in future.

Here we summarise some key considerations to help you get things moving.

1. Is running your own business right for you?

While running a business can be rewarding, it’s a challenge requiring personal drive and resilience.

At the beginning, and in some cases for many years, you may be the only person driving the business forward until your income justifies hiring staff. How much time do you have to give? Do you want to work part time or full time? What financial resources do you have to start up and are these sufficient to cover your overheads and outgoings? How will you juggle working with family and other commitments?

You might find our article on Considerations for starting your own business useful in working through this thought process and asking yourself some hard questions before taking the leap.

2. Do your market research

Is your idea viable now in the current economic and technological environment? What might have worked as a business model before may need some diversification to remain profitable in line with changes in consumer behaviour. Perhaps you can offer a solution to a new gap in the market. Many existing business owners have to adapt their product or service to stay relevant and profitable.

Start-ups however, while small and not tied to a premise or without the responsibility for many employees, can be flexible, nimble and creative, moulding a business idea to fit new marketplaces.

A good way of testing your idea would be to carry out some research with your target customers. Talk to them and find out if what you want to sell is something they'd be interested in buying, and if so, what they'd pay for the product or service. Where would they be most likely to buy it? Online or in person?

Once you've sense checked your idea, you can use the same process to develop and validate your business name and branding. Does it strike the right tone and have the impact you hope for? This is your opportunity to get it right.

3. Write a business plan

See this as a validation exercise - a way of demonstrating you have a thorough understanding of your business and product or service. It will help you understand pricing, what you need to do to break even or make a profit. You may require a business plan when applying for financial support or funding and it will demonstrate to potential partners, distributors and suppliers that everything has been thoroughly thought through.

Our video tutorials on bringing your business idea to life and business planning provide more guidance on carrying out market research and naming your business.

4. Forecast your financial needs

Most businesses fail because their finances put them under pressure and that creates cashflow issues and limits progression through their business plan. And, at a time when the economy is uncertain, you don’t want to take any big risks.

Cashflow is king, so make sure you have enough to live but be prepared to spend or speculate to accumulate. Once you’ve reached the stage where you can fund your lifestyle and perhaps put a small percentage back into the business, that’s when you can confidently make the leap to self-employment. You might even want to run your new business part time, whether juggling home life or alongside another source of income.

Your local Business Gateway adviser will also be able to advise you on some of the funding and grants that may be available.

Our guide on surviving until my business is off the ground offers some useful tips on financial planning for your new business.

5. Keep it professional

From the get-go, set up a business bank account so you can keep your business accounts and personal finances separate. This will enable you to track your income and outgoings more easily and make it easier when it comes to submitting a tax return each year.

How you set up your business will determine how you manage your taxes each year. For more information on different legal structures for businesses and the pros and cons of each read our dedicated guide on legal structures – the basics.

6. Go digital

Building your virtual presence is crucial in a business world where operating and purchasing happens online. Especially now, when physical shopping and face to face interaction is limited. Even if your business is small, building a website, setting up a business listing on Google and curating powerful content on your social media channels fosters credibility and looks professional. Word of mouth and referrals are great, but it’s likely they’ll then look for you online. This can all be done at a relatively low cost, so a great tool when you are starting out and tightening the purse strings.

Our DigitalBoost programme is a one stop shop for upskilling in all things digital, from building a website and using social media effectively, to trading online and making your business and your customer’s data secure.

For some inspiration from other start-ups we’ve supported, read some of our success stories here.