Last week Will commented that he wanted to learn more about how to start a business in a recession. Therefore in response, this week’s Entrepreneur University comes thanks to Lee Lister.

Lee is a Business Consultant with more than 25 year’s consultancy experience for many household names. She is known as “The Bid Manager” or “The Biz Guru” .

Today Lee shares with us her advice on how to build a business in a recession.

“Recessions are periods when economic output is reduced for some time. In periods of recession some may be tempted not to start that business just yet. Others may think that it as they are now out of a job – now is the best time to start a business.  But how can you start a business in a recession and more importantly – is it a good idea?

Well the answer is yes – BUT – you must have the following three things:

• Enough money to get started and survive for a few months.
• A product or products that are particularly required during a recessionary period.
• Good marketing so that you can become established.

First of all, if you can start a new business whilst maintaining your existing job, in a recession, this is the best option for you. Start your business slowly, test your market and build up gradually with a minimal of risk. This will allow you to keep your bills paid, although it will require a lot more work from you. For those who are working less hours this is an ideal solution.

During a recessionary purpose, and indeed for some time afterwards, people do not spend as much and manufacturing is reduced to a minimum and people treat new things with suspicion. It is therefore vitally important that you ensure that your products and services are ones that people will want to and be able to buy with their reduced income. If your products are in the “luxury” area, or are not necessities then think a little sideways. Lower the price or change them slightly so that they appeal more to the cash strapped consumer. Hold sales and be prepared to pare any profit to a minimum and budget for this.

Conversely go for the super rich who are not so hit by recession problems. If you cannot change your products, then think of others within your market that may sell. If you really cannot change your products or price levels then you need to rethink starting a business for a while. Or else only invest small amounts of time and money.

Lastly you should look at your marketing and advertising strategies. Be prepared to spend more than expected on penetrating and establishing your markets. Be prepared to spend more time on guerrilla marketing activities which are much cheaper. Be prepared to compete against established companies that are also feeling the pinch and may resent you taking some of their sales. Network like crazy so that your company name is spread as wide as possible. Persevere and spend a lot of time investigating your market and learning your trade before you invest large amounts of money. Be confident and enjoy yourself. ”

Is there a topic you would like to learn more about for the next Entrepreneur University? Leave a comment below and we’ll try to find an expert to discuss your topic!