Interview with Steve Strauss on Why You Should Start a Home Business When a Recession Loom.
Let’s face it, the economy is tough and tight right now. Should one start up and operate a home business during a recessionary time? Home Business® Magazine satdown recently with Steve Strauss, the author of the Small Business Bible and small business columnist for USATODAY.com to get answers to this and other pertinent questions.
Home Business® Magazine (HBM): I understand that you began your first business from home. Is that right?
Steve Strauss (SS): I did indeed. I worked from home for many years and still do part-time. Whether it is working on my web site (MrAllBiz.com), seminar business, or writing a book, I love the ease of working out of my house. But I always do say that the good news about working from home is that you see your kids a lot. The bad news is that you see your kids a lot!
HBM: That brings me to my next question: In this changing economic climate, would you say it is still a good time to start a home-based business?
SS: You bet, in fact, starting a business from home is one of the smartest things you can do during a recessionary time.
First of all, it is a hedge against bad times. When you work for someone else, you can always be let go when times get tough. But when you own your own business, the only person who can fire you is you.
Second, from a business perspective, it makes a lot of sense. One key to success in any business is the ability to keep your overhead low, and that is even more important in a down economy. As rent is often one of your biggest business expenses, there are few better ways to reduce costs than to work from home.
HBM: What advice would you give someone starting a business in this economy?
SS: The first is that you have to choose wisely. Of course it is never fun to have a business fail, but there is simply less room for error when times are tough, so if you are going to do it, do it right. Pick a business that you know well and one that fills a need. This is not a time to be too creative or ahead of the crowd.
In addition, make sure your family is behind you. You need their support both in terms of the long-term plan, but also in respecting your day-to-day running of the business.
HBM: You mentioned finances earlier. Is it not a lot harder to get the money to start a business in a down economy?
SS: Yes and no. One of the real negative effects of the current mortgage crisis is that a traditional source of capital for new business startups is now much harder to tap into—home equity.
But there are still all sorts of other ways to fund the dream: Borrow from friends or family; that is the most common method. Use your credit cards—that works, but only so long as you have a plan for paying them off fairly quickly.
Be creative. Maybe you can get an advance from grandpa on that inheritance. What about finding a partner who has the cash?
SS: There are two. The first is not earmarking enough money for advertising and marketing your new business.
HBM: But didn’t you just say to keep your overhead low?
SS: I did, but to every rule there is an exception, and this is it. Starting a new business, especially a home-based business, is like being alone in a dark room—you know you are there… but no one else does.
The only way to turn on the light, to let people know you are out there, is to tell them through your marketing and advertising.
HBM: And the second mistake?
SS: It also has to do with marketing, namely, not trying enough strategies to get the word out. Too many new entrepreneurs try one or two tactics—say the Yellow Pages or flyers or whatever—and don’t try others.
In my book The Small Business Bible, I have a chapter on shoestring marketing in which I list about 30 different ways to get the word out without breaking the bank. Instead of one or two strategies, try five or ten.
Especially in a tough economy, creative marketing could make the difference between success and failure.
SS: What I love about entrepreneurs is that we dream big, and that is true no matter the economic circumstances. So to quote Aerosmith: “Dream On!” HBM
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