By Rohit Arora
Did the recession ever really end? Technically, we are in a recovery, but there is little growth in the economy, employment and wages are stagnant, home prices and consumer confidence both continue to drop, and retail sales are down. The immediate future doesn’t look bright. However, the bright side is that now may the best time for people with the entrepreneurial itch to scratch it and go into business for themselves.
How can I advise starting a business when things seem so uncertain and credit markets are thought to be tight? There are several reasons:
1) Job Growth Is Almost Nonexistent
Washington’s stimulus efforts haven’t worked. Meanwhile, corporations have reduced their workforces, gotten increased productivity out of their remaining workers, and felt no need to hire when times got better. The result: higher corporate earnings but few new jobs. Those who have been out of work for six months or more now realize that the government and big companies are not going to create jobs for them.
The answer is to create your own employment. If you have ever dreamed about starting your own company, now is the time to take the bull by the horns (or the bear by its tail) and go for it.
2) Low-Cost Capital Is Available
With housing sales down, banks are not making money from granting mortgages, yet financial institutions cannot generate profits without making loans. While the largest banks have other sources of income and strict lending criteria, smaller banks and nonbank lenders (credit unions, nonprofit institutions and others) have less stringent requirements and are more likely to lend to entrepreneurs.
These lenders may not be as well known as the big guys, but they are making loans — often at better interest rates than the large banks are able to offer. While some experts are saying that capital markets are too tight, the reality is there are lots of lenders out there looking to make loans. Do not be discouraged.
3) Technology Makes It Easier to Go Into Business Than Ever Before
All aspects of starting a business are easier now than ever before because of technology:
- Searching for funding? You can find it online through a loan-matching website.
- Don’t know how to keep your books? You can search the Internet for a CPA or hire a free lance, part-time CFO through Elance.com, which helps thousands of businesses hire and manage online. The site enables companies to find and hire qualified professionals without having to take on full-time employees.
- Need help with your marketing? Conduct a Google search to find a local PR or marketing firm (they are all hungry right now) or take matters into your own hands by using Facebook, Twitter, YouTube and other forms of social media. You don’t need a journalism degree or marketing MBA to take advantage of the free resources on the Internet that can help you promote your business.
4) America Has a Heritage of Entrepreneurship
Small business growth has historically led the U.S. out of past recessions. This is likely to be the case again during the current downturn. Small businesses create two-thirds of the new jobs in this country. Creating an atmosphere to nurture and develop startup companies is vital to America’s recovery.
Whether or not the country is still in a recession is a topic for debate. But our instincts tell us the economy is not great right now. This is an opportunity to take the risk and pursue the American Dream. I know this because I started my company just as Lehman Brothers collapsed. It was difficult, but we came out stronger for it.
Success isn’t going to come to you; you must go after it yourself. Fortunately, there are plenty of people and resources available — often easily accessed online — to help you do it.
Image from Peter Baxter/Shutterstock
A frequently quoted expert on small business lending and recently named the “Top Entrepreneur of 2011” by Crain’s New York Business, Rohit Arora is CEO of Biz2Credit, which connects small business owners with 400 lenders, credit rating agencies and service providers. Since 2007, Biz2Credit has secured $400 million in funding for small businesses across the U.S. via its safe, efficient online platform.