An unstable economy and rising unemployment have left many desperate Americans looking for ways to ride out the financial storm. But despite the economic downturn, or because of it, Dave Ramsey of Fox Business Network says that now is a perfect time to start a new business or to grow your existing one.
"It's not the time for the feint of heart, but the good news is a lot of your competition's out of the way. And the ones that are still opened, a lot of them are sidelined by their own attitude," he said on "Good Morning America" today.
Why This Is a Good Time to Start
Although it might seem like a shaky time to start a new venture, the recession could be the push you need to get started on a dream deferred.
"It's a wonderful time to expand your brand. It's a wonderful time to start into a business," Ramsey said. "But you have to have the right attitude about how you're going at it. You have to be very conservative and cautious and wise about how to do it."
Being laid off can be overwhelming but also empowering. Think of losing that job as an opportunity to do something you've always wanted to do.
In Good Company
If you are nervous about starting a new business in tough times, take comfort in knowing that some of the most successful companies, such as Microsoft, Hobby Lobby, Dell and Chick-fil-A, started out during hard economic times.
Starting a business requires start-up capital, but not as much as you may think. Last year, the majority of small businesses started on less than $5,000 cash, according to the U.S. Census Bureau.
Whatever amount of money you start with, it is important that a new business owner not leverage any part of the new business to get it. Thousands of dollars aren't necessarily needed. With a do-it-yourself spirit and a little elbow grease, there are thrifty ways to save on expenses. Business cards, fliers and online advertisements, for instance, can be made at home.
The important thing is to stay out of debt when starting a business. If a business is in debt, it takes a five-year plan to get out. Debt increases risk. If a business owner has not incurred debt, he or she can more easily walk away from mistakes.
A Business Plan
You'll need a plan that includes what goods or services you want to provide and how you plan to provide them. Local business bureaus can help you write a business plan and the U.S. Small Business Administration offers information and resources that can help.
These organizations can also direct you to grants. There is money available to women and people of color that sometimes goes unused because of a lack of awareness.
But the most important thing about starting a business is passion.
"I think you always, in small business, got to have something that you do that you really just love it. You look forward to Monday morning. It is a joy to go in and do that," Ramsey said. "It's amazing when you own your own deal. And you got to survive all the ups and downs."
Mistakes Will Be Made
Starting a business takes patience and determination. Most businesses fail in the first five years because they lack a strong business plan and are in debt.
Know that mistakes are inevitable. Be prepared for minor setbacks. Learn from them and use them to refocus your business plan. "One of the things I've learned in 20, 25 years of being a small business person is, about 10 percent of my ideas of where I make all my money and what I'm known for. Ninety percent of my ideas are just truly awful. I have no idea which ones are which. You don't want to go borrow money and go $1 million or $200,000 in bet with a loan," Ramsey said.
"When you borrow into these great ideas that we entrepreneurs have in the shower every morning, then, you expand and magnify your mistakes. Don't borrow. Keep it conservative. Be the tortoise. Don't be the hare. It's tempting to be the hare."