Well, it's not impossible, but it does require entrepreneurs to be extra diligent to help optimize their chances of survival.
In this economy there's little room for error when it comes to launching a new business, but there are also opportunities that start-ups can take advantage of now that may not have surfaced during better times, experts say.
"It's the best of times and the worst of times for start-ups," says Lawrence Gelburd, a Philadelphia-based management consultant and a lecturer on entrepreneurship at the Wharton School of the University of Pennsylvania. "It's the worst of times because there is a tremendous lack of consumer confidence and a lot of fear in the marketplace, but it's also a good time for getting great deals."
To start, there are a lot of unemployed workers at all levels looking for jobs and willing to take less pay.
"There's a lot of real talent out there, and you can hire many of them for a song and dance," says Gelburd.
Plus, the down market has eliminated some of the competition from the marketplace and made suppliers more willing to negotiate, he adds.
Still, it's a tough market, and to survive, a start-up needs to be prepared.
"You need to start a business smart," says Gloria Glowacki of the Small Business Development Center at Stony Brook University. That means having a business plan in place and also realistic financial projections, says Glowacki, noting that the center can assist start-ups with their planning at no cost.
A business plan can help keep your business on course, but it is also important if you're looking for funding, notes Trevor Davis, senior vice president and chief lending officer for the Community Development Corp. of Long Island, or CDC, in Centereach, which provides small-business lending and training.
Lenders generally want to see monthly cash-flow projections for the first year and then annual projections for the next two years thereafter, he notes.
The CDC offers a 12-hour program for $40 that covers four major components necessary to run a business, including cash-flow planning. Entrepreneurs who complete the program and a business plan and have a credit score of at least 620 can be eligible for a jump-start loan of up to $10,000.
Michelle Zimmerman fulfilled those requirements and secured a jump-start loan last January, which helped her kick off Rainbow Star Books, a Centereach-based publishing company of educational resources. The CDC loan and a $2,000 grant from the Suffolk County Women's Business Enterprise Coalition helped launch her first book, "Can't Catch a Butterfly" ($16.95).
"I needed help to be able to get started," says Zimmerman, who also works full-time as an independent speech pathologist.
She says she hasn't given up her day job because she's trying to be fiscally responsible and grow her business cautiously.
"I don't want to get in over my head," says Zimmerman.
That's the best tactic to take in this economy, notes Rosalind Resnick of Axxess Business Consulting, a small-business consulting firm with offices in Centerport and Manhattan.
"Keep your overhead low," she says. Start by working out of your home, perhaps even part-time, she advises.
"You really need to be prepared to stick it out for the long haul," says Resnick. "It may take two to three years to get your business to the point that it's kicking off positive cash flow."
That's why it pays to have a cash reserve of six to eight months to fall back on, notes Glowacki.
The bottom line is that start-ups need to be ready for even the worst-case scenario.
"They have to be adequately prepared for anything that comes up," says Les Fixell, a counselor at the Service Corps of Retired Executives office in Melville, which provides free business assistance to entrepreneurs. "A surprise usually comes when they're not prepared."
KEEP ON KEEPING ON
Making it as a startup over the long haul is difficult in any economy.
While 66 percent of all small businesses survive at least two years, only 44 percent survive four years, according to the U.S. Small Business Administration's Office of Advocacy in New York City. So it pays to be prepared. For more tips on getting started in your new business, check out the SBA's startup guide at www.sba.gov/small businessplanner/plan/getready/serv_mark_getinstartd.html.
Source: http://www.newsday.com/services/newspaper/printedition/monday/business/ny-bzherz6011963jan26,0,43597.story
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