I’ve Been There: Starting a Business in a Recession
Many people don’t know this, but I actually started my career as a public school teacher in Los Angeles County. Everything changed for me when the 2008 recession hit, and I watched my hard-working immigrant family lose almost everything. Like many people impacted by the market crash, I felt hopeless. Then, inspired.
As the recession loomed on, I learned about all the ways improved financial literacy would have prevented my loved ones and people like them from being so hard-hit. I felt inspired to act, and to educate myself. Soon, I was a school teacher by day, and adult financial educator by night.
As my work at Legacy Full Circle Financial & Insurance Services took flight, and the market continued to claw its way back from a total crash, I started my first entrepreneurship venture alongside my Husband, Gabriel.
Since then, we’ve been successfully owning and operating cocktail bars and restaurants in Los Angeles, amid uncertain economic periods, a global pandemic, and even our own health issues.
The idea of launching a new business during a recession might seem counterintuitive, but history has shown that some of the most successful companies were born during economic slumps. Despite the challenges, recessions can offer unique opportunities for innovative entrepreneurs.
As the economy feels rocky once again, I’m proud to share my insights for aspiring business owners looking to thrive in uncertain times.
Do your research
It goes without saying, but prior to starting a venture, do some thorough market research. You’ve got to have a real handle on the current market conditions, your competition, and the specific needs of your target audience. Identify gaps in the market that your business can fill, and be ready to provide solutions that stand out.
Build strong financial backing
A recession can be an unforgiving time for businesses with weak financial foundations. Start with a realistic financial plan to present to potential investors, planning for contingencies and unexpected twists. Bootstrapping may be a good strategy, but also explore options like small business loans, grants, or angel investors.
Cut costs where you can
Efficiency is the name of the game during a recession. Minimize overhead costs by using lean business practices. This might include using technology to streamline operations (especially in the age of AI), and carefully managing inventory if you’re selling goods. Aim for a clear ROI goal on most big purchases, and set a realistic expectation of when you can expect to recuperate expenses. Don’t lean too much on credit cards: variable interest can be a trap for business owners whose profits come in months down the road.
My Husband Gabriel and I were proud to recieve recognition at City Hall from all Council Reps & the Mayor of Los Angeles for the impact our restaurant HOUSE of XELAS has had in the City of Angels.
Embrace the digital world
A strong online presence, including a website and social media plan, can go very far in helping you reach your target audience. Many social media platforms and web providers provide in-platform analytics, which will allow you to track performance on your advertising efforts. If you can’t afford a social media manager, tap your younger family members for some tips and tricks. Chances are, they’re tuned in to what’s new and now, and may be willing to help you out.
Focus on building a loyal customer base
In a recession, customer loyalty can be your saving grace. Providing exceptional customer service and building strong relationships within your community can help you weather economic storms. Ask for feedback, listen to it, and be willing to go the extra mile to retain and attract customers. You may even consider customer loyalty programs, discounts, or referral incentives to keep people coming back.
Don’t be afraid to branch out
Connect with other entrepreneurs, mentors, and business organizations in your area and beyond. They can provide valuable guidance, support, and connections. Learning from the experiences of others who have successfully navigated a recession can be incredibly valuable, and mentors can help you find networking events, join industry groups, and refine your pitches to weather any financial market storm.
Starting a business in a recession is not for the faint of heart, but it can be a rewarding venture if you approach it with responsible strategies. With the right attitude and a support system backing you, you really can pull it off. Remember that challenges are part of the entrepreneurial journey, and you can turn them into opportunities for innovation. Subscribe to my newsletter, The Ambitious Amiga, for insights on grant writing, networking events, and more.
