Is it Safe to Start Up a Business in Today's Economy?

How safe is it to start up a business in today's economy? That is dependent on many factors. What is the idea, is it unique? Will it fill a niche that is not being filled in your area? Does it require real estate location? How much money do you have for start up costs? Advertising? When making a decision to to start a business, these are but a few of the factors that need to be considered.

In July of 2009, the Federal Reserve Board released information that loans were declining. This was due to two factors, banks are tightening standards and terms for all types of business loans. The other factor was that fewer people were applying, most likely because they know that they don't have the credit or fear the risk in the current economy. This means without a unique idea and good credit that a bank can get behind, chances of a business loan are fairly low for starting a business.

A positive note, however, is that the Labor Department also reported in July that wholesale prices actually dropped. This is good news because when wholesale drops consistently, the consumer will usually see a drop. On the reverse, if wholesale inflation remains up, that is eventually passed on to the consumer. If this continues, it could mean the coming end of the current recession. These numbers will have to be monitored for consistent drop before the consumer will see it in the long run, however.

So what do you do if you don't know if your idea is a high risk or if you know you have poor credit. Well, if it is something you make, try a test run with an eBay store. See how the national market responds to your product.

Is it a business you can run from home for awhile? Can you market what you are doing from weekend shows? Can you start online and slowly move out to a solid location? Again, much of this depends on the type of business start up you are hoping to get going. A restaurant without a strong fresh niche may struggle today given that there is much competition and the profit margin on a restaurant is slimmer then many other businesses.


If you don't know what to start, there are many successful home businesses out there. Be careful and chose a company that has a reputation. Some good ones are Amway, Avon, and Nikken but there are many more out there. Some have low start ups for as low as 20.00 without supplies or product. However, if starting up a home business, I recommend that you get some literature and be using your own product. You cannot sell anything well without a passion for your product. So find a company you can believe in. I personally prefer the health and weight loss corner as this area has been fairly recession proof. Regardless of what is going on in the world, people are always trying to look better and feel better.

Other options for starting up a home business are affiliate marketing, this is fairly labor intensive but if you use all the free marketing tools out there, the cost is minimal. Good for part time income. Another one is direct marketing of products from wholesalers, good for eBay or a specific company. Top Tier Direct Marketing is another recommendation that I make. The reason for this is most home businesses market to the 80% of the world with only 20% of the income. Put your efforts into marketing to the 20% who have the money and you will make more. Do you want to sell 100,000 toy planes or one jet? A simplified example but it makes the point.

Regardless of what you choose, home businesses in this market are a safer option. About 70% of home-based businesses will last over a three-year period, compared to 29% of other business ventures, according to the Home-Based Business Institute. In fact, According to IDC, home-based businesses create an estimated 8,500 new jobs daily.

So is it safe? Only you can decide that. Do your research. Make sure you are going to provide a unique service. Try for a bank loan, if nothing else you may get feedback on why they do not see it as a safe option that maybe you had not considered. Look at your capital. Can you keep it afloat for one year till consumers know you are there? Can you get investors? Would it be better ran online or from home? Once you have satisfied yourself with the answers, take the risk! After all, according to the 2009 edition of The Small Business Economy released by Advocacy and posted on sba.gov this year, it was stated. "Risk-taking entrepreneurs are often the generators of the innovations that drive the American economy forward."

Have a Prosperous Day!
Cheryl Matthynssens