AMES, Iowa -- Due to the current economic climate, starting a new business in the new year might appear to be an impossible task. Many people are still uncertain about their finances and banks are more cautious about lending funds.
Howard Van Auken, the Bob and Kay Smith Fellow in Entrepreneurship at Iowa State University, knows that 2010 may not be the best time to start a small business. But he says people are still spending and that presents opportunity.
"Budgets are tight, but the money is out there," said Van Auken, who also is a University Professor of management in ISU's College of Business. "It is crucial for businesses to stay on top of consumer spending and make the most of new prospects."
Van Auken sees the economic situation offering new prospects for e-businesses due to the growing popularity of online shopping. He also reports that discount stores are doing quite well, despite the recession.
While there is no single solution for starting a new business, Van Auken offers these tips for potential start-up entrepreneurs in 2010:
1. Good opportunities always exist to start a business. However, the owner must be more diligent in researching the opportunity.
2. The start-up team should include an accountant, insurance professional, banker, mentor and lawyer.
3. Be realistic about the potential.
4. Rely on the cash budget to understand consequences of slow sales.
5. Start with an adequate cash reserve in case sales aren't as strong as expected.
6. Keep overhead expenses low and avoid incurring unnecessary expenses.
7. Know your competitive advantage and insure that customers care about this competitive advantage.
8. Avoid expensive credit cards to finance the business.
9. Focus on providing outstanding service to customers.
10. Don't be afraid to dream; believe in yourself and take the leap.
Recently listed 13th in a ranking of top entrepreneurship
researchers from 1995-2006 by authors from Howard and Morgan
State universities, Van Auken is the chair of Iowa State's
Entrepreneurship Faculty Leaders committee. The previous owner
of a small business in Ames, he has been teaching
entrepreneurship in the business college since 1995.
