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Recession Bugging You? Get Launched!

| Friday June 19th, 2009 | 2 Comments

startup-friday.jpg
high-dive-rockwell.jpgWhat do Google, Ocean Spray and Walt Disney have in common? All were launched during recessions. Since the beginning of this recession, most headlines have been riddled with gloom, but tough economic times lend themselves to advantages many business leaders overlook.
Last summer, as we were still headed into the worst quarters of this recession, I co-founded SoupCycle, a company that makes organic soups and delivers them by bicycle. Whimsical and a bit ridiculous? Sure – but the idea is odd enough to attract customers during a recession, and despite a sluggish economy SoupCycle has already made more than 3,000 bicycle soup deliveries. If you’re up for the challenge, now may be the right time to turn your sustainable business idea into a reality. Here are nine pointers to successfully launch your sustainable business during the recession:


Know thyself. In tough economic times, your customers won’t have the flexibility to “buy green” because it’s the right thing to do. Buying decisions are made based primarily on their impact on the bottom line. Differentiate your product based on cost savings to customers, better customer service than your competitors and clear and powerful branding. Then tout these qualities to perspective clients with gusto.
Take advantage of the system. Federal and state governments offer tax incentives for sustainable businesses, and your business may be eligible for many of them. Oregon’s Department of Energy offers the Business Energy Tax Credit (BETC); business projects that qualify can take 35%-50% of the cost as a tax credit. To check out the incentives that apply to your venture visit The Database of State Incentives for Renewables and Efficiency at www.dsireusa.org.
Get cash in the door. There’s a reason why companies such as Dell and Toyota are respected as efficiency leaders. They solve the cash flow problem by buying their inputs after their customers have already paid for the final product. When creating your company’s operations, create systems that bring money in the door before you spend down your limited cash cushion.
Don’t buy it ’till you need it. As computer programmer and technology investor Paul Graham says, “The way to make a startup recession-proof is to do exactly what you should do anyway: Run it as cheaply as possible.” Lenders and investors are less willing to invest in startups during a recession. That means you need a business plan with as lean a budget as possible. Ask yourself what your business would look like without each line item in your business plan. When you launch, don’t buy it unless it’s absolutely necessary.
Brothers not bankers. Once you’ve got a lean budget, figure out how to cover start-up costs. Research shows that most first-time entrepreneurs get their money from personal savings and loans from friends and family. If you’re asking your network for startup funds, be sure to have a few potential lenders on the back-burner in case your new business’ revenue doesn’t meet projections.
Brand the hell out of your company. If you’ve never started a business before, now is your time to shine. This is your chance to create a culture and invite customers and employees into it. SoupCycle, for example, doesn’t have any customers; it has Soupetarians. Oh – and Soupetarians don’t live in our delivery area, they live in Souplandistan. Create both a brand and culture that fit with your personality, and are meaningful and memorable to clients. Then flaunt them like it’s nobody’s business (except yours).
Word of mouth is free gold. Reputation and referrals are everything. As you work on your launch, it will quickly become apparent who your core supporters are. Nurture those relationships. The people who ask now about your business plan with genuine interest will be the same people who connect you to their social networks and refer your business to their colleagues when you launch. Check in with these people regularly, keep them updated on your progress and find ways to involve them in unique ways.
Accept the inevitable. Be prepared to lose a percentage of your customers due to tough economic times. Keep in touch with lost customers and they’ll come back to you when their budgets allow.
Relax: It’s temporary. This recession will end. Your recession launch is a testing ground to hone your company’s efficiencies. If you can launch lean and run a successful business in the current economy, when we emerge from the recession, your company will be better positioned to serve as an industry leader. I, for one, am optimistic and excited to watch SoupCycle continue to grow as the end of the recession comes into sight. Campbell’s Soup: are you ready to rumble?
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Lazar_Jed_web.jpgJed Lazar has an MBA in Sustainable Business from Bainbridge Graduate Institute and is Double CEO of SoupCycle (Chief Executive Officer and Chief of Excellent Organics). He lives and works in Portland, Ore. This is Jed’s first column in a Sustainable MBA series published with Sustainable Industries.


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  • http://www.sustainablebizconsulting.com Kevin Wilhelm

    This is great advice to any new entrepreneur. I’d add just one point: “Focus”
    Focus: Too often entrepreneurs want to do everything, and they want to do it now. Focus on what you can do now, and what you can do best. All of the other long-term stuff that you’d like to do in a few years can wait. Remain focused.
    Lastly, Jed says “Know Thyself” which is certainly true….I’d expand that a bit because you need to know your strengths, but more importantly your limitations. His key point her is to “Know Thy Customer” which is key. Great post

  • http://GreenCPA.blogspot.com Brian Setzler, CPA

    It is my experience that most new ventures take longer to cash flow out than most people expect. It isn’t unusual for a business to take 1-3 years to provide the owner with a reasonable living.
    Accordingly, the startup venture needs sufficient funds to get through the lean times and necessary investment phase.

    “Cash is King” and your advice to manage cash and know thy bankers is valuable to any startup.