5 Reasons Owning a Business in a Down Economy Absolutely Makes Sense

There’s a certain sense that during a recession, running your own business may not be a good deal. When things aren’t great, the idea is that you want a job where someone else has the responsibility of paying you. But that’s not necessarily a more secure way to ride out a down economy — a business can be a much better bet.

1. You can’t be fired. When a big business isn’t doing so well, one of the key methods to cutting cots is laying off some personnel. But if you’re running your own business, you can’t be fired. You can choose to take a pay cut, of course, or fire an employee (if you’ve hired any), but short of closing or selling the business, you’re guaranteed a job. There’s no employer who can offer similar security.
2. You can choose where to make the cuts. In a business where budget cuts are made above your pay grade, the decision maker may not know enough of what’s going on in the day-to-day operations to make the right budget cuts. If it’s your business, though, you can make sure that the expenses that actually directly help you bring in money aren’t eliminated. More often than not, a big business will make cuts across the board, which isn’t actually practical when you consider some expenses are more important than others.
3. Your personal expenses can be more manageable. When you’re the boss, you decide the dress code, determine whether you can work from home and make other choices that can reduce your personal bottom line. You can save both you and your business money. If you want to use a home office to save expenses (like transportation costs), you have that option without having to convince an employer or manager.
4. You can implement money-saving decisions faster. Found a better way of doing things? You can roll out a new system faster when you’re in charge of the business than when you need to get the office bureaucracy to agree with you. That can mean switching to a new vendor or ending a lease. That makes an owner-driven business more agile — which is absolutely necessary when the economy isn’t so hot.
5. You have more room to negotiate. If you’re expected to meet the needs of an employer, you can’t necessarily make agreements that can get you the lowest possible price now, such as by negotiating a longer contract. Companies with many employees typically have policies in place that are harder to change and all employees are expected to follow, whether or not those decisions make the company less able to adapt.

Of course, all of this comes down to owning the right business. Selling real estate may not actually be a good bet, as far as running your own business goes. And you’ll have to work hard to enjoy security as an entrepreneur. But you can have a more stable business during a down economy than you might think.

Image by Flickr user Coyotejack

This entry was posted on Thursday, June 3rd, 2010 at 10:00 am and is filed under small business. You can follow any responses to this entry through the RSS 2.0 feed.


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