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Norm Brodsky, Recession All-Star

Inc. columnist Norm Brodsky just sold three businesses. Two of them were started just as the economy slipped into recession, in 1990 and 2000. Here, he shares his advice for entrepreneurs starting companies right now.

Norm Brodsky is a veteran entrepreneur.

I certainly didn't go out of my way to start my companies during a recession, but a recession does offer some distinct advantages for start-ups. First, you don't have a big staff or fancy offices that you have to cover every month. Established companies will have these fixed costs, and if their sales drop by 5 or 10 percent, they will be concerned about meeting their obligations. That's one less worry that you will have.

And during a recession, people are scared about losing their jobs. Morale at most companies takes a hit. That's another thing you're not fighting. Your people will be excited that they're building something new.

A start-up is also, by its nature, keenly focused on sales and marketing. Your only job is to tell the world what you have to offer. Meanwhile, established businesses will often cut back on sales and marketing, because it seems easier than laying off employees or making another tough choice. But that usually results in a company's revenue dropping further and faster than it would have otherwise, thus aggravating its problems. You should spend every marketing dollar budgeted in your business plan without thinking twice about it. Let the larger companies adjust.

When you're making a sales pitch to a potential client, don't use the R-word, but say, "Look, I'm sure you're busy examining every part of your business for ways to save money or streamline operations. We can help you do that. We don't have very much overhead, so we can pass along the extra savings to you." To me, that is a pretty compelling offer.

Last updated: May 1, 2008

NORM BRODSKY | Columnist

Street Smarts columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and expanded six businesses.

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