The UK is heading for a recession – a recession that could be long and severe. Typically, recessions involve corporate downsizing and job losses, with leaders at risk of being suddenly out of work.
Many leaders in this situation will choose to regroup, dust off their resumes, and apply for other jobs. However, some will see a layoff as an opportunity to change their lives and possibly start their own business.
So, what should leaders know about starting a business in a recession? US-based business and strategy coach Ellie Diop, founder of Ellie Talks Money, is in an excellent position to offer some tips.
After losing her corporate job during the pandemic, she used her $1,200 stimulus check to build a multi-million dollar online coaching business in just one year. Today, her online academy, Ellievated Academy, serves more than 50,000 students and Diop is committed to helping other people overcome their circumstances to build their own successful businesses.
Here are her four proven strategies for success:
Strategy 1: Keep your startup costs low
“Choose a company that allows you to keep your initial expenses as low as possible,” says Diop. “When I launched my company, Ellie Talks Money, I bought a ring light, an upgraded iPhone, a website domain, and a Canva Pro membership.”
She continues: “In total it cost me less than $600. I shared free educational content on Instagram and spent another $600 over a few months promoting my content on other social media pages.
If you are considering starting an e-commerce business at a low cost, Diop advises identifying the product you want to sell first. Use TikTok’s hashtag #MadeMeBuyIt and explore the most liked videos and the five most popular online products from the past three months. You can then create a Shopify account. That step puts you in direct contact with suppliers like Alibaba and AliExpress, allowing you to create a product without buying inventory upfront (what’s known as “dropshipping”).
You can create low-cost products, list them on your Shopify store, and charge a markup to sell to your customers. Your customers receive the product directly from the supplier after placing an order.
Another option recommended by Diop that will be appreciated by many leaders is to start a consulting firm. Identify a niche or potential topics to cover using platforms like Instagram or Linkedin. These platforms also help you find clients who need help in your field. You can then showcase your skills and achievements to your prospects so they understand the value you can provide.
Diop also proposes to start a low-cost business based on digital products. Some of the digital products that can be sold include printables (digital downloads), workbooks, templates, recipes, courses, eBooks, and subscriptions.
Strategy 2: Build a community through content creation
“Short content videos of 60 seconds or less can help build community on platforms like Instagram and TikTok,” advises Diop. “You can use those videos to educate your audience about a specific topic or industry, while also entertaining and inspiring them.”
To build a following, try to release three to four pieces of short content per day. As you follow this process, you’ll know what works by observing your audience’s engagement through the likes, comments, and direct messages your posts generate.
An important strategy to increase growth is to encourage people to leave comments or direct messages. “It’s also helpful to give your audience a free offer that directs them to your email list so you can keep in touch with them there,” adds Diop.
Strategy 3: Increase trust by delivering quality
“Putting your customer first and getting results for your customer should be your top priority,” says Diop. “So consider things like the quality of your offering and how efficiently your customer will access your services or products. It is essential to build an approachable brand while anticipating and responding to their questions.”
Diop uses the Thinkific platform to improve the quality of its customers’ learning experiences. She has found that Thinkific Communities (an online learning environment that allows educators to communicate directly with their audiences) has allowed her to connect with her community in a streamlined way. It also offers its customers easy access to its products.
Strategy 4: Manage your expenses strategically to qualify for funding
Lack of access to capital is one of the main reasons why most companies fail in the first five years. “It is essential to build a strategy that gives you access to capital from the start of your business,” says Diop. “While funding may not be a requirement to start, it is necessary to scale up.”
As you grow your team, add new products and services, and develop new marketing strategies, it’s essential to have access to business credits, grants, and loans. “To qualify for those financing options, it’s important to keep your business expenses extremely organized,” Diop recommends. “Some of the essential things to implement early on include opening a business account, keeping good financial records, and separating personal funds from business funds. You also want to manage your expenses to ensure you run a cash flow positive business.