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Should You Start a Business in a Bad Economy if You're Not Already Financially Secure?

written by: •edited by: Michele McDonough•updated: 9/30/2011

We've all heard the advice: Take on a regular 9 to 5 job if you're not financially stable, and wait to start your own business until you have enough money to do so. I'm here to tell you that if you wait until the perfect time comes along, you may be waiting a long time - perhaps your entire life.

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    A Tale of an Overqualified Prospective Employee

    Is now the time for you to start your coffee shop business? Some might call me a chronic overachiever. In 2001, I won an award for being an outstanding student-community member. I was taking 20 units toward obtaining a BA degree in philosophy (honors), with a pre-graduate school option; I was working full-time 40 hours a week as a supervisor at a national-chain bookstore; I was working 20 hours a week as a tutor at my university; I had a side business tutoring people; I was treasurer of my honor society; and oh yeah, I was the proud single parent of a toddler. I went from undergrad success to grad school glory and came out of the deal with an MA from the number two school in the nation for philosophy at the MA level, and studied a bit at the Ph.D. level.

    When I left graduate school, and tried to enter the work world - the "real world" as non-academics call it - I was enthusiastic. "I can totally do this. I have an MA degree, lots of research experience, and the drive to be an asset to a company." The year was 2008. I sent out 200 (not an exaggeration) resumes and cover letter packages. I followed up. I did all the right things. I was told I was hopelessly "overqualified."

    What does someone do when they're told they are overqualified for many positions and underqualified for others? I took a deep breath. I had a nine-year old who really enjoyed eating food. Heck, I enjoy eating food! I did what any reasonable person in my situation would do. I started a business and created my own job.

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    Why Wait?

    Had I waited to start a business until I was "financially stable" as some might put it, I'd have surely starved. No, starting up wasn't easy. There were long hours, late nights, and pieces of business advice to sort through (remember, I'm a philosopher, not a business guy, Jim). However, after a lot of hard work, a lot of long hours and a lot of being unnaturally extroverted for my personality type, I was able to put food into the refrigerator. I've been doing it for three and a half years now. I live in a city with a 12.5% unemployment rate and where many more are underemployed. Estimates are that one in six people does not make enough to make ends meet. Had I waited to start my business, it's highly likely I'd have been in that same situation.

    If you have a business idea, it's time to act on it. Yes, you might be working two jobs right now. Start working on the business plan in the evenings. Yes, it might be costly to hire a lawyer to help you set up contracts and your business structure. Set money aside by drinking coffee at home and buying food to prepare at the grocery store. Eat peanut butter and jelly sandwiches (or tuna, or cheese, or whatever) for a week. I guarantee you that there is no better time than now to get your business going. Ten years from now, what are you going to regret more - struggling through the early years of establishing a business or struggling to make ends meet while working two jobs you hate equally?

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    But...I Can't Even Pay My Bills!

    This is often a reason people give for not starting their own businesses. This is a reason to pause. If you're financially unstable because you do not manage money well, you might want to rethink your ability to run your business on your own. It will be unlikely that you will be able to run your business well either. However, if the reason for your financial struggles is the fact that you just aren't making enough to stretch the money, maybe starting a business will be the solution.

    Let's face it, it's hard to put in your labor and your efforts for a company just to get minimal returns back on your time investment. It's hard to feel that zest for life when you're only getting pennies per each dollar the company makes. When you spend your time honing your knowledge of books and the publishing world, and you make a little more than minimum wage, it can be difficult to feel motivation to continue working in a corporate bookstore.

    If, on the other hand, you wanted to put forward the effort to create an alternative bookstore, or a sci-fi geek bookstore or create an independent publishing house, you'd reap the rewards of your efforts. The potential for earning would be greater, because when you run a business, often times what happens is you get out of it what you put into it. If you go in with a solid business plan, spend the time necessary to build your business at a reasonable pace, and you take time to develop yourself professionally, then it's likely you will do better and make more than you would have at the stable job.

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    Running Your Own Show

    Let's face it, running your own show isn't for everyone. Half of all businesses fail within the first five years. However, that figure includes both individuals that were on solid financial footing and those who were not when their business launch took place. Running a business that succeeds is about more than just having the funds to do so. If it were, then a lot of people who are well-to do would create their own businesses.

    Entrepreneurship is also about having an idea and following that idea to its fruition, no matter what forces or challenges stand in your way. And if you're worried about the economy, stop it! Most of the companies that are successful today were built during another time of economic turmoil. Don't use the economy as an excuse not to work on your business idea.