Entrepreneurs looking for a slice of the stimulus pie may want to target one of three areas: industries boosted by stimulus spending, large companies benefiting from stimulus spending or the federal government itself, suggests Victor Cheng, author of The Recession-Proof Business: Lessons from the Greatest Recession Success Stories of All Time.
Starting a business in certain areas supported by the stimulus, like healthcare or education information technology, can cost relatively little. The Recovery Act provides $19 billion in healthcare information technology funding, including provisions to help healthcare providers make the transition to electronic medical records. Similar provisions support expanded use of databases in education. If you have expertise in either of these areas, starting an IT consulting company could be a good move for you.
Other stimulus dollars are headed for the green energy field, an area where small business options abound, says Glenn Croston, author of 75 Green Businesses You Can Start to Make Money and Make a Difference.
If you have a construction background, consider starting an energy-auditing business in which you evaluate the energy efficiency of homes or commercial buildings. You could focus on simply pointing out needed improvements, or take the next step and get licensed to carry out energy-efficiency remodeling work, says Croston, who also runs Starting Up Green, a green entrepreneur Web site.
If you need support to start the business, franchise companies such as Pro Energy Consultants can get you into the energy-auditing business quickly. On a smaller scale, Green Irene, an Avon-like direct sales organization, can set you up to pitch green home and office makeover products at home parties, Croston says.
Feed the Big Fish
Another way modest startups can cash in on stimulus funding is to serve bigger companies that are already benefiting from Recovery Act dollars.
For example, if you have bookkeeping skills, you could pitch your services to road construction companies that are winning federal highway construction jobs, Cheng says. “You may not have the capital to go into heavy construction, but building the back office for that industry or supporting it could be profitable,” he says.
Sell to Uncle Sam
The federal government itself has been spending Recovery Act money, so consider Uncle Sam as a potential client for your new enterprise. The Small Business Administration (SBA) has information to get you started as a government supplier or contractor, says Cecelia Taylor, SBA public affairs specialist. “There’s information on our Web site, and our partners do seminars on getting into the contracting game.”
Becoming a government supplier is not easy, and there’s a whole industry dedicated to getting companies qualified, but it is possible to do the work yourself. The starting step for the process is the Central Contractor Registration Web page, Taylor says.
If none of these stimulus-related options appeals to you, consider starting a business in one of three categories that tend to be recession-proof: comfort food, low-cost entertainment and companies that help consumers borrow or make money, Cheng says.
In hard times, people tend to buy comfort foods such as ice cream and to grow their own food. A snowball stand or garden-tilling business could get you through the summer. Low-cost entertainment choices, including romance novels, online dating sites and DVD rentals are also thriving. Finance, including debt counseling and debt consolidation, as well as businesses related to job seeking, like resume writing, are other good recessionary businesses, he says.
Steps to Success
As you consider a move into self-employment, keep in mind these five keys to success, says Bill Allen, a volunteer business counselor with the Orlando chapter of SCORE, a nonprofit small business mentoring and consulting organization:
- Do a personal readiness review that includes an honest self-appraisal of your commitment to being in business, your understanding of the field and your experience.
- Research the market, competitors, pricing and other business-planning issues.
- Figure out the legalities involved in opening a business such as incorporation, registration, permitting, zoning, patents, trademarks and regulatory issues.
- Find professional advisors to help with legal issues, insurance, accounting, real estate and other concerns.
- Funding is always a challenge, particularly in the current economy. Expect to tap personal financial resources, friends and family to fund your startup. The SBA's loan programs are great for companies that are a bit more established.