Recession, a scary word, but does it have any positive effect? Yes, it creates entrepreneurs. Just think of a situation where a person has lost his job due to recession in a particular field. Since recession is already there, it will be hard for him to get a job in that field easily. This is where the desire to start something on your may develop. No doubt, there are a lot of people that are choosing business even after having a good educational background. Business provided much more scope for growth and one need not depend on anything except his own planning and work. However, before starting a business, there are few things to plan in advance. This is more important for people who do not have any guidance from an experienced person.
First of all you should have a strong business plan that is based on the current market situation and your own interest and skills. If you are going to copy another successful business, it is not a good idea till you bring some innovation or variety with the idea. Various other factors are needed to be taken into account as well like the budget, infrastructure required, desired income and experience.
The next thing to arrange is the emergency fund. Even a salaried person in recommended to have emergency fund for at least 6-8 months. In case of business, one should try to create the emergency fund for even longer. First of all, you should estimate the monthly expenses of your family and then arrange the funds for at least a year. The purpose of emergency fund is to provide protection in case things do not go well. The emergency fund can be adjusted with the help of bank investments like fixed deposits or saving bank deposits. Note that you should avoid investing the emergency fund in shares or mutual funds.
What about loans?
In case you do not have much savings, the only option before you is to take loan so as to start the business. There are banks that provide loans on interest for this purpose and you can avail this facility by giving some guarantee. But the question is whether it is advisable? In my opinion, you should try to avoid loan if possible. Try to start with a small setup like through home based office and once you start doing well, you can expand further.
It is important to remain on the safe side regarding the legal aspect as well. For instance, if you are going to setup an office with employees, you should get your company registered. There is no point in taking any risk with legal rules as it can cause serious problems.