Starting your own business during a downturn

It is certainly shaping up to be a tough time for a lot of people right now. Several friends have found themselves unemployed and I’ve seen a number of people mentioning on Twitter how they are considering starting their own business. From my own experience I would encourage people to go for it – even from the early days I have felt more secure as a business owner than an employee. I am the first to know about any potential trouble spots and can do something about it myself rather than hoping my boss will. Starting a business at any time seems quite scary, as we enter a recession even more so, and as someone who has been through that process I wanted to share my own tips for starting up with nothing.

When I started in September 2001 the web industry was also in the middle of a crisis. The dot com boom was crashing and the market seemed to be swamped with out of work web designers. However we have gone from strength to strength as a company and I believe that the tricky start I had has been important to our success. Sometimes the best lessons are learned through dealing with adversity.

Conventional wisdom is that you should have a pot of money saved – around 6 months worth of salary – before taking the leap and starting up for yourself. If you’ve just found yourself unemployed you might not have that luxury – I only had the next month’s expenses covered when I started up. It certainly focuses the mind! Even if you are fortunate enough to have some cash in the bank, try and see it as your contingency fund and act as if you need to make enough to live from day one of your new business or freelance life.

Spend on only what is necessary

You don’t need much to start out as a freelancer or small company. A computer with appropriate software (which you may already have – even if it isn’t the shiniest and newest Macbook Pro), somewhere to sit and work comfortably, an internet connection and a phone.

You can do without a load of printed materials. When I started the company the only printed materials I had where some cheap business cards. These days getting nice and inexpensive business cards is easy – check out Even today we have business cards and printed letterheads – no compliment slips, leaflets, folders etc.

However, don’t scrimp on essentials

Your computer might not be the newest but it needs to let you do your job. If you need to use Photoshop and it takes half an hour to launch or crashes every hour then it is false economy to battle on as the hours you waste soon add up to a lot of money if you could have been doing chargeable work during that time. Learning when to economise and when to invest in equipment is a vital part of starting out on your own. For a few days keep a tally on the mount of time you spend waiting or rebooting. You can then work out when your investment in a new machine will pay for itself in time saved.

If you are sat at a desk all day essentials also include a decent chair. Back problems can leave you unable to work for weeks. I’m not suggesting you go out and get an Aeron, but shop around for a decent adjustable chair, you can often get really good deals in office stores on ex-display or end of line stock.

Promote yourself on the cheap

We have never advertised in the traditional sense. Instead I have always used the things that I’m good at to raise the profile of the business. A well written article for a busy site, that covers one of your levels of expertise, can be worth many expensive adverts in magazines or a fortune spent on Google AdWords. Think about ways you can raise your profile by putting in some time – writing, starting a podcast, spending time helping people out on mailing lists and forums or offering to speak at a local event are all ways you can promote yourself and help other people too.

I believe the key with this is to never treat what you are doing as purely an advert for your business. Write, speak or answer forum questions in the spirit of community and in sharing knowledge, and do the activities that you enjoy doing, where you can offer something.

Make sure everyone you know is aware of what you are doing

This bit I’m quite bad at, self-promotion not being one of my strong points. If you are already involved in the web community – on Twitter, on mailing lists and forums, have a blog or personal site – make sure that you let those groups know about your new business or freelance status. You may find that people you already know have work to offer or contacts they could introduce you to. It is worth being specific about what you do so that people know you are the person to come to if they need someone for that type of work.

Keep an eye on cashflow

I never wanted to be a bookkeeper but part and parcel of running a company is having a decent understanding of what happens in your accounts. I’d advise any company to get a good accountant to help with the year end accounts and advise on tax issues, however think seriously before outsourcing all of your bookkeeping. I still do all of our day to day bookkeeping, and find that checking into the accounts several times a week keeps cashflow at the front of my mind and prevents any small problems becoming big ones. It also saves us money with the accountant as I can send him neat up to date accounts to check and make adjustments to rather than a pile of invoices and a shoebox full of bills!

Chase unpaid invoices promptly

I find it really difficult chasing money from clients with whom I have a good working relationship, but it is one of the necessary evils of running a business. Have payment terms and stick to them, don’t feel bad about asking for payment when it goes overdue. If you’ve done the work it is your money! In times of trouble companies often use freelancers for a interest free loan, getting work done and then delaying the payment for 2 or 3 months. You are not the bank so don’t let your clients treat you like one.

The Better Payment Practice Campaign website has a lot of helpful information about getting paid and what to do if a client is not paying. A lot of this is UK specific – but some of the general points are true wherever you live.

Get Networking

If your target market is other businesses then getting out and talking to people can generate a huge amount of interest. Check out your local Chamber of Commerce and the local papers to see if you can find local business networking events. Some groups will charge for membership as well as for the events themselves but usually will let you attend a couple of sessions as a guest before joining.

My experience of networking is that I very rarely meet anyone at an event who becomes a client however, a few weeks or even months later I often hear from someone who has been told about us by someone from an event.

My top tip for networking is that you should never go out there and try and sell your services, instead just chat to people. Usually the first question anyone will ask is “what do you do?” so be ready to answer in a way that describes your company and services clearly and memorably. Then find out what they do! You will meet some nice people, perhaps find out about services and products you can use, and also spread the word in your local area about what you offer. If you work alone, networking groups can also be a really great way to discuss business issues in general with other people, and many groups have speakers who come in to talk about business related issues. You can get some good advice from these groups in addition to any contacts you may make.

As with online networking and promotion it’s all about give and take. If you become part of networking or local business groups, and try and help other people by referring them on to people or being willing to share your knowledge, you’ll soon find that people want to help your business as well.

Look for opportunities – even if they aren’t very glamorous

Starting a business in a downturn might mean that there is less really interesting work to go round. When I started out a lot of companies had found they needed to lose or trim down their web teams, and when their applications started to run into issues or need additions made they were looking for freelancers to fill the gap. I spent a good part of the first three years I was in business fixing up other people’s code. Definitely not glamorous work but it taught me a lot about web development and paid the bills until people started commissioning new work again. A lot of the clients who initially came to me to fix up old applications then came back and hired us to develop new ones, so it’s wise not to turn away opportunities too quickly, especially if you aren’t already swamped with exciting work!

So these are my suggestions for starting a business or going freelance during a downturn. I’d love to hear more suggestions in the comments.


Paula Jones December 11, 2008 Reply

I agree wholeheartedly with all your points. (retweeted by purplekitten)

I’m an IT Trainer, and I’ve changed my business model dramatically over the last few months. Opportunities have arisen that weren’t there before, and the recession is just making me cheekier in getting work.

Just take a look at what a business already is, and then turn it into additional or different applications. I now offer online training which I’d never have thought of 12 months ago. I’m happy to report that the recession, while not exactly helping me become richer, is not hurting me either.

Simon Mackie December 11, 2008 Reply

Hey Rachel – this is very timely as I have just been made redundant and am thinking of going it alone. Thanks for the detailed advice! To everyone else thinking of doing it – good luck 🙂

Prisca December 11, 2008 Reply

Thanks for this great article and for sharing your experiences, much appreciated 😉
Just starting up with my little team – so your advice comes just at the right time. Very reassuring that you yourself started edgeofmyseat in troubled times… does make me feel more positive now – thanks 😉

Ben Spencer December 11, 2008 Reply

Inspirational stuff Rachel! Really appreciate you taking the time to share such detailed advice.

This is staying in my bookmarks until my 6 months worth of salary is saved up 🙂

Mike Atkinson December 15, 2008 Reply

Thanks Rachel, that has helped a lot

Emma Jones December 17, 2008 Reply

Great piece. One way to save money when starting up is to start from home – no second office costs to pay.

Over at the home business website at we are also seeing a lot of people start a business in their spare time, whilst still holding down a job. It can be a good way to build cashflow in the business and wind down the day job.

I find this link from and pleased I did!

Chris Cork December 17, 2008 Reply

Great advise, just stumbled upon your site whilst looking for freelance work.

Karen December 19, 2008 Reply

I would just like to add that I too started by business with hardly any funding…in fact I fund all of my business with my PAYE job and yes it is hard, but then nobody said things would be easy did they?
Nevertheless if I can offer any words of encouragement…you should never ever give up on your dreams! There is always someone, somewhere who is willing to help you and often without financial remuneration.
All you have to do is getthe word out, keep researching and associating with the RIGHT people,keep your head high and remember that you are doing what you are doing to make a real difference in the world!

I am “Pledging for Change”

Billy Allinson January 8, 2009 Reply

Fantastic article Rachel, trull inspiring, motivating and comforting all at the same time.

I too am a creative, just made redundant and starting out on my own with about 2 months salary to last – it’s gonna be a challenge for sure – but a great journey and one i know will bring success and mre importantly – happiness.

Good luck and thank you.

P.S. – I can do you some excellent business cards.

Laura M May 3, 2010 Reply

Hey hey,

Another great option for inexpensive quality stationery is – I’ve used them for my multiple businesses for the last couple of years and they’ve always been great.

Also, potential business owners should keep in mind, it’s not that hard to maintain an ordinary part-time job – for example in hospitality or administration – while running your own business, to keep you in peace of mind financially but not stretch your time/effort.

Good luck everyone!

Business Card Designs October 31, 2010 Reply

Well that’s very good tips….I started of with my desktop and Internet connection…Well now i own 5 websites and each one of them giving me 200$ per month…though i spend most of the money advertising…I also do freelancing and I am doing good with it… Great tips Rachel … 🙂

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