Page last updated at 06:00 GMT, Saturday, 24 January 2009

Why recession can be good time to start business

By Sarah Pennells
Business reporter, BBC News

A Union Jack piggy bank
Some people say that redundancy could be an opportunity

The UK is officially in recession and the next few months will bring more job losses, more gloomy statistics and more hardship.

But it could also provide an opportunity for some people to start their own business.

In the early 1990s, during the last recession, thousands of people who were made redundant decided to set up on their own.

So for some people, redundancy turned out to be a blessing in disguise.

Robyn Jones is a successful businesswoman who runs her own catering company, Charlton House Catering. This year it's likely to have a turnover of 80 million.

The company employs around 2,000 people and has over 150 clients, but it was not an easy start.

Robyn Jones was made redundant from her job in the catering division of a construction company in 1991, just as the UK went into recession.

Banana boxes

Robyn admits that redundancy was - initially - a huge blow to her confidence and that she and her husband worried about how they would pay their bills, but she also recognised that it could be an opportunity.

Using a wallpaper paste table as a desk and banana boxes as shelves, she started her business in a spare room.

I had to force myself and be positive the whole time
Robyn Jones, businesswoman

The first few months meant one telephone call after another.

"It was hard to keep your morale up. Everyone put the phone down and didn't want to talk to you," she says.

"We had to keep picking up the phone and do the next call. I wouldn't let myself have a coffee until I'd spoken to a client and I couldn't have lunch until I'd booked an appointment. I had to force myself and be positive the whole time."

It took six months of phone calls and meetings before Robyn secured her first contract, supplying catering to a residential centre run by Guide Dogs for the Blind.

But other contracts soon followed.

Robyn believes her success was helped by the fact that she was prepared to listen to exactly what the client wanted.

"We could offer a service that was tailor made to suit the company. A lot of competitors offered something that was just one thing and that was it, but we were able to tailor-make it to what the client really wanted," she says.

Good ideas

According to the multi-millionaire entrepreneur James Caan, who stars in Dragon's Den, there is no ideal time to have a great business idea.

He started one of his most successful businesses, an executive headhunting company, in 1992 when the UK was in recession.

I think believe in yourself, believe in the strength of your idea, because if you truly believe that idea is a compelling proposition, it's going to work regardless
James Caan
Multi-millionaire entrepreneur

By the time he sold the business, it had 147 offices in 30 different countries.

"If you've got a good idea today, I would encourage you to do it, I think you should go for it," he says.

"I think believe in yourself, believe in the strength of your idea, because if you truly believe that idea is a compelling proposition, it's going to work regardless. It may not be as big, it may not grow as fast but it will succeed, because good ideas always work."

Finding money

Many people may have been put off the idea of launching a business because of worries that the banks have cut back on their lending.

According to the British Bankers' Association, lending by its members is up slightly on a year ago, although the rate of growth is slower than it has been.

I think the good news is that people will actually be challenged to refine their business plan and look at the finance they actually need
Andy Berrow
Business Link

Meanwhile, a number of foreign banks are not providing funding, which is reducing overall levels.

However, according to Andy Berrow from the government-funded advice service, Business Link, that should not put people off.

"Those people who have got a really good sound business plan and who've really researched an idea will still be able to get finance," he says.

"Yes it will be hard because the banks undoubtedly are more reluctant to lend now but I think the good news is that people will actually be challenged to refine their business plan and look at the finance they actually need."

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