If you're thinking of starting a business, know that the deck is stacked against you. According to one oft-quoted statistic, the first-year survival rate among small businesses is only 20%.


And that's on average; it doesn't take into account the prevailing economic conditions.
The chances of your startup timing being perfect may be slim at best, and you may find yourself confronted with a sluggish economy when you're ready to go.

While that doesn't mean you shouldn't test the entrepreneurial waters, neither does it mean you should operate the way you would in a robust economy.
Here are five keys to launching a small business, and keeping it afloat, in an uncertain economy.

1. Keep an eye open to opportunity. If you've been bitten by the entrepreneurial bug, but haven't yet settled on a specific business, pay attention to the impact the economy is having on different sectors. For example, the corporate downsizing that occurred during the 2001 recession and afterward created some market openings.
   
   Sharon Miller, chief executive officer of the Renaissance Entrepreneurship Center, a business incubator in San Francisco, says support services formerly performed in-house represent a particularly fertile field as more and more companies farm out functions such as public relations and payroll. To spot opportunities, keep an eye on the business press for reports of downsizing by local companies. Also, be aware of changing consumption patterns.
   
   If security threats and other uncertainties mean people aren't traveling as much, where are they spending their discretionary income? An idea for a new business or two might lie in the answer to that question.



2. Be extra diligent about your due diligence. You think you've got a good idea, but does the marketplace? Uncertain economic times demand that any new enterprise have legs enough to keep going in the face of tight money and sluggish demand. First, do some homework — by all means talk to people already in the field — to determine if there really is demand for what you want to do.
   
   Then, figure out if you can do it profitably. Take a hard look at costs of the enterprise and weigh those against the price you think you'll be able to charge for your product or service. Do your computations add up to positive cash flow and profitability, or will you be operating in the red from the outset? It's also essential that you be brutally honest about your own shortcomings.
   
   You may have the primary skill needed to succeed at the business you've chosen, but what about the more generic aspects of running a business? The marketing? The accounting? If you need help, get it.



3. Cast a wide financing net. A slumping economy generally makes it tougher for a small-business startup to qualify for financing, and chances are you won't be able to get a conventional bank loan for your business. So, time to think outside the box. Stan Mandel, director of Wake Forest University's Angell Center for Entrepreneurship, suggests these four alternatives:



4. Be tight with your money. Wherever you find your money, uncertain economic times demand that you be careful with it. Cautions Bill Dunkelberg, chief economist of the National Federation of Independent Business: "Don't spend your money too quickly, and make sure you've got a pot of cash in case the slowdown lasts." And if you're operating thanks to investors, Mandel says, be sure you have a clear understanding of the milestones they expect the business to reach in the short term, and make certain you have the money on hand to make that happen.



5. Operate creatively. This is almost a corollary to the preceding point. The name of the game is to stretch your operating cash to the maximum extent possible. That requires
   creativity. Miller recommends doing a "personal/business audit" that spares no expenditure, no matter how seemingly inconsequential, from scrutiny.
   
   The idea is to see if there's "any give in the overhead." Savings, like the devil, are in the details. "How much do you spend on coffee?" Miller asks. And, "Do you have someone come in to take care of the plants?" If you do, think again. Miller also is an advocate of creative partnerships that allow two or more businesses to share expenses. One firm she is aware of provides office space to an independent sales rep who, to pay the rent, handles the company's sales chores.

Whatever particulars apply to you and the business you're trying to start, the common denominator that should inform your every effort is total commitment. Says Mandel: "You have to be ruthless in terms of trying to get your business launched."

Reference: Philipp Harper courtesy of entrepreneurship blog www.aldainreid.com