Unless you are selling in a very specific niche market and you do not need large amounts of credit you will be affected. Either your sales will fall as people stop spending and start saving or the bank will not give you the much needed loan. If you live in UK or the USA you probably have noticed how the banks advertisements have changed from advertising their “great” mortgage deals to advertising their “great” saving accounts. This demonstrates how the banks have anticipated the change in the economy and are preparing for a recession in the economy.

Many of the big players fall during a recession because they are too dependant on a growing economy and fail or refuse to accept that the economy will not keep growing for hundreds of years without also major falling just like major increases. Being small during a recession can also be used as a major advantage because it means you are more flexible in your operations. What I mean here is that if you see that you are unable to meet mortgage re-payments then sell off and downsize, don’t use all your savings up and then before you know it you have gone bust. Another example is that if you have two warehouses and your customer base has decreased then downsize to one warehouse.

My main point for small business owners is that do not go against the flow but with the flow. While in a booming economy you expanded in a failing economy you downsize.

The general idea about a business plan is that it’s something the bank forces you to do if you are requesting a loan or on the other hand you are trying to persuade investors to invest in your business. However if you do think like that then you should probably stop because a business plan is actually necessary for you no matter how you plan to finance your business.

The main reason of writing a business plan when you have a business idea is to test if that actual idea is viable in the first place. Writing a business plan will essentially also help you to work out if your business idea has a chance of becoming into a successful and profitable business.

By writing a business plan you are required to research about your idea to get all the necessary information that will turn your idea into a successful enterprise. If after the research and after you finish your business plan it turns out that your idea doesn’t work then dump the idea and think of something else. All that has happened is that you have lost time but also learned from it.

On the other hand if you decide to go ahead without a plan and your business fails then you would have lost a lot of valuable resources because you may have failed due to the fact that there could have been thing you didn’t know but could have known.

You probably want to get on with your idea straight away and think you know everything but it always helps to be patient and invest some time and energy into writing a good business plan that will help you avoid failure. Remember “failure to plan is planning to fail”.