How to launch a company in a recession

The current economic climate is tough for business – cutting costs rather than expanding has been the objective for many. Whilst the latest Budget has offered some tax breaks for SMEs, the road is full of red tape and bureaucracy obstacles for small companies looking to expand.

As ambitious young entrepreneurs, we were eager to build on the success of our company, Instant Impact,?in the UK (which saw us place 120 graduates in our first financial year) and were keen to launch a new breed of on-campus recruitment in the US. However, in a recession, and within just two years of starting Instant Impact in the UK, launching abroad was inherently risky.

By expanding in conjunction with American recruitment firm Elm Talent, who simultaneously wanted to bring their scientific approach to finance and tech recruitment to the UK, we set up two new organisations: Instant Impact in the US and Elm Talent in the UK. We did this for under ?2,500 each, in less than three months, and both businesses are already profitable.

Cost effective, flexible and risk-averse: we call this model the “Director Swap” and here?s how we did it:

A director from each company swaps country with their trans-Atlantic counterpart to launch their respective companies abroad as joint ventures; we each have a 50 per cent stake in the success of our new businesses.?

Each director has transferred their lives for three months from London to New Haven and vice versa, whilst their business partners manage the existing companies. By using each other?s offices as working bases and even swapping apartments and cars, travelling has been our only significant expense, with each company spending less than ?2,500 thus far.

This synergy between our partner companies facilitates our endeavour as both our companies specialise in different areas of recruitment; Instant Impact for graduates and Elm Talent for professionals with two to 15 years of experience.

With no conflicts of interest, common goals and complementary knowledge the new ventures, we found success by capitalising on each other?s resources, local knowledge and expertise, rather than relying on costly external help or capital.

Crucially, using the “Director Swap” method, we don?t neglect our original businesses; our four companies always have a full managerial staff, ensuring that full workforce capacity is maintained whilst simultaneously planting the seed for our new companies.

Two new companies, two continents, three months, for under ?2,500 each. Here?s to SMEs riding out the recession.

Rob Blythe is co-founder and Director of Instant Impact, the graduate recruitment agency that unites top graduates with fast-growing SMEs in paid internships and graduate jobs.

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