By Alma Robinette
As the cost of living continues to rise, more people are exploring new ways to start to reach financial independence — and it’s easy to understand why. A huge gap exists between the amount of money most professionals make and the amount they need to lead comfortable lives. And this makes it imperative for them to either work longer hours, work two jobs, or in some cases seek greater financial freedom through their own business ventures. Now, however, the ongoing global health crisis of COVID-19 is impacting these initiatives.
Unfortunately, the economic challenges associated with said crisis are likely to make the gap between what people earn and what people need even wider for the foreseeable future. And this is leading some would-be entrepreneurs and small business founders to take a step back and question whether now is a good time to start a new business.
Since the onset of the pandemic, over 100,000 small businesses have already ceased operations permanently, based on a working paper sponsored by the National Bureau of Economic Research (NBER). Additionally, some businesses that were able to weather the storm are now being fined for failing to follow proper safety protocols. And on top of these issues, we still don’t have clarity as to when the economy can fully and safely reopen, or when consumers will have full confidence patronizing businesses once more.
Despite all of this, however, the allure for many to start their own businesses remains. For some, in fact, it may have grown stronger. People feel vulnerable in difficult times, and the notion of becoming one’s own boss can seem reassuring, liberating, and even financially strategic as a result. Additionally, many who have lost financial resources or regular jobs during the pandemic may be looking at this as the perfect time to try a new venture (whereas it can be harder to make that leap when things are going well as they are).
In the end, the answer to whether or not now is a good time to start a business depends on your own situation, and how likely you believe it is that you’ll succeed. But if this is something you’re considering, there are a few things you’ll need to do in order to give yourself the best possible chance at succeeding in a challenging time.
Make a Business Plan
There is nothing more crucial to business success than proper planning — particularly now when there are so many variables attached to the very concept of work. Once you’ve decided on the product or service you want to provide then, take the time to ask yourself a few important questions: What is the true purpose of your business? Who are you selling to? What are your end goals and what steps can you take to reach them? How will you fund this venture? These fundamental questions, and many more, should be comprehensively addressed in your business plan. Business News Daily’s startup guide spoke to the idea of planning ahead this way, and made the crucial point that in any business venture, “things will almost certainly go awry.” If 2020 has taught us anything with regard to business, it’s the truth of this statement — and by extension the importance of having a thorough business plan.
Consult a Financial Advisor
Building a business is a big risk in the best of times, and will naturally feel all the more daunting in the time of COVID. One of the best ways to mitigate risks and make yourself feel more stable in this endeavor though is to make sure the financial side of the business is as sound as can be. And this is where a financial advisor comes in handy. Employing an advisor will first and foremost increase the likelihood that your business will be efficient and profitable. But additionally, U.S. News & World Report’s advice on financial advisors points out that professionals in this field can also expand how you think of company finances — providing you with accurate projections and insights on matters such as risk, investment opportunities, taxes, and more. Essentially, you’ll move past thoughts of costs and revenue and come to consider your business finances in a more comprehensive manner. This can only help you to succeed in difficult economic times.
Register Your Business
After laying out a business plan and seeking the advice of a financial expert, the next step is to ensure that all the necessary paperwork and licenses are covered. Thankfully, the process is simple for those who decide to start a sole proprietorship or a partnership. And for those who want to form a Limited Liability Company, ZenBusiness's guide to state-recognized LLCs makes clear that there are only a few steps that need to be taken, all of which can be done online. This last option may actually be the most suitable to a new business starting up in difficult times also, though. An official LLC carries certain liability and tax structures that can protect business owners financially — which is clearly a chief concern now more than ever. Most notably, LLC founders won’t have to pay some of the additional taxes that self-employed individuals are often subjected to. And in a post-pandemic world, those savings may be the difference between business success or failure.
Seek Out Small Business Assistance
We’ve looked at ‘Small Business Resources to Combat COVID-19’ throughout the current crisis, and while many businesses have still struggled mightily, there have been various programs established to try to help them stay afloat. These vary in style and substance, and different programs are meant to help different businesses. But the bottom line is that government entities are doing what they can to help small businesses succeed despite the challenges posed by the pandemic. For the most part, existing assistance is not designed to fund new startups. However, once you get your business set up (another reason to register it officially), you may find that you’re eligible for some of the additional aid packages that will be forthcoming in the months and perhaps even years ahead.
Rest assured, you have a challenge ahead of you if you’re considering starting a business, particularly during these difficult times. But if you work diligently and accept the challenge, there will come a time when you’ll be able to reap the rewards of all your hard work.
ABOUT THE AUTHOR
Alma Robinette is a freelance business writer. She has spent her career advising new business owners through her articles, and hopes that she has inspired many entrepreneurs to start their own company. In her free time she plays online chess