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Is NOW the Time to Start Your Dream Business?
Author: Matthew Mueller, Director, Commercial Lending
With the number of new business applications up 53% since 2019, you may be wondering if now is a good time to start a business. As with any new venture, there are pros and cons to owning your own company, and many things to consider before setting out on a solo venture.
If You’re Dreaming of Flexibility…
Work-from-home scenarios during the COVID-19 pandemic introduced a new type of work week, one not confined by the four walls of an office. When companies began asking employees to return to their cubicles, several chose to extend that work-from-home flexibility by opening their own businesses. In fact, 62% of business owners say they started a company because they wanted to be their own boss.
However, there is more to operating a business than the freedom to run to the grocery store midday, and it isn’t all positive. For many business owners, the divide between work and their personal life is very thin.
A recent survey of 500 entrepreneurs revealed that 51% have trouble “switching off” and think about work issues during their free time. According to the same survey, only 29% feel they have a healthy work-life balance.
Statistics like these offer hints to the would-be business owner. If you’re the type of person who likes to walk away from work worries and stress at the end of the day, operating your own company may not be right for you, whether you’re considering a new venture now or in the future.
Will Your Business Succeed?
Beyond day-to-day operational stresses, the majority of business owners worry about generating enough revenue to keep the lights on. According to the U.S. Bureau of Labor Statistics, 20% of new businesses fail within the first year of being open. Another 45% will close up shop within the first five years.[i]
In today’s market, business viability concerns are amplified by a number of factors, such as inflation, finding the right talent and continuing COVID-19 restrictions in some industries. Three-quarters of business owners say COVID-19 outbreaks continue to negatively affect business success. Others have been forced to raise prices and work longer hours to remain competitive in today’s inflationary environment.
Still, business owners tend to lean toward optimism, with one in three indicating that their business is in good financial health, according to a survey conducted by the U.S. Chamber of Commerce. What’s the secret to success? For many startups, it comes down to building a solid foundation by setting up the company correctly right from the start.
Building Your Business Foundation
For those who persevere through the ups and downs of daily operations, the passion for their work outweighs the concerns inherent to business ownership. If you think you’re in this camp and are ready to start your dream operation, then it’s important to build your business on a firm foundation.
First, consider whether there is real demand for your product or service. You may be passionate about making widgets, but if no one is buying that product, your business will find it hard to thrive.
Most owners will explore the demand issue as they write their business plan. This important document acts as a guide for your business operation. To create your business plan, you will study market conditions and competitors to gain valuable information on how to position your brand.
It’s also where you will outline your operational structure, set goals and provide an overall plan for running your business. To help navigate this critical starting point, we’ve developed a step-by-step guide to creating a business plan.
The second key consideration in setting your business up for long-term success is building a BAIL team. No, it’s not to protect you in case of arrest. Instead, it’s to surround yourself with experienced professionals who can guide you as you establish your business.
Your BAIL team will include your banker, accountant, insurance representative and legal counsel. The experience of these individuals will help you determine the organizational structure of your company, find funding, and even mitigate future complications and losses.
When starting a business, timing is definitely a factor. But patience and tenacity in researching your opportunity and building the right foundation are even more important.
About the Author
In his role as Commercial Lender, Matthew supports the success of local businesses. He offers financial advice and devises solutions that improve efficiency. Matthew strives to position his clients to win in their respective industries. He became involved in the financial services industry in 2005 and joined First National Bank in 2016 as a commercial lender.
The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.