This year will be a good year to start a business. As entrepreneur and Ohwabisabi Media founder Kelly Wing notes, new businesses can offer solutions to the many consumer problems this pandemic has created, and that means there are plenty of business opportunities to explore. In addition, last year’s prolonged stay-at-home orders would have given aspiring entrepreneurs, like you, time for introspection and moments to discover your true passion. Suffice to say, it is time to start that business of yours!
As you do that, make sure to keep in mind the following things that startups need to succeed in 2021… and beyond. Take a look:
The right legal foundation
The legal structure of a business affects its taxation, paperwork requirements, and owner liability, and that is why choosing the right one is crucial. That said, the US Chamber of Commerce recommends not overthinking this choice, as you are likely to start as a sole proprietorship anyway before shifting to one that best suits your business, like a limited liability company (LLC) or a C corporation. The simplest structure is a sole proprietorship, which is “a business owner who runs a business without any formal corporate structure” and reports their profits and losses on their personal income tax.
However, a sole proprietorship might be too simplistic due to startup owners being increasingly risk adverse in response to the pandemic. This is because a sole proprietorship does not separate personal and business assets, whereas an LLC does. All LLCs will keep your personal assets safe in case the business faces a lawsuit or goes bankrupt. However, the difference you need to be aware of is that depending on your state the process may be different. To get an LLC here in Maine you must file a Maine Certificate of Formation with the Secretary of State’s office, while in California applicants are required to file a trademark for their business name and a Statement of Information. But regardless of the process, the benefits are more or less similar.
If overseas expansion is something you foresee, then a C Corporation might be the right structure for your business. As in an LLC, a C Corporation offers a degree of liability protection, though unlike an LLC, a C Corporation won’t exempt you from double taxation, as you will still have to pay both personal and corporate income tax. But at least you will find it much easier to go international as a C Corporation, and secure funds from investors. Given these differences, take the time to study each structure before settling on one.
An online service
The pandemic has made online services necessary. In 2020, some 35% of personal businesses began offering their services online, as customers were forced to stay home for extended periods of time and physical establishments were closed. Even established businesses have pivoted to this business model, with Locomotion Fitness, for instance, offering virtual fitness classes via Zoom in order to survive.
This business model will remain relevant moving forward because consumers will demand it. In fact, 87% of customers begin product searches online, and that number is projected to rise in the coming years. It is imperative, therefore, that your business offers services digitally, otherwise it will be left behind in these fast-changing times. As an added bonus, going digital helps reduce overhead costs by eliminating the need to pay rent and utilities for office space.
A modern team
The concept of a business team has been changing for a while now due to the shift to remote working arrangements, but 2020 has accelerated this shift and changed how we work forever. In order to succeed this year you will need to not only form a team that are well-trained and highly knowledgeable, but a team that can thrive during these new times. You will need to be aware of challenges that come with forming a remote team, such as efficient onboarding, tracking performances, and, if you are truly going remote, potential language barriers. Cast as wide a net as possible in your talent search, be extensive with your interviews, and stay patient.
A prudent and patient you
Lastly, your business needs you to exercise prudence and patience, as acting on a whim, especially in these current times, could cost your startup a lot. A lack of both could lead to any of the 3 Expensive Mistakes Founders Make, like making a big decision without any planning, doing everything on your own and all at once, and being unrealistic. These mistakes will significantly set back your startup, so it stands to reason that you should be more deliberate in everything you do. Plan in great detail. Set SMART goals. Learn to trust your team and delegate. In short, be the best entrepreneur you can possibly be.
2021 is going to be a tough year for all businesses, old and new, looking to survive. Yet while the environment may have changed, being a good leader hasn’t and if you can adapt your startup will find success.
