The United States has seen an unprecedented leap into business ownership in 2021. The Coronavirus pandemic has created a number of opportunities for many would-be entrepreneurs. Many Americans are starting businesses for a variety of reasons: Change of lifestyle; re-evaluating priorities; job transition creating the need for a “side hustle” which turns into their main occupation; or developing an unforeseen business created by the pandemic. For whatever reason Americans’ have started new businesses during the pandemic at never before seen rates.
In 2021 there were 5.4 million applications for business tax identification numbers (EIN) according to the United States Census Bureau. This is up 1 million applications from an all-time high in 2020 of 4.4 million and way over the pre-pandemic application levels in 2019 which saw total applications for EIN’s of 3.5 million. While these applications do not necessarily translate into new businesses on the street, what it does reflect is that the American mindset of creativity, ingenuity, and being a self-starter created by the conditions of the pandemic appear to be the movement of the future.
While, for many, this is a dream come true and the opportunity of a lifetime, taking care of this investment and livelihood should be priority one. Statics show that well over 50% of new business start-ups die in the first year. In order to help new business owners and entrepreneurs succeed, we have provided a few tips to help you focus on ensuring success of your new business enterprise.
Always Remember, Cash Is King
Many times business owners get caught up in the operations, sales, and marketing of a business that they forget the one vital mission that every business should have – Generating positive Cash Flow. Without positive cash flow, there is no business. Many times, it is hard to generate positive cash flow with a start-up business. That is fine as long as you have a plan and ability to access capital. Getting to positive cash flow should be in your line of sight from day one. Sounds simple but it’s missed by many.
Have A Plan
Many times entrepreneurs come up with a great, creative idea and jump out of the gate with their product or service without really doing the due diligence around the product or service. Can you make a living doing it or producing it? Can the product be produced in quantity to result in enough sustainable income? Can the service or product survive long term? Great ideas are born from great creativity, but sometimes those ideas are not sustainable. Doing the research and understanding your market is critical to that sustainable plan.
Who Can Help
American’s tend to be individualist by nature, meaning they don’t want help and want to do it on their own. While that is often the American way, sometimes having a support function like a business mentor or advisor can help in more ways than one can imagine. Working with a seasoned professional that has years of experience in business can help new entrepreneurs avoid the many pitfalls of starting your own business. Seek out a professional through business networks, advisory firms or through your own contacts that will help you make the right decisions to create longevity in your business.
Have you ever watched the movie “Karate Kid”? Or, are you possibly watching the NetFlix Series “Cobra Kia”? Daniel LaRusso, one of the main characters, speaks lovingly about his karate Sensei Mr. Miyagi. Mr. Miyagi was Daniel’s mentor, but not only as a karate student but in life. Mr. Miyagi would say “One must find balance in whole life”. While many entrepreneurs start out with a focus of the business and only the business, it is important to ensure the right balance of business, family and play in order to have a healthy relationship with not only your family and friends, but with your business as well. Taking time once in a while to recharge the batteries will help you to better drive your vision of the business and to be able to sustain the constant pressures that being a business owner brings.
Allow History To Be Part of Your Future
History tells us a lot. It tells us what works and what does not work. It allows us to dive into things to analyze and understand what key initiatives worked for the most successful entrepreneurs and what were the key driving causes of failures for some. Understanding what works and does not work along with the “Why” behind it can help you blaze a successful path forward in your business, helping you avoid the pitfalls that some had as well as the successful habits and practices that others had. Books are a great resource for business owners. For example, the book “Good to Great” really dives into the concepts that worked and did not work for many businesses. Again, this is just one example that will help you use history to build your vision and plan.
McKonly and Asbury’s Entrepreneurial Services and Accounting Support team can help you navigate these key initiatives and matters. Our group of seasoned professionals work with many start-up businesses helping them navigate the many challenges of running a business on a daily basis. Our services range from internal accounting support to high level services of Chief Financial Officer and business advisory support. Visit our website to learn more about our services or contact David B Blain, Partner and Director of Entrepreneurial Services and Accounting Support or Lindsay Young, Principal.