If you’re planning on starting a business, you’re in excellent company: there are nearly 30 million small businesses in the United States. New businesses face modern challenges: marketing in the age of social media, navigating current regulations and securing funding when more than 600,000 new small businesses open shop each year. If you want to start a business, you’ll need to be prepared for the challenges faced by small businesses in 2019.
Securing Funding in a Crowded Market
Even if you are starting a business with a sizable war chest or assets to back you up, you’re never completely safe from financial difficulties. 82% of businesses that fail do so because of cash flow problems.
The average startup needs at least $10,000 in funding cash. But that’s just the average — small businesses need money, but may not need that much.
The startups that get the most money from investors build on the trends that are popular with investors — for example, in tech right now that’s technology like AI, big data, and chatbots. And it’s not totally unreasonable — 42% of startups fail because of a lack of market need. If you are planning to start your business using investor capital and you’re not building on the trends in your field, you may have a harder sell in front of you.
If you want to start a small business but don’t have the financial resources on your own, you’ll need to look elsewhere for funding. Many small business owners start with their own money, but some borrow money from friends and family or crowdfund to make their dream a reality.
Before you start making any money, you’ll need to cover several expenses — business space, logo and web design, designing prototypes, or hiring employees. You’ll need to have some f cash reserve to lean on in before your business becomes profitable.
Debt can be a small business killer — if possible, you should be debt-free before trying to start a business.
If none of those funding routes work for you, loans are a possibility. But loans will need to be paid back and come with interest. There are other options for securing funding, like federal grants for small businesses.
Legal Challenges Facing a New Business
Starting a new business is easier in the U.S. than almost any other major country — but that doesn’t mean it will be without challenges.
Before your business has served its first customer, you may need a trade name, Employer Identification Number, and business license. Some fields will require specialized permits and certifications beyond a business license. And if you decide to incorporate, you’ll need to know which kind of structure will be best for your business — like a sole proprietorship, an LLC or a co-operative.
New businesses need to comply with a number of regulations and new business owners can benefit significantly from legal advice, especially if they are setting up shop in a field that is more tightly regulated than others. If you plan on holding onto sensitive customer data, for example, you’ll need to comply with cybersecurity regulations and properly defend that data.
Researching what laws govern the area your business will work in is a good start, but hiring someone with legal expertise may be your best best.
Branding and Marketing in the Age of Social Media
Social media, love it or hate it, is now an essential marketing tool for small businesses.
If you don’t have a background in business or marketing, you may have to quickly familiarize yourself with a considerable number of digital marketing tools: SEO, social media marketing, pay per click. And even more familiar marketing methods will require you to learn some new tricks: do you know how best to market with email newsletters? Do you know how to plan an event that will drive sales?
You may not have the luxury of being able to afford help with your marketing and branding. If so, you’ll need to learn fast how to market your business using social media and the internet.
Building a New Business in 2019
Funding is probably still the most important factor in a business’s success. But just having money won’t be enough to build a successful business. New businesses face modern challenges — to start a new business today, you’ll need to either be knowledgeable in finance, business law, and marketing, or you will have to find someone who can advise you.