From sole proprietorships and small businesses to mid-size companies and corporations, the history of entrepreneurship and a go-getter attitude has a long-running history in this country. And yet, at the heels of the pandemic, at the door of rising inflation, and in the midst of political upheaval across the globe, is it a good idea to start a business?
The answer is always dependent on the individual, the type of business, and a variety of other factors.
Let’s look at the big picture. As tax professionals that assist business owners with their business, our job is to look at the numbers, to use the tax code in the most efficient way possible for your particular business.
The Brief History of Entrepreneurship in America
The adventure-seeking, dive-into-the-unknown, go-getter spirit has a long tradition in America. Early colonists were farmers and tolled the land for survival. It wasn’t easy. When new colonists and settlers came over from England, everything was uncertain. They possessed, however, perseverance and a belief in what they were doing.
In the 19th century, small agricultural ventures began and spread across the land, spurring the expansion of economic activity and helping to sprout towns and city centers. The idea of the economically independent farmer and merchant was born. The economy grew bigger and more complex, opening up opportunities for business-minded people to capitalize on their skills. The independent craftsman, clever merchant, and self-reliant producer became an increasingly important part of the growing economy.
As the 20th century rolled around and the Industrial Revolution took hold, growing enterprises and corporations grew their role in the American economy. And as the tumult of the 20th century raged on, the economic depressions, the world wars, and the cultural shifts led to a society that greatly encouraged and promoted the idea of the independent business person who took a chance.
Opening a Small Business at the Tail-End of a Global Pandemic
An aspiring business person might be looking at the economic landscape and second-guess themselves. According to Accounting Today, small businesses lost 96,000 jobs in February, although the private sector overall added 475,000 jobs for the month. And while it’s important to consider the bigger picture as you enter a competitive market, it’s important to know that startups can flourish in uncertainty and economic turmoil. It’s entirely possible, it just takes a little planning, strategy, and grit.
The global pandemic only emphasized the resilience of the small business owner. Thousands of company owners and small businesses were forced to pivot, shift, adjust, and find creative ways to modify their business plan or model.
How Do You Get Started on the Right Foot?
Despite the many business degrees out there, there is no surefire way that works for every business venture. Some of the most successful entrepreneurs and start-ups of the 21st century were not started by business professionals or graduates of business programs. So, what are the ingredients to starting a business amidst economic uncertainty?
- It begins with a strong belief in your business idea and venture. Without the heart, a business will collapse very quickly, whether economic conditions are favorable or not. And while passion doesn’t pay the bills, it certainly fuels the machine that needs to get things done.
- Don’t shy away from niche markets. Finding your audience has always been a central part of making a business successful. As the pandemic shifts many aspects of people’s lives, it opens up gaps and opportunities that need to be filled.
- Embrace digital. A digital strategy is almost a necessity for most companies. Social media and the internet are interesting phenomena. They offer a way to connect with an audience in unique ways. The digital infrastructure can be far less expensive than starting off paying rent in a brick-and-mortar location.
Real-World Examples of How Businessowners Reacted to the Pandemic
Forbes recently profiled a couple of savvy business owners that shifted their strategy when they were pushed into a corner by the pandemic, and how it helped them through the economic turbulence.
One of these was a man running a successful youth sports league who suddenly found his teams stopped and games canceled. Instead of sitting back, he took a close look at his community and partnered up with a local pizza maker. He used his existing network and developed a temporary business plan to deliver fresh pizzas to the community.
Another was Mitch Glaser, cofounder of a wellness company. As a former Wall Street guy, he knew the importance of adaptability and quickly made adjustments in his business when the pandemic hit. He shifted his message and ramped up his social media, targeting people’s real pain points.
How a CPA Can Help You in Those Early Stages
Whether your business is brand new or you’re looking to expand an existing startup or side gig, speaking to a CPA offers numbers-based guidance that will put you in a stronger position. Business owners often underestimate the complexity of the tax laws as it applies to businesses.
A CPA assists aspiring business owners with:
- Discussions about the proper tax structure. What business entity is right for you? Each one has tax implications that make a considerable difference when it comes to tax season.
- Helping build your business plan. A CPA works with numbers. They understand existing regulations, changing policies, and understand the effects of this on a business operation. Working with a CPA on your business plan infuses your existing ideas with a numbers-based emphasis on growth while carefully strategizing startup costs, operating costs, and much more.
- Staying in compliance. No business owner wants to find itself head to head with the IRS as they kick off their business. A CPA stays ahead of these law changes and keeps your business in compliance.
- Establishing a relationship that helps the business in the long term. Your CPA can do much more than just tax preparation for any given tax year. By establishing relationships with a CPA early on in your business, the relationship can flourish and become an asset to your business in the future.
Start Your Business on the Right Foot With Seasoned Tax Professionals
At Sovereign CPA, we aim to develop relationships with clients to better assist them through their business growth. As tax professionals that have helped business owners across various industries, we aim to understand your business to better serve and assist your needs.
Learn more about what a CPA can do for your business. Call us today.