How to Start a New Business in 2020
The calendar has turned to a New Year and a new decade as well. We are now in the 2020s, and for those who are entrepreneurial minded, this could become a throwback to the “roaring 20s” of the 20th century. Although there are always some potential concerns, the U.S. economy is fundamentally sound, and there are seemingly boundless business opportunities across a wide range of industries.
If you have decided that 2020 is your year to finally get into business, it is important to know ahead of time that owning your own business is not for the faint of heart. The life of an entrepreneur is much different from that of an employee. On the plus side, your schedule is more flexible, and your income is limited only by your own creativity, determination, and execution. On the minus side, your income is not necessarily steady, you will be putting in a lot of hours, and there are numerous headaches a business owner has to deal with that an employee does not have to worry about.
If you believe you have what it takes to chart your own path and become a successful entrepreneur, then there are endless avenues available for you to make your dream a reality. The first thing you need to do is decide that owning a business is the goal you want to pursue and achieve this year. By making that firm decision, you are cutting off all other possibilities and resolving that you will become a business owner this year. With this mindset, you will be ready to overcome the countless obstacles that will be thrown into your path.
There are several steps you will need to take to get into a new business in 2020, here are some of the most important:
Clear your Decision with Your Family: If you are single, then this step will not apply to you. But if you have a spouse and perhaps children, then you will definitely need to get them on board with your decision to make the leap of faith into entrepreneurship. There will be some difficult days, especially in the beginning. You will be putting in long hours, and at times, it will seem like the rewards are a long way off in the distance. If your family is behind you, they will support and encourage you when things do not seem to be going your way. If not, they could drag you down and make you feel like giving up when times get tough.
Determine Which Type of Business You Want to Be In” There are literally millions of viable businesses that a person could start, but most likely, there are really only a handful of businesses that would be a good fit for you to start. For example, automotive repair shops can make a lot of money, but if you know nothing about car repair and you have no particular passion for vehicles (other than just driving them), then you would probably not want to get into this type of business, regardless of the profit potential.
To determine the type of business you should go into, you need to evaluate three things primarily:
- What are you good at? That is, what are the one or two things you do better than most other people?
- What are you passionate about? In other words, what do you really care about, what really animates you?
- What can you afford? What kind of budget will he be working with to get into business?
Count the Cost and Look at Your Financing Options” From those questions, you should have been able to identify some businesses you would like to find out more about. Next, you will need to look at the financial aspects of getting into business. There are two ways primarily that you can go about this:
- Start a Business from Scratch; or…
- Purchase an Existing Business
There are advantages and disadvantages to both options, and each will come with a cost. Clearly, buying an already established business will cost more money than starting up a business on your own. But you have to also look at how you will be able to transition from working a regular job into becoming a business owner.
For example, if you start from scratch, you can expect to wait several weeks or even months in many industries before you will turn a profit. And this is assuming that you put in long hours in the beginning as you start your business.
The challenge is that, in order to keep putting food on the table, you may not be able to work as much as you would like on your new business. In many cases, you will need to start it as a “side hustle” that you work on at nights and on weekends until you have enough income to leave your current job. Depending on the type of business you want to start, this is certainly a viable route you could take. Just keep in mind, however, that this will mean extremely long hours, a lot of family sacrifices, and likely a very long time before you start to see any real income.
Buying an established business that is already turning a profit requires a sizable investment, but there are also some nice rewards that come with it. By getting into a business that is already profitable, you are bypassing months of hard work building the foundation, and all you need to do is effectively manage and build upon an already proven concept.
You may be saying to yourself, “that all sounds great, but who has the money to purchase an established business”? It is true that most people do not have a pile of cash lying around that they can use for this purpose, but there are financing options available. Traditional banks are generally skeptical about giving business loans, especially to someone purchasing brand-new, but there are numerous alternative financing methods.
For example, maybe someone in your family has the money to lend you or could even put up capital to invest into a portion of your business. Or with home values rapidly rising lately, you might have some equity in your house that you could use. 401(k)s are also much more valuable in recent years, so you may want to look into taking a loan against your retirement account.
One word of caution about financing to purchase a profitable business. Be sure you have determined that you are passionate about the business and you have the required skillset to effectively run it. A business that was profitable yesterday is not guaranteed to be profitable tomorrow, and you will need to have the ability and determination to continue doing the right things to maintain its success.
Take Action Right Away: You have made a definite decision, you have your family behind you, you know what kind of business you want to be in, and you know how you plan to finance it. All of this is great, but it does you no good if you do not act on it. If you are 100% certain that getting into business is the right move for you, then there is no need to put off taking action any longer. If you procrastinate, you will lose momentum, and before you know it, the days on the calendar will vanish and you will find yourself at the end of another year in the same place you were the previous year. Do not let that happen to you. If you know what you want and you have a solid plan to get there, take action immediately and move toward the goal you have set.
Assemble a Team of Experts: One of the first actions to take is to get some qualified experts on your team. You will need an accountant to help ensure that your financial records are organized, and that you stay in compliance with tax laws. You may also need a lawyer if you are looking at forming a corporation or LLC, and to make sure you have all of the proper legal documents in place.
Finally, if you have decided to purchase an existing business, you will need a reputable business broker/intermediary. A business intermediary is a very valuable resource, because they can curate a list of businesses for sale that meet your requirements, and they can provide expert guidance to help you successfully navigate the ins and outs of a complex business purchase transaction.