During this blog series, we asked if you have Ever Considered Starting A Business, provided some insight on why you should, and showed you how to Turn Your Ideas Into a Small Business. Now that you have discovered that starting a business is something you would like to do and how your product helps serve others in your community, let’s dive into our next question: Why should I start a new business right now?
Consider the economy
Though we assist entrepreneurs across the country, this blog is focused on the state and economy we are most familiar with, California.
California’s thriving economy is known as a hotbed for startups and small business, both because of its thriving economy and with Silicon Valley being located here. Though the misconception is that California is the birthplace only for tech startups, the reality is that this economy provides opportunities for all business types.
For many reasons it is much easier to launch a business during strong economic times, and according to City National Bank’s News & Insights, “California’s economy continues to grow at a faster rate than the U.S. economy,” giving many entrepreneurs a much needed boost to get their business idea off the ground.
Not only is the growth rate important, but when selling products and services it is always a benefit to have a large pool of prospects to attract. Luckily, California has a very large economy that includes many buyers of products and services. To give you a better idea of the size of our economy, if California were its own country, its economy would rank in the top 10 economies in the world.
Though we have looked at all of this from a more macro perspective, as a startup and a small business, you would want to look from a more micro perspective. Take a look at your local economy and see if it is the right environment for the type of business that you want to start.
These are just a few examples of questions you should be asking yourself when analyzing your local economy: Do the prospects I am looking to attract have money to spend? Is there a big pool of potential clients to go after? Is my local economy growing or retracting?
If you don’t, someone else will
For every one business that is established in California, there are thousands of Californians who are waking up every morning saying, “This will be the year I do it!” The unfortunate reality is that most of these individuals get stuck in the trap of only talking about doing it and never acting on their plans.
Based on our experience, fear is the number one deterrent for people not taking this first step, the second being not asking for help from a business advisor. As experienced business advisors, we have helped many individuals talk through their business ideas and come up with solid business plans for either starting a new business from scratch or buying an existing business or franchise that is within the industry they desire to be in.
We understand that the fear of being away from your steady job can create a sense of financial insecurity; however, the regret of maybe reaching an age where owning a business no longer makes sense, or seeing someone else benefit financially from the same business idea you had can sometimes be worse.
When looking at my life as an entrepreneur I try to remember that, “Regret is like cancer to the soul, and it can certainly do a lot of damage.”
High taxes or over regulation?
If you have ever looked into doing business in California, you have most certainly come across the articles about big corporations leaving California for more business-friendly states such as Texas. The perception to most is that it is due to high tax rates. Though the corporate tax rate in California is slightly higher than the national average, this is not the real reason businesses leave. In fact, most businesses, especially small ones, do not get taxed as corporations. Their income is passed through onto the owner’s tax returns and taxed at their specific tax rate.
So if it is not taxes that make doing business tough in California, what is it? Based on our experience, over regulation seems to be the culprit. What do I mean by over regulation?
Local (city or county) or state regulations on specific types of businesses can make it very difficult to get started in California when compared to other states. For examples, in a state like Texas, a new restaurant can get all the permits and approvals they need within a couple weeks. The same process in California can take a couple months.
When looking at your new business model, it is always best to go over it with experienced business advisors such as the ones at Archuleta & Co. During the discovery process, we assist our clients with identifying how their local economy will impact starting a new business, why they should or shouldn’t act at that specific moment, and how local and state regulations will impact their new business.
In taking that first step, a new entrepreneur should call our office at (916) 850-2424 and set up a free consultation, either at our office in Roseville, CA, or via web/phone conference. Doing so will give you the reassurance that you are making the right moves at the right time and help eliminate some of the risk associated with starting a new business