New business applications surged in 2020, a 24 percent increase from 2019. Although the COVID-19 pandemic has caused shutdowns and other economic disruptions, it hasn’t stopped millions of Americans from launching their own dreams of entrepreneurship. As new businesses bloom everywhere, could it be your moment to follow suit? Keep reading to figure out if now is the right time for you to start a business.
What do you want to get out of your business?
To start, you need to be clear about your goals for your business. For example, are you trying to turn a hobby into a part-time side hustle? Or are you aiming bigger with the goal of making your business a full-time job? Will you stay local, such as a hair salon, restaurant, or retail store? Or are you planning to offer your product or service to a national or international customer base?
For a hobby turned side hustle, such as selling homemade goods on Etsy, you should be able to bootstrap your business. Bootstrapping simply means using your personal funds or income generated from the new company to fund it.
If you’re looking to turn your business into a full-time job, remember that no one is an expert in everything. How will you fill the gaps in your own knowledge and expertise? One approach is to bring in a partner with complementary skills. A partner with equity can help you with funding the business as well. Of course, you can also simply hire employees to perform the roles that you don’t know how to do or don’t have time for.
To position your business attractively for investment, you’ll need to choose a legal structure such as an LLC or Corporation. It can be difficult for a bank to lend to a start-up because there is no history of sales and revenue. But, once you have been in business for a few years, you’ll have a record of revenue and sales to show lenders, which helps them understand your business, how it works, and where it’s going. Banks will also want to see your resume and business plan to assess the feasibility of your idea and whether you have the experience and education to execute it.
Why Now May Be The Right Time To Start A Business
There are a variety of forces at play right now that make it an opportune time to start a business. For one thing, supply chain issues have more people trying to shop small and local. At the same time, interest rates have been historically low for a while. This means that, if you can qualify for a business loan, you can borrow money at very affordable rates to launch or expand your business. The most common types of business loans include:
- Commercial Real Estate Loans: Purchase space for your business or renovate an existing commercial space.
- Equipment Loans: Purchase the things your business needs to operate such as manufacturing equipment, office equipment, medical equipment, restaurant supplies, and more.
- Vehicle Loans: Purchase a business vehicle to use for commercial purposes.
- Inventory Loans: Purchase goods to sell to your customers and keep your shelves stocked.
- Operating Lines of Credit: Flexibility to cover unexpected expenses and seasonal cash flow shortages.
Now that we’ve covered some of the basics of starting a business, let’s look at specific advantageous situations to start a business.
E-commerce is on the rise
If you’re able to sell your product online, the share of consumers shopping online has grown dramatically since 2020. Whether you sell on Etsy, Amazon Marketplace, Instagram, or through your own website, an e-commerce shop has a low overhead, so it’s an easy way to test the market and gauge the demand for your product. You can also easily promote your business through social media and paid advertising.
Unfortunately, many businesses that were doing well prior to the pandemic were forced to shut down as a result of COVID-19. Either they couldn’t adapt their business model or couldn’t financially survive the initial shutdowns and overall decreased business. The upside, for your business, is less competition for retail spaces and customers.
Is your industry in demand right now?
Depending on the type of business you want to launch, the moment may be especially primed for you to breakthrough. Overall, the biggest gains for new businesses have been in retail, food service, logistics, manufacturing, finance, and construction.
Starting a New Chapter
Did you lose your job as a result of the pandemic? Were you working for a company that was forced to close? If you still find yourself jobless or you can no longer get into the industry you loved, now may be a good time to make your entrepreneurial dreams come true.
You were Able to Increase Your Savings
If the pandemic actually had a positive effect on your finances and you were able to grow your savings, you could use that cushion to start your business on the side or leave your day job entirely to pursue your business full-time. For example, you could save extra money through increased unemployment benefits, economic impact payments, and working from home instead of commuting. It may even be possible to use your personal savings account as collateral on a business loan. Just make sure you have money set aside for an emergency and your own savings. Don’t pour everything into your business.
You Improved Your Credit Score
If you are launching a new business, commercial lenders may require a personal credit score to see how you manage your debt. Did you pay down credit card balances or other debt recently? Check your credit score to see if it has risen over the past year. If so, now might be the right time to pull the trigger on your new business.
You had time to plan
Whether your new business has long been a dream or you came up with the idea more recently, you may have more material for a business plan than you thought. For additional help with choosing a business operating model and writing a business plan, check out SCORE Northwest Arkansas, funded in part by the U.S. Small Business Administration.
Ready To Launch Your Business?
As an independently-owned community bank, CS Bank understands the importance of your small business’s success. We’ve helped community businesses thrive for 109 years. For questions about what type of business loan is best to assist you with starting a business in Harrison, Huntsville, Eureka Springs, Holiday Island, Berryville, AR or Cassville, MO, contact our team of commercial lenders. You can also start your business loan application online. We’re excited to welcome your new business to our Arkansas or Missouri community.
Launching A Business in Arkansas or Missouri? Here are some helpful resources:
- Arkansas State Chamber of Commerce
- Missouri Chamber of Commerce and Industry
- Resources for Missouri's Startups & Small Businesses | Department of Economic Development
- Starting & Growing a Business - Greater Eureka Springs Chamber of Commerce, AR
- City of Harrison - Business License
- Business Licensing Huntsville
- Business in Cassville, MO