If you’re just starting a business now, or thinking of it, your timing couldn’t be better. Starting a small LLC during an economic slump greatly increases your chances of success in so many ways. If you already run a successful small business, 2010 will challenge your ability to adapt.
For a start-up, you succeed or you die. That’s a strong incentive. During boom times you can always go back to your old profession or find another job even better than the last one. Any business – fundamentally -- is only successful if the “money in” is greater than the “money out”. The more “money in” compared to the “money out” is the primary measurement in business success. That may seem simple, but it can become foggy in boom times when “early losses” can be tolerated for future success. If you keep it simple and work out of your home, how much do you really need to successfully take care of the “overhead” including the home and family expenses?
Actually, the list of advantages to starting a private little LLC now could go on and on. The internet advantage, the small computer advantage, the smart phone advantage, the low overhead advantage, the overnight shipping advantage, the changing climate advantage… the list goes on and on. It all boils down to this: because you can take advantage of being small, you have the advantage over businesses that have been successful and are established for a decade or more.
In contrast, successful small business owners that have been through the tough times in the beginning and then experienced growth and expansion due to increased demand and excellent performance in their field are vulnerable right now -- perhaps more vulnerable than any period in the past 80 years.
Established small businesses have acquired increased administrative costs, increased government fees and expenses, increased energy costs, increased medical insurance costs, increased payroll costs, increased rent costs, increased insurance costs etc. etc. etc. The bottom line is, the bottom line isn’t what it used to be, and all indications are that this trend will continue. When the “money-in” becomes LESS than the “money-out” the small business has a problem.
The government term for a small business in this situation is “Too Small To Save”. Doesn’t that make you feel special? Seven hundred and eighty five BILLION dollars for failing bankers and insurance companies to give multimillion dollar bonuses to themselves and nothing for small companies hit hardest by the fraud the government and the bankers perpetrated upon them and the whole global economy.
All last year, our congress dished out billions to a few big companies and became fixated on taking over our health care industry, even while they run V.A. hospitals so badly already. Only one thing is certain about the new health care plan, it will cost small businesses more and it will introduce new taxes that will become part of our increasing costs of providing our goods and services to our customers.
Almost as bad as what Congress DID last year is what they DIDN’T DO. Congress ignored working on a new tax law. This is important because many current tax incentives for small businesses expired on December 31, 2009. At the last minute they threw some extensions into the Health Care bill, but the House and the Senate couldn’t agree upon it so, officially, many incentives that have kept American small businesses competitive in a global marketplace and growing for the past three decades expired December 31, 2009.
Currently, successful companies that want to stay successful will be the ones proactively raising their prices, producing less more profitably, investing in energy efficiency, doing more with fewer people and testing new products and services that afford them a higher margin.
In either situation, start-up or established company, small businesses are the backbone of the American economy and the American economy fuels the world economy. When it comes to ending the recession and returning to prosperity everyone’s counting on you!