With the Great Recession a not-so-distant memory, many innovators – even those who have great ideas and creative solutions – are reluctant to dip their toes in the business water for fear of failure. There are many naysayers who suggest, even without that tragic economic crisis, most new businesses fail. In fact, Forbes suggests the number is close to 90% in January 2015.
What sets 90% from the 10% isn’t impossible to figure out, and you can gauge how many businesses fail by studying those that do succeed. And, thankfully, there’s much that has changed economically for the U.S. in the two years since the Forbes’ study. There’s a lot of good news on the horizon for hopeful entrepreneurs, and there are plenty of reasons to think that they could be in that golden 10% and that the 10% may be expanding. If you’re thinking of starting a business, 2018 is a good year to dip your toes into the marketplace.
What Makes a Business Successful
According to the Bureau of Labor Statistics, numbers for 2017 looked strong, and this bodes well for 2018.
- About 80% of businesses who employ staff survive their first year.
- About 66% of businesses with employees survive year two of business.
- About 50% of businesses make it through five years in business while employing staff.
- About 30% of businesses see 10 years in business.
About 20% of small to medium businesses fail in their first year, and 50% of small businesses fail within their fifth year. So, yes, the odds of making it past that 10-year anniversary are dramatically lower than surviving the first year of business. However, many businesses to make it to the long-term and, with the growth of the current economy, even more, businesses will do so in the coming years. The shift many people expect in the coming months is an increase in the survival statistics for new businesses.
Many economists suggest that 2018 will be a great year for entrepreneurs, and they have high hopes that these percentages may change for the better. In fact, this past January, Forbes suggests that entrepreneurs ignore the political noise and begin thinking about business opportunities. That’s quite a different message from only two years ago.
If you have ever had the goal of starting your own business, now may be the perfect time to make that dream a reality. Here are a few reasons why innovators and entrepreneurs should consider starting their business.
Three Concrete Reasons to Start a Business in 2018
Experts say that there are specific reasons why entrepreneurs should be excited about the new year’s prospects. Here are three reasons why 2018 could be your year to embrace new business opportunities.
- You’ll receive more tax benefits. It’s true that the recent tax plan is controversial, and no one knows exactly how it will affect the economy in the long term. However, in the immediate future, the tax code will benefit small to medium businesses and those looking to begin a business. Here are some ways the new tax code could affect your business:
- There’s a 20% deduction for organizations known as “pass-through businesses.” These are companies that wouldn’t pay corporate income taxes. Nearly 95% of U.S. businesses are pass-throughs, and they include sole proprietorships, partnerships, and S-corporations. Though the generally pay a lower tax rate than a corporation, this is a new low for pass-throughs, which most startups will likely be.
- Married couples who run service based companies (like law firms or accounting agencies) that make under $315,000 a year will receive a 20% deduction. Single entrepreneurs must make under $157,500 to receive the 20% deduction.
- If your ambition is to turn a business from a medium organization to a corporate one, the taxes for that kind of business are also lowered from 35% to 21%.
- You’ll get to be your own boss. Yes, that’s true at any time period, but, with better hope of success, being your own boss could be a reality considering the uptick in the economy. In addition, the gig economy has meant working hours aren’t confined to Monday through Friday, 9-5. When you are able to set your own schedule, you are able to control the other ways you have of financing your business – and that’s a new freedom for entrepreneurs.
- There are more resources than ever before available for new businesses. Again, in part due to the gig economy, the way we think about business has changed. In the past, one of the biggest barriers to entrepreneurship was lack of resources. Today, people take the talent they have and put it to use for business, and there are plentiful resources to help them. Websites like TaskRabbit and Fiverr provide resources in the form of marketplaces to new entrepreneurs. These marketplaces connect businesspersons with seasoned experts. In addition, mobile apps like Dropbox, Evernote, Square, and Salesforce offer convenient ways for new business owners to manage their burgeoning company – even while keeping other plates spinning.
Upcoming Trends for Entrepreneurs
These are valid reasons why 2018 is a great year for new business owners, but they are not the extent of the list. Economic trends are encouraging, and all predictions point toward positive outlooks continuing throughout the New Year. These trends also present more opportunities for entrepreneurs.
A few other things that should encourage those looking to start a business include:
- The economy is on the upswing. There has been a slow and steady revival of the U.S. economy since the recession, and numbers continue to look good. Consider:
- A million jobs have been added, and the unemployment rate is at a 16-year low of 4.3%
- Housing prices continue to rise and are up 6.5% from last year. Real estate is often a predictor of a positive market.
- The stock market is doing well and was very recently at an all-time high.
- Personalized marketing is on the rise. E-Commerce giants like Amazon are hurting brick and mortar retail locations, but many shoppers still crave a personal touch. Despite drops in overall sales for traditional businesses, there are plenty of these stores that are thriving. Consumers who visit these kinds of stores expect a similar experience when they go online. When consumers are looking for more personalized experiences, it bodes well for new businesses that offer such experiences.
- Live streaming means more access to consumers. Businesses can now live stream events, sales, Q&A sessions, and more. Live video allows businesspersons to connect with both in-store and online customers. In other words, they have access to the best of both worlds. This is good news for new businesses because it means their names can get to the public quicker than ever. When you have a good start to a business through this kind of marketing, it gives your new business a better chance at success.
No matter what kind of business you wish to open, take advantage of the trends and encouraging news ushered in with the New Year, and plan to launch your business in 2018. A new business needs a clear voice with a strategic message, so don’t neglect your digital marketing campaign. If you have questions regarding how to get your message out, talk to one of our experienced team.