Although new businesses fared well in 2020, the fourth quarter was not kind to new business enterprises. According to Reuters, business formation in the fourth quarter of 2020 was down 28.5%. Not surprisingly, the coronavirus pandemic was especially brutal for consumer-facing businesses like restaurants and retail outlets.
What does this mean for entrepreneurs looking to start a business in 2021?
It is always a good idea to plan carefully before launching a new business, but the hurdles of 2020 may make it even more advantageous to get a good business plan in place before moving forward. These tips can help guide your plan to better ensure a successful launch:
- Choose your name wisely. Choose a name that fits your business but can also draw in investors. Some names may give investors pause. A common example: names that involve the words “real estate.” This may give pause because the real estate market is notoriously fickle.
- Consider using a business entity. Instead of just using a sole proprietorship, consider using a business entity like a corporation or limited liability corporation (LLC). These structures can offer increased separation between business and personal assets, translating to greater protection and tax benefits.
- Protect intellectual property (IP). IP comes in many different forms. As noted in a recent publication by Entrepreneur, even your business’ phone number and website qualify as IP.
It is also wise to delegate certain matters to professionals. Legal professionals can help guide your business’ formation and tax planning strategy, leaving you free to focus your efforts on other matters.