2021 is a unique year. After hopefully coming out of the worst of the COVID-19 pandemic, entrepreneurs are looking to moving forward with some innovative ideas and the business marketplace is set-up for these ideas to thrive.
One reason the marketplace is ready to surge is the availability of government spending, like the forgivable Paycheck Protection Program (PPP) loans geared specifically towards small businesses. Another key that sets this current marketplace apart from the past: instead of dealing with a financial crisis like we did in 2008, proactive federal funding has kept banks financially secure and the stock market has surged. Both of which lead to funding to help ease the ability of small businesses to get the capital they need to thrive.
What types of small businesses are doing well?
According to Axios, the biggest sector of new business formation are nonstore retailers. Instead of a storefront, these retailers are using space on Instagram and other online platforms. This seems to make good business sense as businesses can get visibility without the expense that comes with renting a store.
Although the current marketplace reports are hopeful, it is important to note that we still do not fully understand the impact of the pandemic.
How can new businesses help safeguard themselves and better ensure success?
Business leaders can start by carefully choosing a business structure. This decision will influence everything from liability protection to tax obligations. Two of the most common examples include sole proprietorship, which offers no asset protection but is the easiest to establish, and a limited liability company (LLC) which requires a bit more work to establish but provides protection from liability and fairly easy to navigate tax obligations.
Those looking to start a business with another person or persons may consider a partnership. This structure offers some level of liability protection, but another option, the corporation, provides even more. These are just a few of the options to consider when starting a small business. It is wise to carefully review the benefits and risks of each to better ensure you choose the right option for your business needs.
