- As 2020 winds down, now is a great time to look to 2021 to launch your business.
- Careful consideration of your finances, business plan and customer base now can lead to benefits in the future.
- Don't let the shared tragedy and hardship of 2020 sour your outlook about starting a new business in 2021.
- This article is for any small business-minded entrepreneur looking to start a new venture in 2021.
As this unbelievably eventful year comes to a close, it's natural to wonder if 2021 will prove to be a more reasonable 365 days. If you've spent this time of quarantine and remote working dreaming about starting a new business, the good news is there are things you can do today to turn your wishful thinking into a reality in the new year.
We at Business News Daily spoke with several experts, including an author, a successful business leader and an entrepreneur. Your budding business idea can flourish in 2021 by following five tips that center on careful planning, shrewd financial moves and comprehensive risk assessments.
1. Create a lean, yet solid business plan.
If there's anything that 2020 has taught us, it's to expect the unexpected. Before March, no one could have predicted that a major pandemic would have turned the entire workforce, and how it operates, upside down. And while scores of businesses were left in a worse spot than they were just a year prior as a result, Uri Adoni, author of The Unstoppable Startup: Mastering Israel's Secret Rules of Chutzpah, believes the past year has shown that fledgling small businesses need to "think like a camel." He said camels are built to survive in some of the toughest climates on the planet.
"They are resilient and can survive for many weeks without food or water, still running fast when needed," Adoni told Business News Daily. "Be cash-flow sensitive, have a lean organization, create a realistic and conservative operational budget, and make sure you don't deviate from it."
As a former partner at Jerusalem Venture Partners and the former CEO of Microsoft Networks Israel, Adoni advised entrepreneurs to create – and stick to – a business plan. Drawing up a smart business plan is not only beneficial to how your business operates, but it can make it easier to obtain bank loans, it helps you set reasonable milestones and attract investors.
"Potential investors will want to see that you have a solid plan, that you know how to execute it in the best way, that you can outperform your competitors, that you manage your cash cautiously and wisely, and that you don't make any risky long-term financial commitments," Adoni said.
Key takeaway: By creating a cohesive business plan now, you can start 2021 with a clear road map to guide your new venture's path through the first few months and beyond.
2. Simplify your life, and save up.
Many small business owners try to separate their personal lives from their new company. And while there are business structures that do that from a legal perspective, once you start a new business, it becomes a major part of your life. Its costs are your costs, its hurdles are your hurdles, and its successes are your successes, regardless of whether you're a sole proprietor or the owner of a C corporation.
Tracy Timm, founder of The Nth Degree Career Academy and former human capital advisor, said simplifying your life should be a major goal as you head into the new year. One way to do that, she said, is to trim your personal budget.
"Stash away every spare dollar," said Timm. "Stop dining out as often, or ever. Ditch the seven extra streaming services. Make your own coffee. You see where this is going? The simpler your life is, the more time, money and energy you'll have to dedicate to starting your dream business."
Having started her own business while working out of a Dallas coffee shop, Timm said she would bring coffee she brewed at home to her job to save money. Her money-saving efforts extended to lunch and dinner every day, all so she could put those funds into her dream business.
"Every spare dollar I had went back into my business so I could give it the best chance of being the most successful," Timm said. "If you're independently wealthy or significantly well financed, you can ignore this advice when it comes to money. But I would still heed this sentiment when it comes to your other commitments and responsibilities."
Going into 2021, you should "make launching this business your No. 1 priority."
"As much as possible, your mental and physical energy should be going to getting this baby off the ground," she said. "Simplify your life, and your business will have its best chance."
Key takeaway: Cutting costs and earmarking your savings to fund your business is a good way to kickstart your efforts in the new year.
3. Gather data to help plan ahead.
While it's great to proactively establish a business plan and begin saving money now, it's also important to take a look back at your near financial past. Knowing how much money you've historically had coming in and going out is a great way to determine how your money flows, how you handle your funds, and where you can improve.
"Deeply understand your cash flow, especially in the early years," said Kathryn Petralia, co-founder of Kabbage. "Set goals, create budgets, and have funds allocated for unexpected costs."
In addition to cash flow, Petralia says data collection could also help ensure that your business is on the right track from the get-go. For example, if you don't "solve for the customer," which Petralia says is a core tenet at Kabbage, then you run the risk of not fostering a good environment for business growth.
"We've found that if you ensure every decision and product feature is rooted in the benefit of the customer – instead of you, your profits or prospects – then growth will take care of itself," she said. "This continues to prove true, and I strongly encourage companies to approach business the same."
Key takeaway: Data collection can illuminate what your customers' needs are and how your new venture can best serve customers. By focusing on solving customers' problems, your business in a strong position to grow.
4. Carefully consider the risks involved.
Risk is an inherent part of starting a small business. Depending on how you structure your company, you may be held liable for everything that goes wrong within the company. That can potentially put your personal finances and assets in jeopardy. You can take steps to make sure you're ready for any potential issues that come up.
Andrea Sager, a small business attorney and serial entrepreneur, said regardless of what stage of business you're in or how much money you're making, never overlook the potential risks – and their consequences – facing you and your business.
"If you have a business, you're leaving yourself open to many risks, and you have to take the necessary precautions to ensure you don't get sued," Sager said.
Sager recommended that new business owners hire a lawyer or legal team, draw up customer contracts or waivers if needed, and set up the business so the personal risk you're taking on is mitigated. Legal issues aren't something you can handle as a layman, so seek help if necessary.
"Speak with a small business attorney prior to starting your business, just so you are aware of the specific risks involved with your business," Sager said.
Key takeaway: Risks are unavoidable when starting a new business. Discuss your plans with a lawyer, and draw up any necessary legal plans ahead of time.
5. It's OK to be hopeful about 2021.
It's easy to look back on the last year and wonder if 2021 will be any better. After all, scores of small businesses will likely never come back because of the pandemic. While your trepidation is justified, nearly everyone we spoke with was optimistic for the coming year.
For Timm, who started her business after being fired from a job she didn't like, there's no better time than a moment of personal hardship, since it often serves as a catalyst for pushing for success.
"While we all know intellectually that a new calendar year is an arbitrary point in time and nothing will fundamentally change, other than the number we write on the date, there's something about a new year that inspires hope and gives us the freedom to imagine that life can and will be different or change for the better," Timm said. "Honestly, I think there's no better time to start a business than when you've experienced a significant setback or experienced a lifetime low."
Sager said 2021 is the perfect time to start a dream business.
"So many people are in limbo not knowing whether they're going to have a job or not, so starting the new business on the side while having a steady income stream is an ideal situation," she said.
Others feel that there's no such thing as a bad time to start a small business – at least when it comes to a collectively bad year like 2020. As Adoni points out, some of the largest companies making headlines today, such as Uber, Slack and Airbnb, started in the wake of the 2008 economic crisis. However, he pointed out that a shared tragedy doesn't inherently equate to success.
"The saying that every crisis brings new opportunities is true and will likely be proven during the post-COVID era," he said. "There are new needs that have emerged, old solutions that are no longer relevant, and new companies and solutions to be introduced."
Key takeaway: While 2020 has been a highly unusual year, don't be deterred from launching your dream business. With the right effort, you can make 2021 the start of a successful new beginning.