What You Need To Succeed In 2021
For the last two years, Carly Chamerlik was a full-time flight attendant for a major commercial airline. Her career changed overnight in 2020 amid the coronavirus pandemic. Industries including hospitality, live events and sports, and travel were among the hardest hit by COVID-19. Chamerlik received economic support through the CARES Act, keeping her employed throughout the summer. At the end of September, Chamerlik was furloughed from her job.
Prior to the furlough, however, Chamerlik’s new career as an entrepreneur began to take flight.
She used her spare time during the summer — which she had quite a bit of since she was not flying as frequently — to start building websites. Additionally, she focused on sharpening her photography and marketing skills. In October 2020, Chamerlik had filed to form a limited liability company (LLC) and launched her small business: a boutique branding agency.
‘I’m currently a one-woman show,” Chamerlik says. “I offer web design, branding and lifestyle photography services, and branding consultations. I love the startup life!”
Chamerlik is one of the millions of Americans to turn to entrepreneurship during COVID-19. The Wall Street Journal has reported more than 3.2 million applications for employer identification numbers (EINs) were filed in 2020. This surpasses the 2.7 million applications for EINs filed in 2019. In a time of chaos and uncertainty, Americans are choosing to make a leap of faith. They are ready to run a small business and become the master of their own destiny.
Optimism and hard work can only take a business so far, however. A small business needs to be built on a strong foundation. Key elements, like the aforementioned EIN filing and forming an LLC, will protect your startup and enable it to grow and reach success.
If you have decided that 2021 will be your year to start a business, congratulations! Make sure you have each of these items before you open your doors — whether in person or virtually — for business.
A business plan is one of the most important documents you can draft for your company. A well-written business plan acts as a blueprint for your business. It gives you the chance to objectively align the team towards a common vision, evaluate the feasibility of the business and its business idea, and attract interested investors to invest in the startup.
Inside a business plan, you will be able to detail what your business does, why consumers will purchase its offerings, and how the business plans to make money. A business plan examines its competition and has an understanding of its target audience. Detailed cash flow for the business are stored in its financial projections and any funding requests required from investors is outlined in the document. The goals of the business may also be found in a business plan, with additional details about the timeline and steps necessary to reach each goal.
Prior to forming a limited liability company (LLC), Chamerlik started under the default entity formation of sole proprietor. She waited until business had grown and gained enough consistent clients to file as an LLC with S Corporation status.
In our conversation together, Chamerlik mentioned that it’s important to research the right entity formation for your business — and I agree. Every business is different and has different needs. An LLC provides limited liability protection and is a flexible entity. However, in the event you plan to take your business public, you may consider looking into a corporation. If you want to earn a profit with your business and meet social and environmental performance standards, you might look into a Certified B Corporation. There are several types of entity formations to choose from depending on the needs of your business.
Need help figuring out which entity to file as? Reach out to a legal professional or an accountant. They will be familiar with what incorporating under certain entities means for your business and its taxes and can provide advice and answer questions pertaining to each entity type.
New business owners need certain documents to conduct business activities. Entrepreneurs that plan to hire employees or want to open a business bank account under the company’s name will need to file for a tax ID. This is commonly referred to as an employer identification number or EIN.
An EIN is a nine-digit number issued by the IRS. It identifies and tracks employer tax accounts. You may use an EIN to legally identify your small business in lieu of a social security number (SSN) as EINs are slightly less sensitive than SSNs.
In addition to an EIN, entrepreneurs will need these additional materials for their small businesses to stay in compliance.
- Business licenses and/or permits. These will vary depending on your industry, city and county, and state where you plan to conduct business.
- Registered agent services. A registered agent (RA) is the point of contact between your business and the state. They collect paperwork such as annual report filings and franchise taxes on your behalf and submit it to you in a timely manner. This allows you to address the documents and helps keep your business in good standing.
- Registered trademarks. Unique names, slogans, logos, and designs associated with the business must be registered at the federal level. This ensures they are not plagiarized by competing businesses.
- Insurance. Small businesses must be properly insured to protect against any financial losses or natural disasters.
In July 2020, Michelle Chu founded Kono’s Kitchen. Kono’s Kitchen is a brand of freeze-dried single protein raw dog treats designed to provide healthier treat options to dogs. While the business is less than a year old, Chu is thankful she was able to start the business with a financial nest egg of at least six months in savings to cover operating expenses.
No matter what the current economic climate is like, small businesses require more money to get started than you might think. An emergency cash reserve is crucial. These funds should be enough to cover six months or more of business expenses. If you don’t have a financial cushion built up, you may consider working another job to ensure you are able to save up for the business and maintain your own personal expenses and needs.
Amid COVID-19 it has become clear that a user-friendly website is an essential item for small businesses. This is the best way for customers to reach you on a local and national basis.
Investing in a website has long-term benefits for entrepreneurs. Websites help increase visibility in search engines, ensuring customers are able to find your business online. They also allow for customer engagement. Customers may find out what your hours of operation are, the phone number to reach your business, and social media platforms where they can follow and interact with you.
If you feel confident about being able to build your business website, go for it! Otherwise, you may work with designers and companies that specialize in providing these services and can get your website up and running. In addition to creating a website, it’s equally important to obtain a domain name. Remember that a domain name should be keyword-rich which helps optimize it for SEO purposes. Domain names should also be easy to pronounce, short, and simple to spell out. When possible, get a dot-com (.com) extension for the domain name as well.
Running a business can feel lonely and frustrating, especially if you are new and don’t have all the answers. (Did we mention this feeling can feel amplified by 10000x if you’re trying to start a business during a pandemic?)
The good news is nobody has to start a business alone. With the help of SCORE Mentors, you can connect with mentors that are experienced in your field. They are ready to help answer any questions you may have and guide you along the path to success. Should you succeed, you may be inspired to give back to the community and become a SCORE mentor to the next generation of entrepreneurs.