Boston business attorneys note small business economic confidence posted its first gains in seven months in September as outlook for sales improved and businesses prepare for the holidays.
Reuters reports the National Federal of Independent Business said fewer small businesses expect sales to decline. The recession from which the country is still trying to emerge has been a precarious time to start a business. Yet statistics show that this recession, like the ones that have come before it, continues to incubate small businesses. In many cases, laid off or downsized employees have struck out on their own out of necessity. In other cases, other factors made it the right time to launch an enterprise.
The BBC recently reported that employees in both the U.S. and Europe are increasingly turning to starting their own business as a way to better ensure their own job security amid today’s unforgiving corporate climate. While the U.S. unemployment rate sits at more than 9 percent and Congress debates job proposals of varying credibility, the number of new businesses is growing at the fastest rate in 15 years.
Such businesses are the driving force behind the U.S. economy –accounting for 52 percent of the workforce, according to the Small Business Administration. Nearly 20 million workers are employed at companies with fewer than 20 workers. Another 20 million work at companies with fewer than 100 workers. Together they rival the 47 million who work at companies with 500 or more employees.
Still, the reality is that more than half of all small businesses fail during the first 5 years. Common reasons include:
-Lack of experience
-Over investment in fixed assets
-Poor credit availability
-Personal use of business capital
Tax and regulatory concerns can also play a part in small business failure, as can lack of access to experienced legal counsel. Business formation includes your choice of entity and is an important consideration. Formations include sole proprietorships, partnerships, limited liability corporations (LLC), S-corporations and C-corporations. Each has its pros and cons — including tax implications.
Early stage coaching, business startup and planning and corporate finance are also critical aspects of getting a business off the ground. Complying with state and federal employment law is critical as well.
The challenging nature of starting a successful business means such ventures are often started by midnight CEOs — someone who is hanging onto a steady job while launching a business in his or her spare time. In many cases, they are starting a business similar to the one in which they already work — which can raise issues involving employment contracts, non-competes and other protective measures.
Most believe such ventures will offer them the job security not present in corporate America. And that can be the case — just be sure you are launching your business with a solid legal foundation.
A Boston small business law firm, The Brown Law Firm, LLC, has offices in Belmont and Boston. For a free and confidential consultation, call 617-489-0817 or contact us through this website.