So you’ve decided to start a business in 2020. Congratulations! For people who possess a certain kind of ambition and ingenuity, being an entrepreneur is the most rewarding way to live.
Before you start your business, or even if you are already in the early stages of building your company, it helps to take a step back to think about the larger strategic vision for your company and how you fit into the competitive landscape. For example:
- How will your business find customers?
- What is your niche in the market?
- Do you understand how to connect with investors when the time is right?
- What is your unique competitive advantage that sets you apart from the other companies in your space?
- Are you getting into an industry that has strong growth potential and healthy profit margins, or is your company going to be one small fish in an overcrowded pond?
And beyond those classic questions of business strategy, you need to consider some specific insights and trends that are happening in 2020. Here are a few to navigate the year ahead.
Location Still Matters
Entrepreneurs too often assume that, in the era of digital marketing, it no longer matters where your business is located. You can sell products online and do business with customers worldwide via your website and social media, right? Well, perhaps — but there are still a few advantages in choosing a location that has a healthy business climate.
According to an Incfile analysis of recent survey data from WalletHub and Thumbtack, the top five overall best states to start a small business are Texas, Utah, Georgia, Montana and Oklahoma.
Different states have different strengths in their business climate, and they might not all be relevant to you. But pay attention to factors such as cost of doing business, state business tax climate, accessibility of business financing, cost of office space and quality of workforce (if you plan to hire employees).
Some cities have thriving business communities centered on particular industries or sectors. Another survey from WalletHub of the top 10 best large cities to start a small business gave high marks to cities like Orlando, Oklahoma City, Miami, Austin and Denver. Those cities tend to have advantages like clusters of tech startups, high growth of small businesses, affordable costs of doing business, cultural amenities and tourism destinations.
Sometimes it’s a good investment to locate your business in a city or state where the business climate is already thriving; positive momentum can be contagious!
Is Your Industry Growing or Declining?
Another factor to consider: What are the growth prospects for your industry? According to statistics from IBISWorld, the top five fastest-growing industries in the U.S. (by 2018-2019 revenue growth) are:
- Wind turbine installation
- Automated guided vehicle manufacturing
- Solar power
- Social networking sites
- Telehealth services
These industries are not the only ones where good opportunities can be found. But it’s worth considering: How can you connect your business to a growing market? Can you provide services or products to businesses in one of these industries? Can you create solutions for the types of problems that companies in these industries need to solve?
Keep Investors Happy
The past few years have seen a surge of venture capital investment in startups, with investors looking for exciting technologies, charismatic company founders and game-changing ideas. According to commentary in Forbes, venture capital investors in 2020 are looking for more efficient, well-disciplined companies to invest in.
Before investors will buy into your business, they want to make sure that your business has a workable business model with strong fundamentals. They want to know that you know how to find the right customers to become profitable more quickly, while managing your costs.
Don’t Fear Recession
Some economists and business analysts are worried about the possibility of an economic downturn in 2020. But don’t let that stop you from pursuing your business dreams. Some of the most successful businesses were started during a recession. During a recession, there is often less competition, less static, less froth in the market; it’s cheaper to acquire assets and hire talented people.
No matter what happens in the broader economy in 2020, much of your success as a business owner is within your control. Work hard, build relationships and make well-informed strategic moves. If you have a great idea and are willing to work harder than ever before, 2020 could be the best time for you to start a business.
