There are 33 million small businesses in the United States, comprising 99.9% of all businesses, and they create more jobs than larger companies. They drive the economy, but they’re also subject to unique challenges. Whether you’re starting an ice cream shop or consulting firm, you need to be a determined and open-minded thinker willing to work harder than most people realize. You can succeed, but you’ll have to jump through a lot of hoops and keep your head on straight when things get tough.
It’s important to understand what defines a small business and how it varies by industry, especially when registering with government agencies or applying for business loans. In general, a small business is independently owned and operated, with no more than 500 employees in the United States or internationally and less than $5 million in annual revenue. That number can vary by industry, and the Small Business Administration provides a chart with the maximum numbers for each industry.
Small businesses often start with personal funds or loans from family and friends, but they can also seek venture capital or crowdfunding. One of the biggest reasons small businesses fail is because they don’t have enough working capital to cover expenses. A good cash flow management strategy is essential, including tracking revenue and paying varied and fixed overhead expenses on time.
You’ll also need to decide what legal structure best suits your company. This can affect your taxes, liabilities and growth potential. A common choice is a sole proprietorship, which allows you to sell products or services under your own name without incorporating. A company website is essential for most businesses, and social media platforms can help you spread the word and interact with customers once you launch.
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