Want To Start a Small Business in 2024? Here’s What You Need To Know

Kikujiarm / Getty Images/iStockphoto

Kikujiarm / Getty Images/iStockphoto

Self-made millionaires often attribute their financial success to starting their own business. But starting a business that will actually perform well is easier said than done. The chance of failure is discouragingly high. According to the Bureau of Labor Statistics, approximately 20% of small businesses fail within their first year.

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And the odds of a small business collapse only increase as time goes on, with the failure rate upping to 30% by the end of year two, 50% by the fifth year and 70% by year 10.

How can you start a small business in 2024 that will stand the test of time and put you on the path to becoming a self-made millionaire?

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Now Is a Good Time To Start a Small Business

Though there are evergreen challenges for small businesses, 2024 is shaping up to be a great year to launch one.

“For those hesitant about starting a business, there has never been a more opportune moment,” said Yali Saar, co-founder and CEO at Tailor Brands. “The changing job market, combined with the rapid progression in AI, suggests a significant shift in occupational roles and opportunities. Consulting firm McKinsey estimates that around 12 million occupational transitions may be necessary by 2030 due to these advancements.

“This climate presents an ideal backdrop for starting a small business, offering a chance to innovate and adapt to the evolving economic landscape.”

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Create an Impeccable Business Plan

Before embarking on forming a small business, you must create an ironclad business plan.

“Creating a thorough business plan is essential early on, as it will serve as a roadmap for the business’s journey,” said Ben Richmond, U.S. country manager at Xero. “It should include the current business status, the future vision and goals of the business, financial projections and operational strategies.”

Get Ready To Navigate Higher Borrowing Costs

Though you have reason to be optimistic about launching a small business in 2024, you need to know that with the Federal Reserve raising interest rates, borrowing costs, including those for business loans, have gone way up. But obtaining capital for your small business is still totally doable.

“The availability of capital remains relatively accessible, with only 2% of business owners reporting unsatisfied borrowing needs,” Saar said. “While borrowing is more expensive, 31% of business owners regularly access these funds, indicating that while capital is costly, it’s not out of reach. Planning for lower fixed costs is more crucial than ever under these circumstances.”

Tap Generative AI Technology

To help mitigate high fixed costs, tap into the latest technologies, particularly those involving generative AI.

“These technologies can streamline various business operations, reducing the need to hire employees or external agencies for every task,” Saar said. “By integrating AI tools into business processes, entrepreneurs can achieve greater efficiency and cost savings, allowing them to allocate resources more strategically.”

Prepare To Be Agile and Resilient Amid Economic Downturns

Staying resilient and agile in a rocky economy is hard for anyone, but it’s so important — especially for business owners. It will pay off in the long run, and you have an advantage over big companies here.

“While small and medium-sized businesses (SMBs) often face significant challenges during economic downturns, leading to higher rates of closure, solopreneurs tend to navigate these periods with greater resilience,” Saar said. “The agility and lean operational structure of solopreneurs enable them to adapt quickly to changing market conditions. Unlike larger businesses with more fixed costs and complex operations, solopreneurs can pivot more easily, reducing expenses and modifying their business models to suit the evolving economic climate.”

Understand New Small Business Regulations

Regulations are always changing, and they could intensify or decrease depending on which party takes the office later this year.

“Staying informed about recent regulatory changes is crucial for new business owners,” Saar said. “For instance, in 2024, U.S. entrepreneurs must adapt to new FinCEN reporting requirements, which mandate the disclosure of crucial information about business owners and their beneficial owners. Failure to comply could result in significant sanctions, highlighting the importance of being up-to-date with regulatory changes.”

Choose the Right Business Structure

How is your business structured? Give yourself time to think about this and strategize so that you can position yourself for success.

“The legal structure of your business is a critical decision that influences various aspects of your operation, including setup costs, management, applicable state laws, tax filings and legal liability,” Saar said. With each business entity having its unique legal requirements, it’s essential to select the structure that best aligns with your business goals and regulatory obligations. This decision can significantly impact your business’s financial and legal health.”

Emphasize Sustainable Growth

“Finally, it’s important to focus on sustainable growth strategies,” Saar said. “This involves balancing the pursuit of expansion with the need to maintain financial health and operational stability. Sustainable growth can be achieved through careful planning, prudent financial management and a commitment to delivering value to customers.”

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This article originally appeared on GOBankingRates.com: Want To Start a Small Business in 2024? Here’s What You Need To Know