The COVID-19 pandemic has changed the way business is conducted for small enterprises and large corporations alike. The pandemic has also created many first-time entrepreneurs.
According to the U.S. Census Bureau, more than 4.4 million new businesses have been created in the country since the start of the pandemic at the beginning of 2020. On average, 380 out of every 100,000 Black adults became new entrepreneurs in 2020 as the pandemic surged, up from 240 in each of the prior two years, according to a recent study by the Kauffman Foundation, based on Census data.
Serial entrepreneurs, entreprenrship development experts and financial coaches offer first-time entrepreneurs the following 10 tips on navigating a pandemic-influenced business climate.
1) Get your affairs in order: It’s tempting to jump straight into business when you have an idea, but a successful business means having all your paperwork in order.
“Often, new business owners simply conduct business without getting their proper affairs in order, meaning properly forming the company by registering with their state, obtaining a business license, setting up a Dun & Bradstreet account, and setting up their first business bank account. This is all vital for taxing, banking, and business credit purposes,” says serial entrepreneur Antonio Wells, owner of Chicago-based NAMYNOT Inc, a brand growth and strategy marketing agency.
You need a DUNS number, which is a nine-digit ID for your business obtained from the private business credit reporting agency Dun & Bradstreet. The number is required to receive your business’s credit report from Dun & Bradstreet, as well as to apply for any grants or cooperatives from the federal government.
Getting affairs in order also means seeking accounting advice. “Business owners shouldn’t be afraid of the cost of hiring a bookkeeper or an accountant, but the cost of not having one. They can [provide] tax guidance and so much more,” offers Wells.
A bookkeeper or an accountant will help you with your budget. Your business will make money, you will have to spend money on business-related expenses, and you will have to keep track of both. “When revenue is coming in it’s vital to properly budget, allowing for unforeseen expenses and revenue dips,” explains Wells.
You also have to establish social media accounts and keep them active.
2) Understand your role as a boss. It is sometimes complicated for new business owners to understand the role of a boss. It would help if you had an employee versus employer mindset shift.
“You’re now responsible for the future of your business. Every decision falls on you and you will have to figure out ways to motivate and manage your own employees. You’ll basically have to learn a whole new skill set,” says career entrepreneur Sam Shepler, founder and CEO of Testimonial Hero, a location-independent services business.
3) Your expertise will fall short. Even the most experienced business owners sometimes fall short in some areas. Remember, you are not an expert in all areas and will sometimes need to seek expert help. Missteps will help you to learn on your entrepreneurial journey. “You will have to tackle tasks that you are not trained to do, tasks that you have no idea how to do, and worse, tasks that you won’t like to do. Learning is crucial, and leaving your comfort zone is the way to go,” notes Shepler.
4) Raising funds at the start is not realistic. It is still very challenging for Black startups to raise funding. In fact, in 2020 Black founders received just 0.6 percent of all venture capital available.
“If you don’t have a wide network of powerful people, you’ll have to start with minimal financial resources like everybody else. Funding won’t come for something that’s still at the idea stage,” Shepler notes.
Adam Garcia, CEO of the trading education platform The Stock Dork, explains: “Securing funding has become even more difficult now as market uncertainty has grown significantly. First-time entrepreneurs need to have their business model and finances in order, without any flaws, to earn investors’ trust. They should leverage their competitive advantage and show investors how they plan to use it to dominate the market,” he says
5) Listen and Learn. “There’s so much information out there that you can benefit from. Read books, read articles, listen to podcasts, talk to other people, and just listen to what is out there. It will help you immensely and is a completely free resource to learn from,” advises Stefan Chekanov, CEO of instant messaging platform Brosix.
6) Be flexible and adapt. When you’re the owner of the business you have to roll with the punches. “The business world is ever-changing and things are constantly being tweaked. Business owners must be able to pivot. They should be in the mindset to adapt when the time comes. Keep an eye out for signs of things that aren’t working and get ahead of things when you need to adapt,” offers Chekanov.
7) Develop and maintain relevance. “You must continue to innovate or evaporate from the business world. Be driven to create something that positively impacts the lives of the people you serve with the goal of leaving the world a better place than you found it,” financial coach Dorothy Griggs of Build Wealth Properly. “Companies with a genuine community-based connection, providing a human touch in a more virtual, post-pandemic world, will definitely beat out a competitor who’s lacking these qualities.”
8) Prepare for an emergency. All businesses, especially small businesses, should have an emergency fund to cover unexpected expenses. “If the pandemic taught us anything, it’s that emergencies can come up when you least expect it and last longer than you could imagine,” Griggs says. She suggests keeping three to six months worth of expenses in an emergency fund.
9) Building remote teams. “Most businesses, small and large, have shifted to completely remote or hybrid models during the pandemic. First-time entrepreneurs need to get on this trend and focus their efforts on building a remote team that can collaborate effectively,” advises Garcia of The Stock Dork.
He suggests investing in communication tools and business software to help employees complete tasks effectively from remote locations.
10) Don’t scale too fast. If your product becomes an instant hit, it may be tempting to grow the business fast. But hold off. “In these uncertain times, the market is very volatile and can collapse at any point. My advice for first-time entrepreneurs is to keep their business simple and don’t scale too fast,” explains Garcia. “In an unpredictable market, scaling too fast can have dire consequences like business failure and bankruptcy. Growth is obviously a huge part of the business life cycle, but right now, keeping it small and playing safe might be the better option.”