Coronavirus has forced thousands of businesses to close their doors permanently, and there is no end in sight. While some people who were laid off during the initial lockdown are starting to go back to work, many continue to struggle with financial instability.
Starting a Business During a Pandemic
A global pandemic might seem like a terrible time to start a new business. However, if you have a good business idea, pursuing entrepreneurship might be the best way to make it through the COVID-19 recession.
Turbulent times like these provide unique opportunities for new businesses with new ideas to find success. In fact, the number of new business applications in the United States is increasing at the most accelerated rate since 2007.
While launching a startup during a recession is incredibly challenging, Coronavirus has created unique opportunities for people to start their own businesses and achieve success.
Reasons To Start Up a Business in Coronavirus Times
COVID-19 has inarguably changed the way companies operate in the United States, and many believe this "new normal" is here to stay. Businesses have adapted the way they communicate, work, attract new customers, and deliver goods. This innovative time presents entrepreneurs with a rare opportunity to identify and capitalize on new business opportunities or new business models.
As the world has changed, so have consumer attitudes. Today's buyers are more open to new ideas, products, and ways of doing things. While many customers have less money to spend, they are looking for new businesses that can adapt and meet their needs during the pandemic. This recession is the perfect time to attract consumers who were stuck in habitual spending patterns but are now seeking new relationships with new brands.
What Documents Do I Need To Start a Business During COVID?
To start a business during COVID-19 (or any time), you'll need to file registration documents. The legal documents required and the cost will depend on the type of legal entity you want your business to be and the state where you are registering.
Limited Liability Company (LLC)
- Articles of organization
- Operating agreement
- Certificate of limited partnership
- Partnership agreement
Limited Liability Partnership
- Certificate of limited liability partnership
- Limited liability partnership agreement
- Articles of incorporation
- Bylaws or resolutions
The information that these registration documents typically require includes:
- Business name
- Ownership and management structure
- Registered agent information
- Number and cost of shares (for corporations only)
Now more than ever, developing a long-term, recession-proof business plan with solid financial planning is essential to a new venture's success. A thorough business plan will guide you through each stage of starting and running your business. It will serve as an outline for your operation's essential elements, such as your business strategy and structure.
A well-thought-out business plan is essential to securing funding. Banks need to see evidence that you will pay them back, and investors want to know they'll make money off their investment. A strong business plan will help convince people that you know what you're doing and that they can trust you with their money.
If you obtain a small business loan for your startup, you will also need a loan agreement. Loan agreements are legal contracts between your business and the bank that list the terms for the loan. The bank is the lender, and your business is the borrower.
Financial Backing During a Pandemic
If you are concerned about the cost of launching a new business, there are various ways to obtain financial backing during the COVID-19. You can even start a business with no money if you can secure financing.
Small Business Loans
A small business loan is a traditional source of funding for new ventures. Your company will borrow money from a bank and pay it back over time with interest. Whether your business succeeds or fails, you're on the hook for the amount borrowed.
SBA provides a number of loan resources for small businesses to utilize when operating their business. For more information on loans or how to connect with a lender, visit: https://www.sba.gov/funding-programs/loans.
Venture Capital Funding and Angel Investors
Some wealthy investors or investment banks provide venture capital funding to startups. They will invest in the company in exchange for a certain percentage of the business' income. The primary difference between venture capitalists and angel investors is that venture capitalists typically invest other people's money, whereas angel investors provide personal financial backing.
Since the start of the pandemic, venture capitalists have become hesitant to invest in new businesses. However, many angel investors are still actively pursuing new business opportunities.
Crowdfunding and Microloans
Crowdfunding is an alternative to traditional loans that can help you launch a new business. However, crowdfunding is exceptionally competitive, and less than a quarter of crowdfunding campaigns are successful in meeting their goals.
Microloans are a type of financing in which small loans are issued to new businesses by individuals. This type of funding is commonly combined with mentorship to help you successfully launch your business.
Types of Business To Start During Coronavirus
This new financial environment has created various opportunities for startups to quickly find success. New products and services are in-demand, and businesses that can meet changing consumer needs have the chance to see significant profits.
A few examples of COVID-19 business opportunities include:
- Virtual fitness services
- Delivery services/ dropshipping
- Telehealth services
- Cleaning services
- Mask making
- Online consulting
- Digital marketing
- App development
Tips To Launch a Business in Pandemic Times
Here are some essential tips for successfully starting a new business during coronavirus:
- Ensure your business idea is "COVID-proof" and that people can use your product or service during the pandemic.
- Be flexible and ready to adapt to the changing times.
- Ensure there is a market for your product or service.
- Make your product or service easily accessible online.
- Connect with potential buyers using social media.
- Develop a robust digital marketing plan.
- Look for opportunities that require a low amount of financial investment.
- Start your business from your home, whenever possible.