Starting a small business is both exciting and scary. Whether you’re the type of person who plans for every worst-case scenario or likes to jump headfirst into an idea and figure out the details later, there’s a lot to consider before launching your idea.
One thing many small business owners stress over is when to start their business. There are a lot of different factors to consider when thinking about the timing of launching a business, but one of the most important ones is the state of the economy.
To help you decide whether 2024 will be a good time to start your business, here are a few details about what’s happening in the economy right now and a few concerns some business owners have.
Why some people are hesitant to start a small business in 2024
If you’re trying to read the economy right now to figure out if 2024 is a good time to start a business, good luck. Economists have been saying a recession is right around the corner for nearly a year now. And yet, the economy grew by 4.9% in the most recent quarter, and the unemployment rate is at a very low 3.9%.
The experts can’t quite agree with what’s happening. Some economists think there’s a 56% probability a recession will come next year, while others think the economy will slow down but will avoid any significant downturn.
At this point, you might have a better chance of predicting a downturn by flipping a coin.
But even if a recession doesn’t materialize, a slowdown in the economy could lead to consumers spending less money, hurting small businesses’ bottom lines. Already, 62% of American workers say they’re living paycheck to paycheck, and consumer credit card debt has hit a record high of more than $1 trillion.
What you should consider if you’re starting a business in 2024
Even if a recession doesn’t happen in 2024, there are a few factors you should consider before starting a small business, based on what other business owners have said recently.
1. Inflation is still a significant problem
A recent National Federation of Independent Business (NFIB) report showed that ongoing inflation is one of the top concerns for business owners, with 23% saying it’s a problem. Inflation has forced many businesses to raise their prices, but the higher cost of goods and labor hasn’t necessarily increased their bottom lines.
2. Labor quality may be an issue
The NFIB report found that 23% of business owners said labor quality was their biggest problem, tied with inflation. Finding workers is still difficult right now, and 61% of business owners hired or were trying to hire workers recently. Some businesses are also planning to increase spending on labor, with 23% saying they’ll do so in the next three months.
3. Capital is available, but it’s expensive
As the Federal Reserve has raised interest rates, nearly all types of borrowing have gotten more expensive, including business loans and business credit cards. The good news is that just 2% of business owners said their borrowing needs weren’t satisfied, and 31% said they were borrowing regularly, indicating that access to capital is still available. But with interest rates elevated, the interest paid on small business loans is still higher than in recent years.
Only you can decide when it’s the right time
Unfortunately, there’s no crystal ball telling you when it’s the right time to launch your idea. But there’s no denying that the economy needs small businesses. The White House recently said that 56 million U.S. workers are employed at companies with fewer than 50 employees — which amounts to 45% of all private sector jobs.
While you should definitely consider all of the potential issues you could run into if you start a small business in 2024, only you can decide whether it’s the right time to finally get your idea off the ground.
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