by David Nilssen, CEO & Co-founder, Guidant Financial
Most entrepreneurs wait until later to make the leap, but beating the crowd has distinct advantages.
It happens every January: our web traffic at Guidant Financial goes through the roof with people seeking advice about financing a new venture. And I think I know why. “Start my own business” ranked in the top 25 most common New Year’s resolutions in 2013 (just behind “drink less” and ahead of “quit smoking”).
It follows that new business formations would spike at the beginning of the year, riding this wave of resolutions and in line with the intensified interest in new business financing that we see at Guidant in January. But when I looked at the data, I was surprised to see a very different picture: the first quarter is actually the slowest time of year for new business starts.
What gives? Why aren’t those New Year’s resolutions converting into first quarter business startups?
Here’s my hypothesis: in January, people begin to think in earnest about striking out on their own. But it takes them until the spring, the summer, or even the fall build up the courage to actually make the leap.
Joel Libava, the Franchise King says that January is “what I call, ‘I want to change my life’ month. Everyone…okay, almost everyone, wants to eat better, lose weight, exercise more, and here’s where it gets good for franchising, lots of people want to change careers.”
Jania Bailey, the President & COO of FranNet agrees. “We find a lot of our clients are ready to investigate business opportunities right after the New Year because they’ve spent some quality time with their families and then the cold reality hits of returning to a job they may not enjoy. That’s weighed against the time with family — their desire to find something better increases dramatically. And that ‘something better’ could be business ownership.”
There’s certainly no shame in that – starting a business is a serious undertaking, and it should by no means be rushed into. But here’s my gut feeling: if your New Year’s resolution was to become an entrepreneur, you’ve been thinking about starting your own business for quite a while now. You probably already know what kind of business you want to start, whether it’s a bakery, a distillery, a dog walking service, or an online retail shop. I’ll even up the ante and bet that you’re already kicking around a few potential business names.
Am I right? Then you’re about as ready as you’ll ever be to start your own business. You could go along with the herd and wait until later this year to make it official. Or you could start your business right now. Many people would suggest that by starting early you might see the following benefits:
Competition for hiring – The more new businesses that are starting up and staffing up, the more heated the competition for qualified candidates will be. Start your business in the first quarter and theoretically access a larger talent pool than you’ll find later in the year. Plus, you’re less likely to get stuck in bidding wars with other startups that will drive up your labor costs.
Press opportunities – When everyone’s shouting, nobody gets heard. It’s almost impossible to get the time of day from journalists in a busy news season, so take advantage of a quieter time and announce your business launch when journalists are looking for leads.
Negotiation power – Basic economics: if the demand is low, the prices go down. Fewer new businesses looking for office space in the first quarter means that you’ll have greater leverage in negotiating with leasing agents. A discount on rent, free tenant improvements or even equipment can be a huge boon for a new business, since office space will be one of your biggest expenses. Phone plans, insurance policies, internet service – you name it, you can negotiate a shorter contract when business for service providers is slow – or at least negotiate more features. With fewer new businesses starting up in the first quarter, sales reps will be more amenable to flexing their terms as long as they can get you on the books.
Advantages securing capital – It’s a tough financing climate out there for small business financing and so the less competition you have, the better. If the line of startups outside the bank is a mile long, your business plan had better be dazzling. Talk to lenders and investors at the beginning of the year and increase your odds of getting noticed.
Some might argue that these potential benefits are real and others imagined. But frankly it doesn’t matter to me. The most important reason for starting your business in the first quarter is – simply – because it’s right now. The truth is that there will never be a perfect time, and there will always be some reasonable excuse for putting your entrepreneurial dreams off once again. But I guarantee that years from now, you’ll look back and you’ll wish that you’d started today.
This quote from psychologist and author Albert Ellis can give you an idea of what’s at stake: “The best years of your life are the ones in which you decide your problems are your own…you realize you control your own destiny.” Most small business owners I know say their greatest regret is that they didn’t take control of their own life and livelihood sooner.
You could start this year off by going to the gym every morning, cutting the junk food, and drinking eight glasses of water a day. Or you could do the one thing that will change your life the most and improve your happiness by tenfold: become your own boss. What better time than now?
About the Author: David Nilssen is the cofounder and CEO of Guidant Financial and a recognized expert in small business and franchise financing. Guidant has helped over 8,500 entrepreneurs invest over $3 billion into franchising and small business through SBA loans, unsecured credit and rollovers for business startups. Those businesses have created over 60,000 jobs. Follow David on Twitter.