If you are in the process of starting a business in the Golden State – or if you are seriously weighing up whether entrepreneurial life is for you – then it is a good idea to learn more about the constituent parts that go into building an enterprise in this dazzling coastal U.S business hotspot.
There is no doubt that starting a business is one of the most challenging tasks you can set yourself – but in a state with so much competition, it can be even tougher than previously thought. With zero momentum behind the project, you will need to develop every facet of it from scratch.
You’ll need to work out what industry you will be based in, the type of products or services you will offer, the brand image you wish to project, and your long-term goals for success. What’s more, this will likely be done without a meaningful budget as you try to bootstrap your business into existence. As you grow, you will have to start recruiting a team and managing other people, which is a steep challenge in and of itself – again, due to how competitive California is, both in the business sense and competition in recruiting talent.
To help you get to grips with the basics, here is a guide to starting a thriving business in California today.
Get the basics in place first
The best place to start when it comes to building a thriving business in such a competitive state – but one that has the potential for prosperity – is, unsurprisingly, the basics. Although this sounds blindingly obvious, your business will have little hope of standing the test of time if you don’t build firm foundations for it from the very start.
This is the mistake even ‘successful’ entrepreneurs make when they try and grow their business too quickly. Look at most big Californian companies, and you’ll see that a sizable amount of them laid the base for success first and gradually built upon it rather than trying to run before they could even crawl. Moreover, in some cases, a company can experience too much demand from customers early on before they have had a chance to nail the basics first.
These basic fundamentals include making sure your accounting department is in place so you can pay employees on time, ensuring you are paying the correct amount of tax, and managing growth efficiently. It also means sticking to a rigid budget plan, which is a major pillar in your overall business plan – which you need if you are to see success in any state, but especially in one like California, where competition is rife, and market volatility is not uncommon.
Another key area you need to pay attention to is corporate insurance. Sure, most types of business insurance aren’t required under California state law (except for California Labor Code Section 3700, which mandates that employers must provide workers’ compensation insurance from a licensed insurance provider). However, just because business insurance isn’t legally required, it doesn’t mean you, as a business owner, should forgo it. In doing so, you’re putting yourself and your company to significant (and unnecessary) risk – legally and financially.
Proper business insurance in place will help prevent you from being directly liable for incidents beyond your control – such as burglary, property and equipment damage, cyber-attacks, employee and customer accidents (such as illness or injury in the workplace), and even economic downturns in some cases.
Natural disasters might also be included in certain coverage types, which, given California’s frequent wildfires, offers many business owners peace of mind. Whatever industry your business falls under, and whether you sell products, services, or anything else, you’ll need to find an insurance policy that suits your company. Ideally, going through business insurance agents in California will be your best bet.
Make sure you are starting a business for the right reasons
Starting a business can be soul-destroying. Starting a business in a state like California can be even more so, thanks to tough competition. Although popular culture and the success stories of certain celebrity business owners can glamorize entrepreneurship (take Apple, for example), the truth is that it is far tougher than other career paths – at least in the beginning.
When you build a business, you are solely responsible for its success. This makes it a lonely, tough journey that no one can really help you with other than a business partner. Therefore, you need to ensure you are starting your business for the right reasons.
If you have embarked on this arduous journey simply because you thought it might earn you millions, and you fancy yourself as the next Steve Jobs or Elon Musk, then you are unlikely to stand the pain for very long. Thriving business owners may enjoy the spoils of success, but they typically have a deeper reason for starting their company.
It might be that they are passionate about the industry they work in, think their product will truly change their customers’ lives or want to make a positive difference in the world. Whatever the reason is, it has to be the right one for the business owner – otherwise, entrepreneurship will not be as rewarding as it should be, making failure much more likely – especially in a state like California, which is an extremely competitive place but can be prosperous for hard-working, aspirational entreprenurs.
Have a strong skill at the core of your business
When you first start a company, it is likely to just be you on your own, delivering the products or services. This means it is not good enough to presume you can succeed as a business owner by outsourcing these crucial skill sets to others. Although this is how it will increasingly be once you are up and running, you won’t have the money to hire employees or freelancers at first.
As such, you need to have a working understanding of the different skill sets required to make your business function. For instance, if you run a cake-making business, this means being an adept baker, while if you are running a digital marketing agency, then you need to have a background in marketing. Without this backbone of talent, your business cannot hope to succeed.
Don’t scale until you become profitable
Lastly, you should avoid the impulse to scale before you are ready to handle it. It is tempting to take on staff, rent an office, and give the appearance that you are larger than you are in order to stand out among the crowds of companies in California and look like one of the bigger ones – but this will just backfire in the longer term.
Unless you are consistently profitable and have the necessary demand from your customer base, stay as small as possible for as long as possible. This is even true if you are struggling to fulfill demand.
You can always hire a freelancer to outsource work or rent temporary hot desk space if you want to host an in-person meeting, as an example. With over a hundred lines of work wherein people can fully freelance under California employment law, there’s never been a better excuse nor availability to outsource work. This flexibility that freelancers provide is far safer to maintain than the pressures of investing too heavily, too quickly.
