Over the past decade the Chicagoland market has become synonymous with entrepreneurs and small business owners. Although our market is home to more than 10 Fortune 500 companies, the small business ecosystem is our true hero, with nearly half of all Illinois workers drawing their paychecks from a small business.
The current health pandemic has only accelerated support for small and independent businesses. But it may leave budding entrepreneurs and aspiring small business owners in a quandary: Is now the right time to start a business?
The answer: There is never a right or wrong time to start a business. It is possible to launch a thriving business amid economic uncertainty, especially if you have a business model that responds effectively to the needs of today's consumers. If you're considering taking the next step toward small business ownership, here's what you need to know to get started:
Step 1: Survey your target market
Today's environment is unlike any other as we navigate a state of constant change.
While it's important to ensure your product or service is relevant today, it's equally important that it can stand the test of time.
Test your idea in as many virtual venues as possible. Attend virtual networking events.
Set up online focus groups. Schedule 1-on-1 e-meetings with friends and former colleagues. Soliciting feedback from potential consumers will help you better understand your market and recalibrate your plans where necessary.
Develop a business plan
Critical to the launch of any new business is a detailed plan that outlines key objectives, anticipated challenges and charts the course of a business in its early years.
But right now, creating a 3-5 year plan might not make sense. Instead focus your efforts on microplanning for the short term.
Map out marketing goals, staffing plans and financing needs on a month-to-month basis, accounting for the level of uncertainty in the months ahead. Above all, be sure your defined value proposition is thoughtful and sensitive against the backdrop of today's economic environment.
Understand lending criteria
Next, determine how much capital you need to bring your plan to life and where you will secure it.
Before funding a first-time business owner, both financial institutions and investors will examine the big (financial) picture, especially in an unpredictable economy. Lenders will look at key indicators of a borrower's ability to repay a business loan or line of credit personally should the business be unable to.
These indicators may include an owner's own capital investments, income-to-debt ratio, and general market conditions, making a healthy personal emergency fund more important than ever.
Make it official
It's a good idea for small business owners to open a business checking account and apply for a business credit card, which help keep business finances separate while streamlining reporting and tax processes later.
In order to get the right banking products for your business -- as well as any additional capital you may need -- you must first determine the legal structure of your business and register it with the IRS.
These processes can take significantly longer in today's environment, so it is prudent to start early.
Establish your support system
Small business ownership can be intimidating, but you don't have to do it alone. Every Bank of America small business customer has access to one-on-one business support from a small business banker whose only job is to help them be successful.
From guidance on how to optimize administrative functions, to stepping in and extending repayment periods when cash flow slows, having a strong working relationship with your small business banking advocate is key to the early success of your business.
Despite the times small business ownership is well within reach for Chicagoland residents.
To take the next step toward opening a small business, please visit www.bankofamerica.com/smallbusiness or stop by your local financial center and ask to meet your small business banker.
• Jenny Pietanza is a small business banker manager for Bank of America where she supports small businesses across the Chicago suburbs.