Many people dream of having their own businesses, but various factors hold them back from taking the leap. Some aspiring entrepreneurs are afraid to give up the security of a full-time job for the risk that their business venture will fail, while others simply keep delaying the decision to start a business until they have reached particular milestones—for example, until they have retired, their kids have finished college, or they have saved a certain amount of money.
In reality, entrepreneurship does involve some risk, and there will never be a “perfect” time to start a business. However, economic conditions, sociopolitical trends, and the type of business you are starting may all have an impact on your success as an entrepreneur. Currently, several factors are indicating that 2018 is an exceptionally positive year in which to become a business owner.
Have you been seriously considering starting your own business, but have been unsure whether it was the right time to do so? Here are a few reasons why 2018 is a great year to become your own boss:
- Strengthening economy. As the national economy has continued to recover from the doldrums of the Great Recession, consumer confidence—and therefore, consumer spending—has surged. Business owners are experiencing the benefits of the strengthening economy as their profit margins increase. In addition, factors like a low unemployment rate, tax relief, and reduced regulations on businesses have led the National Federation of Independent Business (NFIB) to declare 2017 the strongest year for small business optimism in the 45 years that the organization has been publishing its “Optimism Index.” This trend of heightened business and consumer optimism is expected to continue in 2018.
- Expanded access to healthcare for business owners. Under the Affordable Care Act (ACA), businesses with between one and 50 employees can use the Small Business Health Options Program (SHOP) to offer their employees health insurance. However, due to the high cost of plans, SHOP has been underutilized by many employers. Therefore, the Trump Administration is taking steps to further reduce healthcare costs and expand health insurance options for small business owners.
In October 2017, President Trump signed an executive order entitled “Promoting Healthcare Choice and Competition Across the United States.” One of the most important changes under this order is the expansion of access to association health plans (AHPs). AHPs allow small, similarly oriented businesses to band together and purchase large-group insurance policies—which tend to be less expensive and more comprehensive than plans that individual small businesses can buy on their own. The new executive order extends the ability to join AHPs to more small businesses, which will help these business owners save money on high-quality insurance plans for themselves and their employees.
- Tax breaks for small businesses under the new tax reform law. In December 2017, President Trump signed into law the Tax Cuts and Jobs Act, the most sweeping overhaul of the U.S. tax code in over 30 years. This new law contains several provisions that will benefit business taxpayers. For example:
- S-corporations, partnerships, and other pass-through entities—which encompass many small businesses—will receive a tax deduction of up to 20 percent. However, taxpayers will need to understand the nuances of this deduction, as it is not fully available to all small businesses. For example, for most employee-based businesses, like restaurants, the deduction is limited to 50 percent of payroll expenses.
- Bonus depreciation and §179 expensing have been expanded. Through 2022, the new law will allow business taxpayers to use the concept of bonus depreciation to immediately deduct 100 percent of the cost of eligible property the year it is placed into service, rather than depreciating it over the property’s useful life. This will allow businesses to reduce their tax burdens by seizing greater deductions. In addition, the Tax Cuts and Jobs Act expands the tax code’s definition of §179 property, for which businesses may deduct a certain amount of the purchase price. Section 179 property typically includes furniture, equipment, vehicles, and other items used primarily for business purposes. Previously, businesses could claim a deduction of up to $500,000 for up to $2 million of qualifying purchases, but the new law raises the deduction to a maximum of $1 million for up to $2.5 million of purchases.
- The corporate tax rate has been lowered from 35 to 21 percent. This is one of the most well-known provisions of the new law, and for any businesses organized as C-corporations, it represents a financial boon.
In light of these recent changes, current conditions are very favorable for those interested in starting a business. No matter the year, however, franchising offers a less risky business opportunity than buying an independent small business. One reason for this is that due to the structure of franchises, franchise owners enjoy much-needed protection against the whims of the economy. For instance, franchises offer established brands and proven business systems, allowing franchisees to focus on maximizing their profits rather than worrying about how to run their businesses. These profits enable franchise owners to cultivate income streams that are independent of the stock market—which, as recent declines demonstrate, can be volatile even in a strong economy.
Furthermore, franchising—and particularly semi-absentee franchise ownership—is a great way to diversify income. Semi-absentee franchise owners need only be present at the business location for a few hours each week. The operation is primarily run by a trained manager, allowing the franchisee to maintain a full-time job while reaping the benefits of an additional income stream. Franchising also offers a lucrative option for individuals seeking a reliable source of income during retirement.
If your dream is to enjoy the freedom and flexibility of being your own boss, consider all of the reasons why NOW is the right time to take the leap. Among the multitude of options for business ownership, franchising offers advantages such as lower risk, a strong support network, and an established business model. There are currently over 3,000 different franchise companies in a variety of industries operating in the U.S., and franchising is expected to grow exponentially in the coming years. Start the exciting journey to becoming a franchise owner today—call Franchise Logic at 303.805.5078 to schedule a free, no-obligation consultation!
(Sources: https://www.nfib.com/surveys/small-business-economic-trends/, https://www.forbes.com/sites/sallypipes/2017/10/13/trumps-executive-order-offers-relief-to-employers-and-patients/#7859794b3c4f).