Annual Observance Highlights Importance of Small Businesses

Every year for the past 53 years, the president of the United States has designated one week as National Small Business Week. In 2016, that week was May 1 through 7. The purpose of the event is to recognize the contribution small businesses make to the American way of life.

Small businesses create nearly two-thirds of net new jobs every year and employ more than half the U.S. population. In Maryland, small businesses account for more than 97 percent of all employers and 1.1 million jobs. Recognizing that a healthy economy depends on the success of small businesses, the state of Maryland and the U.S. Small Business Administration offer loans and financial assistance that can help entrepreneurs. Even with adequate funding, small business owners encounter a number of issues that could threaten their livelihood.

Understanding the Market

The number of small businesses in the U.S. has grown 49 percent since 1982. It’s an encouraging sign for people considering starting their own business, but during times of growth, there is also a risk of market saturation – when the available supply of goods or services exceeds demand.

To avoid opening in an oversaturated market and to position one’s business for success, an entrepreneur must conduct market research, which can include:

  • Finding data about the economy, employment, and incomes in a specific area
  • Analyzing potential competitors – reading press releases, news articles and visiting competitors in person, if possible, to see what they offer
  • Conducting surveys through a market research firm to determine whether there’s really a need for one’s product or services
  • Studying one’s chosen industry to learn about long-term business outlooks.

Thorough market research is a must for start-ups, and it also helps businesses develop marketing and sales materials that appeal to target demographics.

Personnel Concerns

Many small business owners say they have trouble finding qualified employees, a problem that can leave a business short-staffed. In a customer service environment, being understaffed may interfere with the ability to serve customers well, which in turn can harm the reputation of a business. And growth or expansion may be impossible, without an appropriate number of qualified employees.

Interviewing and vetting job candidates is a time-consuming task that may be too much for small businesses to manage. Paying a recruiter or human resources contractor to find employees frees up time for business owners to focus on day-to-day operations.

Another personnel issue that has an even greater impact on small businesses is partnerships. An informal agreement among friends to become business partners can lead to legal and financial problems, should one partner decide to leave the business. Business partners need legal agreements that specify how they will earn income, what happens when one partner wants out, and who has the authority to make decisions, along with other details.

Taxes and Regulations

Small businesses can easily run afoul of tax and labor laws. Tax laws are difficult to understand, and labor law violations can occur when a business isn’t aware of how a subtle change in operations affects obligations. For example, when a business hires a freelance or contract employee but pays that person a fixed fee, the U.S. Dept. of Labor may determine that the freelancer is actually an employee and is entitled to benefits such as employer contribution to Social Security and Medicare.

An attorney can help small businesses understand their tax obligations, as well as prepare for pending changes in tax code that might affect them. Moreover, an attorney can help small businesses create the best foundation for success and provide legal counsel throughout the life of the business.

Lusk Law, LLC, specializes in assisting small business owners, helping to avoid litigation when possible, and we’re ready to actively represent our clients in court when litigation is necessary. Our experienced attorneys have provided legal counsel and representation to entrepreneurs in Frederick County, Howard County, Baltimore County, Baltimore City, Carroll County, Washington County, Anne Arundel County, and other counties in Maryland. With over a decade of experience in representing small businesses, we’re ready to offer a consultation concerning your rights. Please call us at 443-535-9715 or fill out our contact form if you have any questions about this topic.

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