New York can be a great place to start a business. It has been rated as one of the top five most entrepreneurial states in the nation, has a diverse economy, and is home to well over a million minority-owned and women-owned businesses.
At the same time, starting a new business in the Empire State is not without its drawbacks. Following are the top five challenges new business owners will face when opening and running a business in New York, along with tips on how to overcome the problems in order to remain successful long-term.
Cost and Complexity of Forming a Business
Recent estimates show that it costs about $100 to register a business in the state of New York. However, costs can be significantly higher if you sell products and/or services related to public safety and health, or if started your business in another state and are opening a branch office in New York. What’s more, there are a lot of regulations to navigate. You’ll need to be prepared to do a lot of paperwork before and even after you start your new business in the state.
Additionally, New York has a high tax rate. The business income base tax for the state is 6.5%, and there are also city sales taxes, UBT, and payroll taxes to attend to. What’s more, the state’s tax code isn’t easy to understand as it lists a number of metrics that must be used to calculate your company’s tax bill.
The best way to deal with the above-mentioned challenges is to partner with experts in these fields. Using an online tool to form your business can help you avoid mistakes when filing paperwork. Working directly with state agencies as the need arises can help you understand the requirements and fulfill them faster and more efficiently than would have been possible on your own. You may also want to find a reliable expert who can help you manage your taxes in the state in order to keep your tax bill as low as possible.
Expensive Real Estate
Before the COVID-19 pandemic, the cost of leasing or renting commercial space in New York was well over $82 per square foot. This has fallen as low as $54.85 in Manhattan as many companies that switched to a virtual work set-up struggle to motivate employees to come back to the office. Even so, the cost of renting a commercial office in New York can still be far out of reach for many entrepreneurs, especially those with a limited budget.
To overcome this problem, consider renting a co-working space. Such spaces provide amenities ranging from desks and chairs to coffee and printers to make it easy for you to get your work done quickly, easily, and comfortably. Such a set-up is particularly ideal if you have several employees who need to work together, in person, to complete projects.
Given the fact that the city is home to so many small businesses, it’s not surprising that it would be a highly competitive business market. Entrepreneurs who want to start a business in the state will need to do careful research to find a niche that isn’t overly competitive. Ideally, you should be only or one of the only businesses in your local area to provide a particular set of products and/or services.
What’s more, a company will need clear and appealing business values. If you haven’t done so yet, take some time to think about your unique value proposition (UVP). This isn’t an elevator pitch, although it can be used to create one. Rather, it’s a list of values and qualities that set your business apart from other, similar companies. There may be other plumbing services in your local area, for instance, but maybe you stand out because you put a premium on the environment and offer sustainable products and services. Maybe there are lots of companies offering tutoring services, but you work with age groups that others don’t.
Once you have chosen the right niche and properly defined your business, you’ll want to brand yourself by selecting brand colors, choosing a font for your business name, and creating a winning logo. You’ll also need to create a marketing plan to generate awareness of your company and what it has to offer. Use all the tools at your disposal, including social media marketing, email marketing, encouraging clients to leave reviews, search engine optimization, content marketing, etc.
Unlike some other aspects of starting a new business, dealing with the competition is an ongoing process. You’ll need to keep tabs on industry developments and business growth in your local area to see if you need to change some aspects of your business model to ensure your business continues to successfully appeal to its target audience. You’ll also want to keep tabs on your stats and analytics online to see who is coming to your site, how long they visit, and which topics/products/services catch their interest.
Balancing Growth vs. Quality
Once your business has gotten off the ground, you may find it difficult to balance growth vs. quality. You don’t want to allow your new company to stagnate; in fact, doing so could lead to your company’s demise. As your customer base grows, you’ll need to expand in order to accommodate new clients. Alternatively, you may need to add new products/services to your line-up in order to keep current customers engaged with your business.
Expanding your business will almost certainly boost your bottom line but only if it’s done right. The quality of products/services must remain the same or even improve if you want to maintain brand loyalty and keep new clients happy. You may be able to lower the cost of some of your products/services if your client base grows, but you should also be prepared to raise costs, if the need arises, in order to hire new employees to help you properly care for current and potential clients.
There is no “one size fits all” plan for business owners who are considering expanding their services. Rather, you will need to carefully research your competition, analyze your target audience and its needs, and assess your finances to decide if, when, and how to expand your business.
Hiring the Right Talent
New York is home to top colleges and attracts talented workers from all over the world. Even so, it can be difficult to find talented workers as there are so many local businesses all looking for good employees. What’s more, you’ll have to not only find the right talent but also work hard to keep your employees long-term.
There are several things you can do to deal with labor challenges in New York State. One solution is to look for independent contractors you can partner with to grow your business. Freelance professionals can help you reach your goals without putting a strain on your finances as you would not have to cover benefits for these workers.
On the other hand, companies that do need full-time employees in New York should be prepared to offer attractive compensation packages. Such packages should include not only a high starting salary but also benefits such as paid leave, paid vacation days, medical insurance, dental insurance, etc. You’ll also want to find ways to help your employees grow their skills and develop their talents. Make sure your office environment is welcoming and professional in order to retain the talent you need to grow your business.
Running a business in New York can be an incredibly rewarding experience. The state has much to offer small business owners and can be an ideal venue for entrepreneurs of all ages and walks of life. Even so, it’s not easy to start a business in the Empire State. Consider the pointers outlined above, tweak them to meet your needs, and make sure you know what you’re getting into in order to boost your odds of success.