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Solopreneurs: Home-based businesses are growing in California

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    California is America’s largest state and is home to some of its most famous large companies, but it is also home to millions of successful home businesses. If you’re considering starting a business in California, it helps to know more about the overall trends and business climate there.

    According to statistics from the SBA Office of Advocacy’s 2016 California Small Business Profile, California is showing significant signs of home and small business growth. Many minority business owners, especially, are starting a business in California in recent years.

    Here are a few of the biggest trends and insights from this report that you should know if you're thinking about starting a home business in California.

    Small Businesses Are a Big Part of California Business and Employment

    There are 3.7 million small businesses (defined as having fewer than 500 employees) in California, making up 99.2 percent of overall California businesses. As of 2013, California small businesses were responsible for 6.7 million jobs, or 49.6 percent of the private sector workforce in the state.

    What This Means for Your Business

    Don’t assume that small businesses are just “small” businesses – your business dreams matter! Every new small business is helping to generate jobs and opportunity.

    Small Businesses Drive Job Growth

    As of 2013, California small businesses created 244,926 net new jobs. Companies with 100 to 249 employees added the most jobs, with a total of 47,050 new jobs created. Smaller companies with 5 to 9 employees added the fewest jobs, with only 22,865 net jobs.

    What This Means for Your Business

    Don’t be afraid to grow. The more employees you have, the more likely your business is to add additional jobs to the workforce.

    Owners of Incorporated Businesses Earn More Income

    Government data suggest that small business owners who incorporate their businesses are more successful than those who do not. As of 2014, California business owners who had incorporated their businesses were earning a median income of $56,099. Meanwhile, people who were self-employed at unincorporated businesses were only earning a median income of $24,454.

    What This Means for Your Business

    Incorporating your business — whether it’s forming an LLC or choosing another corporate entity — is an important step to make your business a legal corporate structure. Based on this data, it appears that incorporated businesses are more likely to earn higher incomes; perhaps this is a sign that incorporating your business gives your company more credibility and stability.

    Incorporating your business also gives your company a separate legal identity that is separate from your personal identity and your personal assets. This can help you build credit in the name of your business (instead of just relying on your personal credit score), which can make it easier for your business to borrow money and grow...earning even bigger profits in the years ahead.

    If applicable, also make sure to get your California business license, depending on what industry you’re in and what regulations require. Check out the Bizee Business License Research Package for more information.

    Minority-Owned California Businesses Are Growing Fast

    The 2016 California Small Business Profile data also showed that a growing proportion of people who are starting a business in California are minorities: African-American, Asian, Hispanic and Hawaiian/Pacific Islander. In fact, between 2007 and 2012, the percentage of California businesses that are minority-owned grew by 32.7 percent, while non-minority-owned businesses actually decreased by 8.8 percent.

    What This Means for Your Business

    Now is a great time for minority business owners — if you are part of a minority community and you feel like it might be a good occasion to start a business, you are not alone! Many people who are starting a business in California right now are from these various groups that have been historically underrepresented in the business ownership community.

    Also, if your business is a B2B organization (that sells to other businesses), you should know that a growing share of California’s small business owners are minorities. Be prepared to make sure that your marketing is diverse, inclusive and relevant to all kinds of business owners from all cultures and backgrounds.

    More California Businesses Are Starting Than Closing

    Running a business always has an element of risk, and not all businesses will succeed. But one bit of good news from the California Small Business Profile is that in the past few years, more new businesses have started in California than have exited (closed or gone out of business).

    For example, as of 2014's second quarter, 36,329 establishments started in California and only 33,139 exited. Overall, the state’s startup rate was higher than its exit rate. Clearly, many people are seeing the current climate providing promising conditions for starting a business in California.

    What This Means for Your Business

    If you’re thinking about starting a business, now might be a good time! Many other entrepreneurs in California are taking the leap and starting a business too...perhaps the time is right for you to do the same.

    To learn more about the 2016 California Small Business Profile, refer to the Minority Business Development Agency.

    Are you ready to take the next step in starting a business in California? Talk to Bizee. They have a range of service packages to help you start and manage your company, do your California business license research, and take care of anything else you might need to launch your California business.

    Ben Gran

    Ben Gran

    Ben Gran is a freelance writer from Des Moines, Iowa. Ben has written for Fortune 500 companies, the Governor of Iowa (who now serves as U.S. Secretary of Agriculture), the U.S. Secretary of the Navy, and many corporate clients. He writes about entrepreneurship, technology, food and other areas of great personal interest.


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