Starting your own business takes lots of courage. Where you register your business can determine how successful your business will be. Some states in the U.S. are better than others when it comes to determining where to locate your business.
California is one of the business-friendly states, with 99.8% of businesses in California being small businesses. These businesses make up a vital part of California’s economy as they employ 48.8% of the workforce.
The state ranks number one in terms of innovation and technology and access to capital for businesses. But these are not the only reasons why this “Golden State” is a land of opportunity for small businesses. Here are 4 reasons why you should consider registering your business in California.
1. Large Population
California has a population of 40,223,504 million, making it the state with the most people. Your business can benefit from the hustle and bustle of this large metropolis in numerous ways including:
- A Large Pool of Workers
You need access to qualified workers when you’re starting your business. Easy access to a large workforce will make it easy for you to find the most qualified talent for your business at a cheaper cost.
You also get access to a diverse workforce which exposes your business to a range of opportunities and markets as no ethnic group makes up a majority of the population in California.
California is also home to some of the most respected colleges in the world where international students like to flock. This increases the range of talent your business has access to.
- A Diverse Customer Base
If you’re targeting a specific customer segment, you are likely to find more customers in a populous state like California that has a large population of that segment.
- Access to a Wide Professional Network
A higher population means easier access to professional service providers such as accountants, lawyers, and other consultants who can provide you with business services. For instance, it’s easier to get access to an attorney who’s specialized in what your business offers, like an intellectual property lawyer if you own a publishing company.
2. Strong Economy
An area’s level of economic development affects the success of your small business. In a strong economy, your business will have more opportunities to grow.
California is home to many modern industries such as renewable energy, tech, media, and software which means the California economy tends to react immediately to fluctuations in the market.
California had a GDP of $2.9tn in 2022, a 2.9% increase from 2021, making it the largest economy in the U.S. From 2012 to 2022, California’s GDP grew at an annualized rate of 2.4%. The GDP of the Golden State has grown so much that it’s poised to overtake Germany and become the 4th largest economy globally after the U.S, China, and Japan.
Low unemployment and greater disposable income among consumers mean more sales and profitability for your business. Access to cash allows you to expand your business, increasing your capacity to acquire new customers or increasing the range of your customers and services. You can also use your profits to acquire more efficient technology to help you cut costs and run your business even more profitably.
3. Resources and Programs
Running a business requires you to navigate a set of rules and regulations including paying taxes. Thankfully, California happens to be one of the best places to register a company thanks to various resources and programs for small businesses offered by the state and private investors.
Some of these include:
- U.S. Small Business Administration (SBA): Provides free and low-cost business planning and regulatory compliance assistance to entrepreneurs.
- Governor’s Office of Business and Economic Development (GO-Biz): Assists with webinars, workshops, and permitting and regulatory information.
- CalGold: Assists with the business permits and licenses.
- CA Department of General Services: Issues state contracts to small businesses and disabled veteran business enterprises.
- CA Department of Consumer Affairs: Provides licensing in more than 200 business and professional categories including particular medical and financial professions.
- U.S. Citizenship and Immigration Services: Verifies employment eligibility (Form I-9) and helps in obtaining employment authorization and immigration through employment.
- U.S. Department of Labor: Advises on federal matters of federal wage and hour issues.
- Covered California: Provides Small Business Health Plan Option Program under the Affordable Care Act.
- U.S. Internal Revenue Service: Provides Employer Identification Numbers and helps with federal income and payroll taxes.
- CA Franchise Tax Board: Administers corporation and personal income taxes.
Programs and resources for small businesses that are still ongoing as part of the COVID-19 relief assistance are as follows:
- California Rebuilding Fund: Lends up to $100,000 or 100% of a business’s average monthly revenue for three months prior to the COVID-19 pandemic, whichever is less.
- Small Business License Fee Exemptions: Provides two years of fee relief for licensed restaurants, bars, and barbers and other cosmetologists.
- Disaster Relief Loan Guarantee: Allows access to capital for small businesses in low-wealth and immigrant communities and others that do not qualify for federal disaster funds.
- U.S. Small Business Administration Debt Relief Assistance: Provides debt relief to existing SBA borrowers.
4. Strong Infrastructure
California’s strong infrastructure makes it an attractive place to start a small business. You can sell and purchase goods and services with minimal difficulty. The Californian transport system consists of road, rail, and freight, with California having the highest number of imports compared to other states. In July 2021, Governor Gavin Newsom signed legislation to provide affordable and reliable internet access to all Californians, which means internet connectivity for families and businesses.
California made historic infrastructure investments in 2021 including expanding access to broadband and enhancing the state’s transportation system for the 21st century. The plan also included investments in capital assets that support core state functions, including state office buildings, fire protection facilities, and courts. In 2022, The Governor’s Budget of an additional $20 billion was set aside for further infrastructural developments in transport and clean energy innovation.
These infrastructure developments may help your business to grow sustainably by potentially reducing the cost of delivered goods, easing communication with stakeholders, facilitating easy mobility of goods and people, removing productivity constraints, and increasing the overall competitiveness of your business.
BFC Can Get the Financing You Need with an SBA CDC 504 Loan
Your business needs adequate financing to take advantage of all the opportunities that California has to offer. As Southern California’s leading SBA CDC 504 Loan Program experts, we can help you get access to the capital you need to grow your business.
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Contact our loan experts to get started with eligibility and the application process or to answer any questions you may have.