Should you wait to Form an LLC until the Market Recovers?

The stock market strikes again and maybe you’re considering putting your plans to form an LLC on hold for a while. With the world’s investment markets once again taking us to a corridor between disaster and false alarm, should you wait to start your business until the economy looks to be more friendly to the entrepreneur just starting out? If you were expecting a clear cut answer, you’re going to be disappointed because different people with different risk tolerance, capital, expertise, and backing will all have different answers. There is no clear cut answer but let’s look at some factors to consider.

First, Although there’s no question that the investment markets are tied very closely to the world’s economies, that doesn’t mean that when the stock market goes up or down, the economy does as well. In fact, quite the opposite. That is easily seen by looking at an individual stock. Take a company like Apple. Apple is arguably one of the most healthy companies in the world. It’s the largest company in the world and has as much cash in the bank as the Federal Government. Apple’s stock, however, sees drops in value from time to time for no reason that can be tied to the health of the company. The stock market does the same thing. Jamie Dimon, CEO of JP Morgan recently said that they don’t stop hiring people and opening bank branches just because the stock market is having a bad couple of weeks. Don’t put off your plans to form an LLC only because of the stock market.

Second, if you have prepared appropriately and have enough cash saved to form an LLC, what better time to do it then in a down economy. Even if the economy were to dip in to a recession, rent could go down, the prices of essential business needs may go down as inventories at your suppliers increase, and service providers may be more eager to work with you for less money since jobs are harder to find. In other words, it could be the perfect environment but only if you have enough money to sustain your business and your family for a little longer than in a healthy economy.

Nobody can tell you when the time is right to form an LLC but business doesn’t stop because of a slower economy or a stock market that can’t seem to go up. If you have a business that sells a luxury item or service, you may consider waiting a little longer but for most businesses, the economy won’t be the cause of success or failure. Your LLC will succeed because you painstakingly planned and saved more money than you think you will need.