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No matter where you start a new business, it will be harder than you think, but that’s more true in California than anywhere else. The best way aspiring entrepreneurs should approach launching a new venture in the Golden State is to understand the common barriers to success from the beginning. Otherwise, it’s all too easy to underestimate the struggles that will be involved. Armed with this information, however, you can position yourself best to weather the storm and come out on the other side a success.
The Challenges of starting a business in California
There are many challenges specific to starting a new enterprise in the State of California. While this is a great place to change the world, even the most brilliant business leader won’t be able to do so overnight, even with the most brilliant business idea.
If you are contemplating starting your own company in California, the first thing you should be aware of is that this is a challenging market. Millions of people from all walks of life gather here. It can feel like tons of them are trying to do the same thing as you. If you have a great new idea, then there are probably lots of others in California who have already had it. This area tends to be ultra-competitive, and things move quickly.
Another challenge is that California is expensive. As of 2024, the average cost of renting or buying housing in California is 97 percent higher than in the rest of the U.S. Transportation costs are 28 percent higher, utilities are 22 percent higher, and food is 15 percent higher. On average, California’s total cost of living is 38 percent higher. This means your expenses while starting a new business in California will also be higher than elsewhere in the U.S.
In addition, the state is not the most friendly to businesses. According to U.S. News and World Report, California has the most regulations of any other state in our nation, with 395,608 restrictions written into its laws. Your venture will need to stay abreast of all the relevant rules and requirements to ensure compliance and avoid falling afoul of the authorities.
State taxes for businesses are also high in California. As the Sacramento Bee reports, the Tax Foundation routinely ranks California as one of the worst states in the union for its high business tax rates. In terms of California’s overall business tax climate, the foundation sets the state at 48 out of 50. California rises slightly to 45th for its corporate tax burden and 27th for its sales tax rate.
These factors mean it’s particularly important to have reasonable expectations when starting a new business in California. Make sure to give yourself plenty of time and a long runway. These are likely necessary while making your dream a reality, much less making it into rolls of cash.
That said, creating a new business is often worth the suffering, like anything worth doing in life. So here’s my advice for starting a business in California.
Tips for aspiring and new entrepreneurs
My first piece of advice is to master emotional intelligence and cultivate the ability to compartmentalize. As an entrepreneur, you will undoubtedly experience days when you feel small or defeated. Your insecurities may rise up, or you may find yourself faced with a seemingly insurmountable problem. You will need to deal with these emotions in a healthy manner and push past unhelpful rumination to cope effectively with the day’s challenges.
Next, be patient with yourself and your business. Almost nothing will happen on your ideal timeline. You may have an incredible vision and enough ambition to take over the world in only 18 months, but it’s best to expect a hard grind instead. Remember, there is no road map to do what you are doing. There is no cheat sheet. You need to make it all up yourself from nothing, and that takes time.
Finally, self-care isn’t just important — it’s indispensable. Starting a business is a humbling experience. When things go wrong, there’s no one to blame but yourself. Many people underestimate the amount of pressure involved, and that pressure is constant. Entrepreneurs need to put more energy into self-care than many realize. By that, I mean taking time to rest and relax with loved ones but also having fun and exploring interests unrelated to the business.
Lead the fullest life possible
Becoming an entrepreneur needs to be about more than just wanting to live a certain lifestyle. It entails accepting enormous pressure and responsibility. Therefore, before setting off on this path, be sure to ask yourself if you’re ready.
If you are willing and able to give 100 percent to your vision, however, the experience of starting a business will push you to grow in unexpected directions. It will also help you lead the fullest life possible.
– Nicholas Mathews, founder and CEO of Stillwater Behavioral Health, is a passionate and committed treatment provider in every aspect of his professional life. A resident of Southern California by way of Oregon, he started his career in behavioral health as a result of his own profound experiences with personal recovery; his passion is giving back to a population of his peers. A serial healthcare entrepreneur, every venture he undertakes is dedicated to helping individuals struggling with addiction and mental health disorders.
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