Starting a business in the United States remains possible, but the environment has shifted markedly since the boom of the 1980s‑1990s. Entrepreneurs now face heightened regulatory risk, a trend toward higher taxes, and a government posture that increasingly favors larger, more controllable enterprises.
Legal and regulatory risk
- Eviction moratoriums: During the COVID‑19 pandemic the CDC issued a nationwide eviction moratorium that was not authorized by Congress. Many small‑business landlords were forced to continue paying mortgages while tenants could not operate, effectively putting those businesses out of business.
- Potential for repeat actions: The precedent shows that emergency powers can be used to override contract law, raising the risk that future crises could trigger similar restrictions.
- State and local variations: While the federal moratorium was nationwide, individual states and municipalities also imposed their own lockdowns and licensing restrictions, creating a patchwork of compliance requirements.
Tax trajectory
- Rising income and capital‑gains taxes: Proposals to increase rates on personal income, investment returns, and estate transfers are gaining traction in the U.S. and across the Western world.
- Carbon‑related levies: Emerging carbon taxes could raise the cost of importing or producing goods, directly affecting margins for product‑based businesses.
- Overall fiscal pressure: The combination of higher taxes and stricter enforcement makes capital‑intensive ventures more expensive to launch and sustain.
Governmental and economic direction
- Statist shift: Policy discussions indicate a move toward a more centralized, “statist” model, where the government seeks to bring a larger share of the economy under direct control.
- Preference for large, unionized firms: Big‑box retailers and large corporations are easier for regulators to monitor and influence, leading to policies that can disadvantage independent stores (e.g., restrictions on what local shops may sell compared with national chains).
- Limited bailouts for small firms: In past crises, large firms received substantial government support, while many small businesses were left to fend for themselves.
Sector‑specific considerations
- Service‑oriented businesses (restaurants, bars, etc.): These were among the hardest hit during the pandemic due to mandatory closures and the inability to shift quickly to alternative revenue models.
- Internet‑based or advisory services: Digital businesses face fewer physical‑location constraints and may be less exposed to lockdowns, but they still confront the broader tax and regulatory environment.
- Capitalisation: Small enterprises are typically under‑capitalised, making them vulnerable to sudden cash‑flow shocks caused by regulatory actions or economic downturns.
Practical checklist for prospective U.S. entrepreneurs
- Assess regulatory exposure: Identify any industry‑specific licensing or health‑safety rules that could be tightened in an emergency.
- Build cash reserves: Aim for at least 6‑12 months of operating expenses to survive potential moratoriums or supply‑chain disruptions.
- Structure for tax efficiency: Consider entity types (LLC, S‑corp, C‑corp) that may mitigate future tax increases, and stay informed about pending legislation on carbon and capital‑gains taxes.
- Diversify revenue streams: Incorporate online sales or services to reduce reliance on a single physical location.
- Monitor policy trends: Track federal and state proposals related to business regulation, taxation, and labor law to anticipate changes that could affect profitability.
Historical perspective
- 1980s‑1990s: Generally regarded as a “golden era” for U.S. entrepreneurship, with relatively low tax burdens, limited regulatory interference, and abundant venture capital.
- 2000s‑2020s: Increasing regulatory complexity, higher taxes, and a shift toward centralized control have moved the business climate closer to the conditions of the 1960s‑1970s, when starting a company was more challenging.
While the United States still offers a large market, robust legal protections for property, and access to capital, entrepreneurs must weigh these advantages against the growing risk of government intervention, tax escalation, and an environment that increasingly favours large, union‑backed enterprises. Careful planning, strong cash reserves, and a flexible business model are essential to navigate the evolving landscape.
