8 Benefits of Business Ownership
To many, starting a business seems impossible. From setting up your business entity, to taxes, hiring, maintaining accounting systems, marketing - the list goes on and on! I'll admit, it sounds intimidating. And we haven’t even considered the most important part! What is your business going to sell and how will it make money? Pretty discouraging, I’d say. BUT...
Having a successful business is more achievable than you may realize. All it takes is one entrepreneurial epiphany to produce enough motivation and energy to power a small town in Nebraska. As Stephen R. Covey says in his book, “The 7 Habits of Highly Effective People”, always begin with the end in mind! It’s important to think about the end goal. What do I want to be true of my life? What am I ultimately trying to achieve? Is it flexibility, or financial stability, or freedom? With these questions in mind, let’s think together about the benefits of having a business, the end results, and consider if a business may be the means to your end goal.
Benefit #1 - You Do You
Owning a business means you’re the boss. You call the shots. You make the decisions and you’re ultimately not responsible to anyone. Some would say your customers are your boss; however, your customers are only your boss if you allow them to be. Sure- you could choose to work on the weekends and you could choose to answer customer requests in the middle of the night, but that’s up to you. While you do have to give the customer what they want in order to be successful, you do still have the freedom to create some “terms and conditions” - because it’s YOUR business!
Benefit #2 - Unlimited Earning Potential
In “Rich Dad Poor Dad”, Robert Kiyosaki states that the poor and middle class work for money but the rich make money work for them. Working for money looks like going to a 9-5 job and collecting a paycheck. Making money work for you looks like investing in your business with the expectation of getting that money back- plus more.
When you own 100% of your business, you retain all the profit. The more thought & effort you put in, the more your profit grows. If you work for someone else, your earnings are limited by your salary. Unless you earn commission, more effort does not necessarily translate to more pay. Getting a raise is ultimately not up to you, and it can be frustrating to work harder / smarter than other employees with little reward. When you own the business, there is no cap on the potential reward.
Benefit #3 - Tax Optimization
This one is often overlooked. Owning a business gives you more opportunity for tax savings that you can't have being a W-2 employee. Do you have business email on your phone? Deduct a percentage of your phone bill on your tax return! What about a home office that you exclusively and regularly use for your business? Deduct that, too! Need a computer that you’ll use for your business? Deduct it! The list goes on- but generally speaking, owning a business can be beneficial from a tax perspective.
Benefit #4 - Flexibility
This will require some thought and effective planning on your part. Structuring your business in a way that doesn’t require you to be present can bring unlimited flexibility into your life. Sick child? No problem. Don’t feel like working today? Enjoy your day! Month long vacation in Europe? Have at it! Life throws curveballs. Having the flexibility to handle emergencies at a moment's notice is a luxury that most 9 to 5 workers don’t have. If you effectively manage your business, flexibility can be one of the most rewarding benefits.
Benefit #5 - New Skills
You are the owner, accountant, marketer, salesperson, web developer, secretary, IT, and much more. Eventually, you may be able to pay other people to absorb some of these roles; however, as their boss, you’ll need to have an understanding of what those contractors / employees are doing. Starting a business is a huge learning opportunity. This benefit is unique in that, even if your business totally fails, you get to take these skills with you. Knowledge is power- and even attempting to learn about each sector of the business will teach you new things!
You’ll have stories and experiences to pull from if you have to re-enter the workforce. Imagine how diverse your resume will be and how easily you’ll stand out from your competition. Starting a business makes you more well-rounded and attractive to hire.
Benefit #6 - Meaningful
Do you find your 9 to 5 job meaningful? Business owners find purpose and meaning in their businesses. Think about building a business from the ground up. You put your blood, sweat, & tears into it. When you find meaning in what you’re doing you have the ability to work harder, care more, & be motivated to succeed. People dread waking up to go to work- and while owning a business has its challenges, there will be days where you dread going to sleep. You should find joy in your work!
Benefit #7 - Less Risk
This may seem counter intuitive. Having an established business is less risky than having one source of income (your 9 to 5). Remember- we are beginning with the end in mind. A startup may be a big risk but if you become successful, each one of your customers is an income stream. If you lose your job, your one source of income is gone. With a business, you have a chance to diversify through different product / service lines, different customer bases, and different territories. When you have different income streams, losing one doesn’t hurt as much. If times do get tough and you have to close your business, revisit Benefit #5 and use this learning experience to your advantage.
Benefit #8 - Not Wondering “What If”
Many of us have a burning desire to venture out on our own. We’re held back by fear- fear of the unknown, fear of leaving our seemingly safe (See Benefit #7) career, and fear of what others will think. Taking the plunge will never leave you wondering “what if”. Don’t work for 40 years in your “normal job” and lose out on the chance to forge your own path. There is never a better time to try than now!
We Are Here To Help!
We exist to help people setup and maintain their businesses! If you start a business, you’ll want to spend time on the aspects of the business you really enjoy. But, there are necessary evils- operations, administrative work, financials, accounts- that must be set up and maintained for you to continue doing what you love. Thankfully for you, there are crazy people out there (like me) who enjoy getting the little things right so you can be free to focus on the big picture. Let us help you focus on your talents. Check out our consulting page and feel free to reach out (firstname.lastname@example.org) with any questions!
Mike Kern, CPA