Have you ever thought about starting your own business and becoming an entrepreneur? Becoming an entrepreneur means creating a new business and taking it from a concept to an income generating entity. Starting your own business involves risk but has greater reward.
Being a boss and not having to follow others is appealing to most of the people but not everybody enjoys everyday arduous task. Not every is a hustler. Are you a Hustler?
Some people prefer not to think about work after 5PM. They choose 9 to 5 grind rather than trying to follow their passion and figure out everything on their own. It does makes sense, after all, why all the risk when the reward is not even promised.
Let’s dive into the topic – is it really worth ditching current job and go on a full-time journey of entrepreneurship?
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Is starting your own business really worth it?
There is no one straight answer to this. Is it really worth stating your own business? Is it really worth spending sleepless nights thinking about your business?
Well, it all depends!
Some argue it will all worth at the end while others question about the end. Everyone has their own opinion and no two cases are the same.
Here are 4 main factors that determines if starting your own business is really worth it.
a. Current financial condition
Your current financial situation tells a lot about you. Depending on your financial condition, you might be living under poverty line, middle class or high-income category. And depending on your category your priorities are different. If you are struggling to make ends meet, there is a higher probability that you don’t have time to think about being an entrepreneur. Therefore, it is not worth starting a business at this point.
As a middle class you’d want to jump to the other side. Robert Kiyosaki describes it very well in his book cash flow quadrant. In four quadrants of cash flow, you’d always want to move to the right side of the quadrant.
Related topic: My favorite personal finance books and how I took actions after reading them
High-income individuals are either already a business owner or have a high-paying job. The business owners are always look out for additional business ventures. Their mind is always geared towards progress, higher income generation and expanding network.
If you don’t own already, as an individual with high-earning jobs, it makes more sense to start your own business. With high earnings, your life-style will also fall into high spending category. The cash flow usually ceases as one stops working. Therefore, one must explore other avenues of generating income after retirement. I cannot imagine working the same way after retirement.
b. Individual personality
Personality says it all about the person. His or her choices are dependent on personality. Confident and goal-oriented people make big leaders and therefore they are more geared towards leading people either in their organization or own businesses. If you are self-reliant, resilient and focused, you should own your own business.
As a person with passion and skills, it’ll benefit you from opening your own business. This gives you a sense of fulfillment and help recharge your passion and skills lifelong. You’ll love your passion more if it is generating income and supporting you and the family.
c. Long term goals (5 year to 20 years)
As a human being we all have different goals. Be it, personal, economical or retirement goals.
Most people set their goals for a year, two years, five years, even twenty years while some prefer to live in the moment. Living in a moment does not necessarily mean not having any goal. Their goal is live the fullest within that moment and they tend to think that nobody has seen future.
Goals are very important to keep us on track. It helps us track our progression and reflect back for adjustment. Not everyone knows how to setup their goal. If you are one of those who don’t know and do not want to set your goals, it’s probably not worth starting your own business.
If your long-term goals are freedom, flexibility, benefits and security, at some point in life, you’d muse about having your own business.
d. Family and Friends influence
We are social animal and are always surrounded by friends and family. We need friends, family and their support in every step of our life.
Sometimes, we tend to make decisions based on our friends’ or family members’ influence. While in most cases, they steer us into the right direction, at times, they can also be a bad influence. It all depends on receivers’ final action though.
Therefore, if you are starting a business because your friend said so or one of your family members made a lot of money, then it is probably not worth to start your own business.
How to start your own business?
Now you’ve figured out if it is worth starting a business a not, you’re probably wondering how to start your own business.
Don’t worry, we’ve got you covered.
Starting your own business is not that difficult at all and no, you don’t need to have a college degree to start your own business. All you need to have is, passion towards the field (or niche) where you want to start your business and a lot of perseverance. The road to become successful business owner is not easy but it’s not unattainable as well.
If you’re wondering, where do I began, the following few tips will help you decide.
a. Choose a business niche
A niche is your focused area of a broader market where you want to run your business. A business niche is an area within the market in which you’ve expertise. Finding a business niche for your trade is one the first thing of starting a business. It is applicable from self-employed small business to big corporation.
As a business owner, your plan is to choose the area of trade within you interest, that’s high in demand and possible a low competition. These high demand low competition niches are the most profitable niche markets. There are evergreen niches for a business as well as season. Therefore, you should carefully pick the one that suits your future plan.
b. Pick a business name
Business name is the identity of a business. This is the first thing customer will see and know of before exploring into the products and services the business offer. Therefore, a creative business name is necessary that grabs customers attention. A good business name should be simple and easy to spell or pronounce, web-friendly and should let customer immediately know what services it offers.
The business name is used everywhere from website to marketplace store and physical locations. Therefore, it is required to have a memorable business name.
c. Market validation
Market research is an essential step of every startup business. You’d want to identity the potential customer and need for the product. Once the demand for the product is identified, you’d want to know the market size and market saturation. Without knowing these things, you are hitting the darts in dark.
Market research is a must in order to start a business and make it successful. Market research will give you so many insights that you won’t have otherwise.
For a small online business, market research may be just going to Amazon or Etsy and see the sales volume of your product, the reviews from the customer and how many sellers are selling similar product.
The best product to sell is the one that solves someone’s problem. If you know how to solve the problem and find a way to monetize it, you will become successful.
Another way of conducting market research is testing the products itself in marketplace like Amazon, Etsy or eBay and see if it sells. As a beginner, you’d probably have to spend some money on advertising to see traction. This gives you option to revise, update or even change your product based on the customer response.
d. Register your business
You’ve figured out your business niche, picked the name and validated that there is a demand for your product/services.
Where do you go from here?
It’s time to register the business. You need to register the business to get all the benefits that a business can enjoy.
Lots of self-employed individuals get bogged down into registering the company and getting a website setup before they’re sure which product they are going to sell. I would strongly suggest performing the market research and test your product before finalizing the industry you want to get into. There is always a chance that you might not like your first choice.
The first step of registering a business is registering the trade name. Depending on the formation, your business can be a sole proprietor, a limited liability, or an incorporation.
i. Sole proprietorship:
This is the simplest and the most common business structure that consists of only you and/or your spouse. You are the sole owner of the company. You cannot have any employee but are allowed to hire independent contractor for outsourcing your work.
Forming a sole proprietorship
You need to register the company name which is called DBA (Doing Business As) at the local county clerk’s office. The registration is in person, and you’ll need to provide few details about the company. The certification will be issued which confirms your DBA name for the company. After filing DBA, you’re required to obtain all the permits required (depending on you trade) to doing business.
Business Taxes
Sole proprietor business is a single employee business therefore, a separate business tax setup is not required. The income from the business will be combined into the personal tax while filing taxes every year.
Besides business taxes, if your business involves selling products and taxable services, you are required to collection and remit sales taxes. If you are selling products in marketplace, each marketplace has their own way of collecting and remitting taxes therefore you need to check with them. However, if you’re selling on your own, you should charge the buyer taxes per your State law.
Contact your controller’s office to register and start remitting taxes collected from the sales. Once approved, the Controller’s office will provide a business id number called EIN and provide access to their online portal. The sales taxes can be submitted to the Controller’s office online through their website. The taxes should be submitted either quarterly or yearly depending on the type of business.
ii. Limited Liability Company
Limited Liability Company (LLC) business structure gives you protection against the business liability. You can have more than one owner of the company. The beauty of LLC is that it can act as sole proprietor as well as incorporation while filing taxes.
LLCs do not pay taxes on their profits directly. Their profits and losses are passed through to members, who report them on their individual tax returns.
How to register your LLC
Registration of your LLC starts with naming your LLC. You should come up with a name, that has not been taken by somebody else. Therefore, before applying for the company, you must search your name to verify if there is a company with that name already.
If you’re registering a LLC in Texas, you’ll find the link helpful. Type in the name of your LLC and see if a company with the same name exist. If it does not, you can process with forming a company and filing with the Secretary of State.
iii. Corporation
Corporation in its own is a legal entity, which is expensive to open but gives the highest protection to its owner in terms of tax liability. Corporation is an independent individual entity and does not depend on the shareholders. A corporation can raise capital by going public.
Pros and Cons of starting a business
There are both pros and cons of starting a business. It has some of the best benefits on taxes but it comes with a price. This distinction between the price and benefit is what determines, if the startup can succeed or fail.
Are you willing to give up your comfort zone in order for better future? Let’s explore some of the advantages and cons of starting a business.
Benefits:
1. Be your own boss
As a business owner, you can be your own boss. Entrepreneur enjoys not having to listen to others. He is the decision maker of his company and s/he has a power to direct the company s/he envisioned. Being your own boss is the best feeling in the world.
2. Pick a lot of skills (time, money, and resource management)
You’ll pick a lot of skills along the way, while starting a business. You’ll learn things you were never capable of once you start your own business. Running a business requires you to be able to manage time, money and resources, and be a manager, employee and accountant at the same time. If you didn’t know any one of these, you’ll learn these with time.
3. Financial growth, Income (profit)
Although you’ll probably end of spending money at the beginning, you’ll setup the business to generate income. Some setup their business to supplement their existing income which others create them to replace the current income. Whatever your goal is, you’ll grow financially, if you are serious about your business.
4. Feeling of ownership
This is the best feeling in the own. Your business is something that you created from the scratch and believe me when I say this – You’ll love it when you see it grow. It’s like your baby. You gave it a name of your choosing. You nourished it and took it to a level that it’s self-dependent to generate income. It is a piece of you that you own.
5. Write off business expenses
Tax write-offs are one of the best advantages of starting your own business. You only pay taxes on the profits you make and you get to deduct any expenses related to your business. If you earn your income but working for someone else, you cannot deduct your expenses like your groceries and transportation. But as a business, you can deduct every single expense related to your company.
Those flights you took, hotels you stayed in and dinner, lunches for your business, yes, you can deduct all those under company expenses.
Drawbacks:
1. Starting your business will affect personal life if you don’t know how to balance the two
This is true for any work you do; not only your business. If you don’t know how to maintain the work life balance, it will affect your personal life. The same thing goes with the business too. Being an entrepreneur is not easy. It is highly likely that the struggles that goes on with establishing the business will somehow seep into your personal life. If the business requires heavy involvement from you, you’ll have limited time for your family.
Starting a business is an excuse to quit 8 hour per day job to work 24 hours a day.
2. Extra work hours to validate your business
Business does not take off immediately. It takes a lot of time. Before you even start venturing business, it requires time to validate your business. This is the process of putting a plan to make money with your conceptual idea. And it takes a lot of hard work, and extra time at the beginning. If you’re starting a business with already established idea, it might not take as much time but no matter what, you do not see the results immediately.
3. Time, money and resource management can be stressful
You may be good at something but not at everything. As an individual, you may be good at your skills. You’d have to wear so many other hats as a business owner that you’ve never thought of before. You’d have to manage people and resources instead of focusing on the skills. You’ll be required to manage time to get things done quickly. At times you’ll have be take control your finances. All these tasks may overwhelm people.
4. Keep up with Legal (taxes, accountants and business insurances)
Keeping up with the legal is one of the biggest hurdles with starting a business. With income, you’re require to understand how to handle them.
Taxes are always the last thing anybody would think about while making money.
After all you’ve to file in once in a year, right?
It can be mind boggling at times. If you don’t do taxes properly, the legal implications can haunt you for a long time.
Once your business is up and running, you need to protect it from every possible attacker. Therefore, you’ll have to take on business insurances. You’ll also need to have a legal team that would defend you should any legal issue arises.
Different types of self-employed businesses that you can start right-away
Now you are sure, you want to start a new business and you understand all the benefits and drawbacks it has; and you’re ready to take on any challenges, where do you start? The following are some of the self-employed businesses that you can start right-away. These self-employed businesses do not require huge capital and anyone can start them, even with a full-time job.
1. Selling products on marketplace (Etsy, Amazon, Ebay or business website)
Anybody can start selling products on marketplace. You need to find the product that you want to sell. You can start with retail arbitrage, dropshipping, digital products or your own product.
Etsy is one of the best platforms to start selling your product and start getting traffic with easy-to-understand advertising.
eBay also offers some good features for new seller and you can start selling your used products.
Amazon, relatively complex, but easy to get in marketplace with high customer volume, also provides platform for selling products.
Setting up your own website requires time and cost but also one of the best ways to start selling your products.
2. Become YouTuber
YouTube is becoming more popular for businesses that it was before. Starting a YouTube channel is free. All you need to have is a content, a good plan and post consistency, to become successful YouTuber. YouTube used to be a platform to market your businesses but YouTube itself is becoming a business nowadays. The ad-revenues generated by your videos can be sufficient enough to make it a full-time business.
3. Affiliate Marketing
Affiliate marketing is the process of promoting someone else’s product or services for a commission. It is a very lucrative business due to the fact that you don’t own the product therefore there is no inventory to maintain and there are no customer services required, therefore not returns to handle.
The earning from affiliate marketing is very small but you’re trading for volume and this can be completely passive; that’ll generate income while you’re sleeping.
4. Writing Courses and eBooks
eBooks and online courses are becoming new training medium nowadays. If you have skills to share and are knowledgeable on any industry which has market demand, you can start writing eBooks or courses related to the topic or industry. These contents can be as simple as getting started guide and how to videos or beginners training course. With so many people on the internet, we have people from every skill level trying to learn something.
5. Offering services as handy man, dog walking or transportation industry
Handy man, dog walking or getting to transportation industry like Uber, Doordash are also one of the self-employed businesses that you can get started right away. Although less passive, they can generate high income depending on the demand.
6. Real Estate Investing
Real Estate investing is a very lucrative business. With the right education and money for initial investment, you can start investing in Real Estate right away. If you know what you’re doing, you can make it a semi passive income source.
Why starting a business is a good idea?
- Starting a business is a good idea because nowadays you can start without a lot of money. There are business models that requires literally no money down to start building business. Initial capital is one of the reasons why most of us don’t get started.
- It’s a good idea because we should follow our passion. Everyone wants the freedom of choices, i.e., be able to do what we want and when we want it. Nobody should have to put off their dreams because they’ve 9-5 work that they need to get to everyday to make a living.
- Business can provide financial freedom. Your job can provide financial freedom too, but business can get you there quicker. Financial freedom will help you do what you wanted to do, improve your standard of life, give back to the community, or help a family/ friend. Whatever your priority is, it can help you achieve it.
Have you thought about starting a business? What is your motivation to starting a business? How do you want to starting a business? Please comment below to let us know.
