Every day in America someone starts a new small business. It may be a barber shop, a doughnut shop, or a home based business. Along with the start ups there are likewise many failures. Why do you suppose that is? This article will present some reasons both for and against starting a small business.
In 1989, while working as a shipping and receiving clerk for an office supply company in Chattanooga, Tennessee, I began thinking seriously about starting a small business of my own. The problem with my job, of course, was that, like many who start a small business, I felt that I was working hard for my employer, saving him money and all the while not making what I was really worth. I was also in college at the time, married and had three children all below the age of ten.
We were living in a mobile home, paying lot rent, and barely making ends meet on my small pay check. I was also doing everything I could on the side to make extra money. This often meant working at night, on Saturdays, and such other time I could besides going to school and working my regular job.
Business Ownership – Continued
Coach You’ve moved from doing the nuts-and-bolts work to supervising and directing others who do the actual work. You now have some time to start putting systems together that will make it less likely that people will make a mistake.
In 1985, when I first moved with my family to Chattanooga, I was asked by a neighbor if I would be interested in cutting his lawn. I agreed to do so and he even gave me the mower to work with. He paid me a whopping $15.00 A week to cut his yard. I began to notice that it only took about an hour to mow that lawn after doing this for a while. I was making $15.00 per hour mowing, and my job, even if it was easier and inside out of the sun, only paid me $4.25 per hour. You can guess what happened.
Upon Further Consideration…
I started with that one lawn. Then I obtained another and another and another until, in just a few months, I was mowing all day on Saturdays and making between $80 and $100 extra money per week on the side. Things at work began to assume a turn for the worse and I finally turned in my notice. At that time, I had nine lawns that I was doing on Saturdays.
At the rest of my notice, I went full time in the lawn business. I had obtained a pair of commercial accounts to go with my residential customers and my income soon passed my former amount by several hundred dollars. The business grew to over 40 contracts within a few months. My income went from $200.00 Gross per week to around $600.00 Per week. I enjoyed my new found freedom. However, I found that owning a business has many pros and cons.
Owning a business, whether small or large, takes a certain type of person. Not everyone is cut out for it and some people a better off not attempting the task. Here are a few qualities that every small business owner needs to have.
The best business owners in my experience are those who take time to listen to their customers concerns. They also listen to their employees. They are fair minded individuals who, although they’re concerned about the ‘bottom line ‘, know that their ‘bottom line’ will be stronger if they treat both their customers and employees with respect and dignity.
According to the article ‘Empowering Employees ” published by The National Federation of Independent Business,’ From superior customer service to a healthy bottom line, empowered employees will make your business stronger and more successful. ” In order for this to work, however, leaders within the organisation must offer trust and support to their employees.
Employees who feel empowered will feel good about where they work. These individuals will become more loyal and contribute greatly to the overall success of the business. Employees who feel that they’re truly trusted and appreciated will give back to the body and the business will benefit. Happier employees contribute to a stronger bottom line.
The fourth ‘must’ for a prospective business owner is a readiness to invest in themselves and their business. If one doesn’t have the proper knowledge of business principles and book keeping needed to manage a business, they should do every thing they can to gain that knowledge before engaging in business. A business person should know their product inside and out. They should be willing to assume the risks involved in purchasing equipment and supplies necessary to operate efficiently.
Lastly, a prospective business owner should be one who is able to cope with the stresses of operating a business. Having the mental and physical stamina to handle stress is very important because stress is a part of all business owners life. Equipment failures, bills, customer relations, general maintenance, book, and employee troubles keeping are all sources of stress. Add in the stresses of family life and it can become real trouble. If one isn’t able to handle stress, all kinds of things can go wrong. Health, mental and emotional problems as well as physical burn out can result.
As a business grows these stresses only increase. When I started my business, a friend of mine also started a lawn service of his own. He printed up flyers and went through a large neighbor hood posting them on mailboxes and front doors. Almost over night his business went from zero to over sixty clients. He later told me that he needed to get a partner and buy extra equipment to handle all of the work. Lucky for him, he was ready. He had spoken to a friend about the option of being his partner, planned for an additional investment, and was as ready as he could’ve been for this explosive growth, but what if he hadn’t been? Can you imagine trying to handle sixty clients in a lawn service all by yourself? What about when it rained? What about snow? I can tell you from experience that would’ve been very stressful just trying to follow the work.
The business can be very easily started if there is a single owner. The legal costs incurred in such type of business structure are very low. The paperwork and formalities are also very less. Many businessmen start as sole proprietors initially and later change the business structure when their businesses grow due to this.
Perhaps the biggest ‘pro’ of being in business for yourself is being able to control your own income. When you’re in the situation of owner / operator you’re incontrol of the price you charge for your time and abilities. Working hard and fast, being honest and above board with people, pays off and pays off big when you’re the boss. You can actually earn what your worth. Your income is limited only by the existence of work and your own efforts.
One of the main benefits is that, the taxes to be paid are lesser compared to other types of business. These have partnerships involved or in the event that a firm is a corporation. The reason for this is the lack of double taxation in a sole proprietorship firm. Double taxation meant that the company and his owner both have to pay tax on the income produced by the business. The company pays the corporate tax and the owner pays income tax. However, in the eyes of the right, the owner and his business are deemed to be a single unit in sole proprietorship. So there is no corporate tax and owner pays only the income tax.
Another advantage is that the owner has 100% right over the income generated through the business. Thus, financial planning becomes hassle free as the income remains in the possession of a single owner and he may keep it with him or re-invest it according to his discretion. The owner may also use the income for non-business purposes or for personal use. The reason for this situation is that, in sole proprietorship, there is no difference between business income and personal income.
In case the owner has just started the company or if it is going through a slump, the proprietor may face some losses. In such a scenario, the owner can deduct his losses from his total income, including the income generated from sources unrelated to his business like interest on shares and selling of property. The income tax a proprietor pays is then calculated based on this reduced income.
A second ‘pro’ is more time with the family. When I had my lawn service and wanted a day off, I scheduled it. If I wanted a long weekend, I could take it. Birthday parties, ball games, dinner with friends, chores around the house, school functions, church, could all be scheduled into my time. The things that were important to me could be worked into my day. All it took was planning. As long as my lawns got done on time, my customers never complained about my taking time with my family. Scheduling and being willing to work a little louder than normal are the keys.
A third ‘pro’ is the pride and satisfaction that came with the knowledge of a ‘job well done’. When my customers were satisfied with my work and told me so, it really made my day. My work was my reference. I mean that every customer I obtained from the first person to the last, was obtained by referral. I had business cards and I used them but never needed to advertise further. My work was my advertisement. My parents taught me that ‘any job worth doing is worth doing well’ and I tried to practice that in my business. There is nothing more beautiful to me than a well groomed lawn.
A fourth ‘pro’ is the many long lasting relationships that come from being in business for yourself. Many of my original clients from 1989 were still clients ten years later when I sold my contracts and transferred to another state. We exchanged Christmas cards and became good friends through the years. The mutual appreciation between us was quite strong and made my work even more gratifying.
A final ‘pro’ of being in business for one’s self is NOT having a boss to answer to say to you what to do. This does have it’s benefits, but it also meant that when something goes wrong, there is nobody else to take the heat. If your the ‘boss’ you are responsible. This is true both with customers, as well as with the authorities.
A business of your own, run in an honest and upfront manner, can be a real blessing. It can bring a real sense of pride and accomplishment to your life. There are a few ‘cons’ to being in business for your self. Let’s look at them.
Not to throw a wet blanket on any ones dreams. However, it ‘d be a disservice to you to only mention the plus side of business ownership without mentioning the down side. It all depends on how you’re watching it, the following things can be either a problem or simply among the nasty things which are required if you’re to succeed in business.
We have already mentioned a number of the stresses of being in business. Many of these things, like those already mentioned cannot be avoided but some can simply by committing to doing everything in your business legally. The rest have to be treated as they arise.
Taxes can be a ‘con’ in owning a business. They make it necessary to keep really good records. If your not one who is meticulous enough to retain receipts and other valuable records in an organized fashion, paying your taxes can become a real hassle, especially if you are ever audited by the IRS.
Another ‘con’ can be having to have specialized licenses, with a view to operate legally in your state. Most states require a business license and so do most counties within a particular state. Whether you have to be authorized by the state and county or just the state usually depends on the place of your business. Sometimes you need a city business license as well. You better do your homework or you’d be in for a headache.
Lastly, when you are the boss, you are responsible for everything right or wrong. There is no one else to blame especially if you’re a ‘sole proprietor’. If you are not ready to take on full responsibility for your organization, you shouldn’t attempt to be in business. Risking a large amount of money, time and effort can be either a disaster if you are not properly prepared. You can lose and lose big.
In this day and age especially, times are hard. There are many folks out there who’re touting many different schemes. Most of these sound good. They promise big income for small outlay. Some of them are legit. However, others are only ‘pie in the sky’. Any offer that promises a ‘six figure income’ for little to no effort on your part is perhaps the latter.
The only true way to make money is by good old fashioned hard work and persistence. Owning a business takes a lot of effort. Even the most needful of services must be marketed to make money. Having a good idea is just the beginning. You have to tell someone your idea and be willing to do whatever it takes to make it fly to transform it into an income. That takes a great deal of hard work, long hours, and perseverance in the first years. Sometimes it pays off and sometimes it doesn’t. It is a chance you take.
The question is are you willing to take the chance and invest in your self? It’s your future. What are you going to do with it? If you decide to undertake the chance, do your homework first. Keep everything legal. Invest in yourself. Have a plan and work your plan. Set goals for yourself and your business. Take pride in your work and get it right. Be a people person, and do not ever forget what’s really important in life.