The Internet is full of stories quoting dreary statistics on the number of small businesses that fail each year. This article isn’t one of them!
There are many benefits to starting your own business. It offers unique financial and leadership opportunities that are detailed here.
More Money, More Wealth
According to Payscale.com, the median income for someone with the title of Small Business Owner / Operator is $70,642 per year. This figure breaks down to weekly earnings of $1,358.50. Here is an important fact: the median weekly earnings for a full-time worker (wages or salary) in the United States is only $799. The typical small business owner clearly pulls in more income than his or her counterpart employed for someone else.
Then there is the subject of wealth. The median net worth of business owners is almost 2 ½ times greater than non-business owners. Business building is a long-term project; therefore, it encourages people to engage in behaviors that have long-term benefit. Planning, saving, and staying ahead of competitors are important for growing a business and wealth.
Sense of Security
People contemplating a new business venture often hear about the “risks” associated with such ventures. However, a business can add to one’s financial security in important ways.
First, business owners have a diversified revenue stream. This situation gives them an advantage over their salaried counterparts. For instance, business owners sometimes have “clients from hell” while people who earn wages and salaries sometimes have “the boss from hell.” A business owner who needs to replace a customer who is belligerent, disrespectful, or just plain unprofitable must only replace a small source of his or her revenue. Contrast this situation to a worker employed for someone else. If a worker has a boss that is belligerent or disrespectful, he or she must replace 100% of his or her income.
Second, a business enhances retirement security. Think about it from this perspective: A salesman employed at a company builds a customer base that creates value for the employer. When a business owner develops a customer base, it benefits himself. That value becomes an asset that can help fund a retirement. An hourly or salaried position, no matter how well-paying, is still growing someone else’s asset. At a time when pensions are going the way of the dinosaurs, this distinction is important to keep in mind.
Be a Leader / Direct Innovation
There are many outstanding large companies in America. Large companies can also be very bureaucratic, intensely political, and hostile to change. Being large does not immunize a company from potential failure. The liquidation of Circuit City and the ongoing struggles of RadioShack prove this point. If a person has a great idea, starting a business may be the only way to make that vision a reality.
Sometimes an entrepreneur’s vision is an invention. People know the product Spanx because Sara Blakely took a risk on her idea for a new type of hosiery. Other times, entrepreneurs improve an existing type of business. Walmart, the largest private employer in the United States, grew because Sam Walton took the concept of the General Store and made it extremely efficient. While these are examples of companies that became huge, America’s successful business owners create niche products and provide services that generate value for themselves.
Put Risk in Perspective
There are, of course, risks to starting a business. It’s important to put the risks in perspective. Millions of Americans ended up under water on their mortgages because they believed that housing prices could not fall. After sharp declines in the stock market, the joke was that many Americans now had “201Ks” instead of 401Ks. Let facts, not fear, be your guide. With good planning, a business provides outstanding opportunities for wealth building and professional development.