Working for yourself is called self-employment. A person who takes the risks of being self-employed and owning a business is called an entrepreneur. Small businesses contribute billions of dollars to the U.S. economy and employ more workers than all of the country’s large corporations combined. Owning a business can be challenging, but it can be very rewarding as well.
ADVANTAGES OF OWNING A BUSINESS
A major advantage of being the owner is that you get to make the decisions about how the business will be run. The owner can say what the business will and will not do. This includes the choice of products and services that will be offered. It also includes hours of operation, the types of customers the business will target, and the prices it will charge. As a small business owner, you have the freedom to set your own hours, deciding when you will work and how long you will work. Small business owners also keep all the profi ts of the business. Profi t is the amount left after all expenses are deducted from the revenues or sales of the business.
DISADVANTAGES OF OWNING A BUSINESS
If the business fails, the money invested in the business is lost. Most money invested in a small business comes from the owner and/or theowner’s family and friends. Owning a small business is often risky because it is hard to get credit. In many cases, the owner uses his or her personal credit, including credit cards, home equity, and loan debt in order to get and keep the business running. With most small businesses, and especially during its fi rst years, the owner works long hours and does many different tasks to keep the business running. Because money is often tight, owners cannot always hire others to do the work for them.
TYPES OF SMALL BUSINESSES
There are two main types of small businesses: lifestyle businesses and venture businesses. A lifestyle business is one where the owner intends to keep the business small. The business provides a good income for the owner and his or her family. These businesses exist for the lifetime of the owner and often have no resale value. For example, a dentist may elect to be a one-dentist offi ce and provide services to his or her patients. When the dentist retires, the business closes. Some entrepreneurs have their businesses “on the side.” This means they work a full-time job for someone else and pursue their avocation—a secondary occupation they enjoy—in their spare time. Their avocation may also bring them a nice “side income.” Other business owners want their businesses to grow into large companies with unlimited growth and many workers. This type of business is called a venture business.
As it continues to grow, it will eventually become a corporation. For example, Phil Knight started a business designing tennis shoes in his garage in Eugene, Oregon. When the company grew, it eventually became the publicly held corporation known as Nike. A venture business owner has an “exit plan” so that others can continue operation of the business when the owner decides to leave. The business owner simply may become one of the many stockholders and will no longer have total control of the business.
GETTING STARTED IN BUSINESS
How can you decide if being an entrepreneur is the right career for you? Your answers to the questions that follow will give you a better idea of whether or not you should consider owning your own business.
ADVANTAGES OF OWNING A BUSINESS
A major advantage of being the owner is that you get to make the decisions about how the business will be run. The owner can say what the business will and will not do. This includes the choice of products and services that will be offered. It also includes hours of operation, the types of customers the business will target, and the prices it will charge. As a small business owner, you have the freedom to set your own hours, deciding when you will work and how long you will work. Small business owners also keep all the profi ts of the business. Profi t is the amount left after all expenses are deducted from the revenues or sales of the business.
DISADVANTAGES OF OWNING A BUSINESS
If the business fails, the money invested in the business is lost. Most money invested in a small business comes from the owner and/or theowner’s family and friends. Owning a small business is often risky because it is hard to get credit. In many cases, the owner uses his or her personal credit, including credit cards, home equity, and loan debt in order to get and keep the business running. With most small businesses, and especially during its fi rst years, the owner works long hours and does many different tasks to keep the business running. Because money is often tight, owners cannot always hire others to do the work for them.
TYPES OF SMALL BUSINESSES
There are two main types of small businesses: lifestyle businesses and venture businesses. A lifestyle business is one where the owner intends to keep the business small. The business provides a good income for the owner and his or her family. These businesses exist for the lifetime of the owner and often have no resale value. For example, a dentist may elect to be a one-dentist offi ce and provide services to his or her patients. When the dentist retires, the business closes. Some entrepreneurs have their businesses “on the side.” This means they work a full-time job for someone else and pursue their avocation—a secondary occupation they enjoy—in their spare time. Their avocation may also bring them a nice “side income.” Other business owners want their businesses to grow into large companies with unlimited growth and many workers. This type of business is called a venture business.
As it continues to grow, it will eventually become a corporation. For example, Phil Knight started a business designing tennis shoes in his garage in Eugene, Oregon. When the company grew, it eventually became the publicly held corporation known as Nike. A venture business owner has an “exit plan” so that others can continue operation of the business when the owner decides to leave. The business owner simply may become one of the many stockholders and will no longer have total control of the business.
GETTING STARTED IN BUSINESS
How can you decide if being an entrepreneur is the right career for you? Your answers to the questions that follow will give you a better idea of whether or not you should consider owning your own business.
- Are you self-motivated? If you can get going and do what you need to do without being told or reminded, you will make a good entrepreneur.
- Do you like people? If you like people and can get along with your customers, you have a good chance of success
- Are you a leader? Entrepreneurs are able to get others to follow their lead. They are confi dent and persuasive.
- Do you take responsibility? Entrepreneurs take charge and follow through.
- Are you organized? Business owners must have a good plan before they get started. They line up their resources, fi ll in the gaps, and charge forward.
- Do you work hard? To be a successful owner, you must set the pace by example. Business owners work many long, hard hours. They don’t expect others to do what they themselves are unwilling to do.
- Do you make decisions easily and quickly? Owners must take risks and be willing to accept the consequences. Decisions sometimes have to be made without complete information.
- Are you trustworthy? Others must trust you and accept that you know what you are talking about. This means building trust and long-term relationships.
- Are you persistent? Business owners stick with it, even when the going gets tough. They fi nish projects and forget about excuses.
- Do you keep good records? Entrepreneurs must account for their costs and their revenues. They must pay taxes and understand about profi tability and cost analysis. These things require complete and accurate records.
If you have a good business idea, you should start the process early. Get your thoughts and plans onto paper, get advice from those you trust, and work toward your dream of owning your own business. In putting your idea into writing, you will be starting your business plan. A business plan is a document that describes the steps that will be taken to open and operate a business. It should show that you are worthy of funding (loans) from government and private sources, such as banks and venture capitalists. Sample business plans can be found at the SBA website or at various other websites by conducting an online search using the keywords business plans.
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