While the rewards can be plentiful, the life is not easy
Entrepreneurship and owning a business can be wonderful. However, the myths attached to the entrepreneurial lifestyle and business ownership are steeped in misconceptions.
Owning a business is a licence to print money
I shake my head when I hear people who work in government, healthcare, or industry and don’t have to worry about where their next paycheck comes from tell me that people who own businesses have it easy and have a license to print money.
These people have no idea that 60 per cent of business owners either lose money or are making a marginal income. In other words, most business owners would be financially better off if they got a job with regular pay, benefits and a retirement plan. Yes, owning a business can be profitable and lead to financial freedom, but there are many risks and costs.
Doing what you love can make you a lot of money
I honestly believe that you should be doing what you love. However, this doesn’t always translate into making money. Recently I was approached by a small business owner who loved what she does, serving her customers and building relationships. Unfortunately, the business isn’t making money.
The financial reality is that to continue doing what you love, you need to find a way to make the business transaction profitable. In other words, you need to create enough money to enable you to continue to have a viable business. Without profits, paying yourself and your staff and surviving is impossible.
Most entrepreneurs get into business because they are passionate about what they do; they think if they love what they do, others will love it and exchange that love for money. The reality is that most businesses fail. Yes, do what you love by all means but make sure you can figure out how you will put food on the table.
Owning a business means you don’t have to worry about a boss
Working in a company where you have someone keeping you accountable can be difficult if you believe that you should be able to work without constraints. When you own your own business you don’t have a boss; you have many bosses. You are required to be accountable to your customers, partners, suppliers, employees, and the government.
Imagine the stress of being held to task by bankers who want to know where their money is or staff who want you to be at their beck and call to help them solve the latest drama in the business. I know many business owners who would gladly trade the tension of dealing with the business’s demands for a boss who paid them regularly and left them to go home at the end of the day without the worries and financial burdens of owning a business.
Owning a business enables you to write off many of your expenses
Owning a business can indeed have some financial benefits that working for others might not. Some expenses can be written off, like office space, some transportation costs, and even some communication costs. However, taxation laws require that these write-offs be legitimate business expenses. Fraudulent write-offs can be costly for entrepreneurs when they are audited.
The reality is that, to write off business expenses, you need to have business income. Building a business with substantial income to enable you to write off business expenses takes considerable time and effort, much more so than going out and getting a job in most cases.
Owning your business will make you happy
If you are unhappy with your life before starting your business, chances are that you will be less happy when you own a business. The relationship between business ownership, making more money and happiness is tentative. The stress, lack of work-life balance and financial uncertainty of owning a business often lead to relationship failure and home lives that are less than fantastic. Happiness and business can mix, but happiness must be intrinsic to the entrepreneur’s life irrespective of the business.
As a serial entrepreneur, I want to tell you that you can have happiness, freedom and money through business ownership. However, considerable time, energy, effort and investment are required even to have a chance at being successful.
As a successful entrepreneur and multimillionaire recently told me, being in the right place at the right time had as much to play in his success as his energy and effort. Ultimately he realized that his happiness was not dependent on his business and financial success and sold out to pursue other passions. The myths and misconceptions of business ownership are many, yet for those who are able, strong and lucky, the rewards can be plentiful.
Dave Fuller, MBA, is an award-winning business coach and a partner with Pivotleader Inc.
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