Everyone has the dream. Quit your job, open your own business and finally stop working for the man and start working for yourself. Make your own hours, create your own wealth, and live the American dream. This is certainly possible but let me give you some things to think about you make the jump.
1. You will work MORE hours than you’ve ever worked before. Large companies divide up the work and give most employees a 60% work day. Sixty percent in my opinion because most people could get their job done in 3 days if they put forth 100% effort. You won’t have that luxury. You will most likely be doing every thing to save money. Eventually you will hire staff to do things but no matter how big your business gets you’ll be mopping up.
2. No matter how much money you make you won’t have much cash for a while. When you are building your business you pour every single bit of profit back into the building phase. You can make considerably more money working for someone else in the first 5-10 years. For the first 20 years of my life I watched my friends put money in their 401K and make twice what I took home each year. Now I have millions of dollars in cash flow and assets but depending how they invested their money and what they make, they may have this also. They worked 40-60 hours a week, I work 60-80. Unfortunately to make the big money you have to sell…or build it big enough to take a big draw.
3. You can write off a ton of stuff through the business. It’s not what it used to be but there are plenty of tax advantages to owning your own business. If I go to Hawaii, I’m looking for plants…..kinda. I actually did order some new tropicals for the nursery. Great plants…one because they were interesting and would sell well, two because I can write off a $5000 trip for a $1000 plant order. Sometimes you have to see the plants in person 🙂
4. Lawyers and Insurance kill you. You really need both when you have a company, any company. You and your family will need insurance. Eventually your employees will need it. From day one you’ll need a lawyer. Neither of these is cheap and will certainly add to your costs. If you are an employee, both of these are much cheaper if not free
5. You have to be much more organized and driven to work from home. There are a ton of distractions at home. It’s easy to sleep in and stay up late. Your family expects you to help more when you are physically at home. Generally you don’t have staff at home to keep you organized as well. It’s up to you. Even if you have the ability to work from home it’s best to create your own space that is apart from every day living or even get outside office space.
6. It can get lonely. Many business people thrive on interpersonal interaction and when you open your own business the numbers are generally very small. That big office space is gone and it’s just you and maybe a few people that help. Some thrive on it and become hermits in their own little world and others call everyone because they just want to talk to someone.
7. No security. You can throw financial security out the window. Unless you sold your last business or banked some cash, you are going to be teetering on the financial edge and questioning every week if it was the right move. This is why so many new businesses take on investors and give up way more of their company than they wanted. There is something to be said of a steady paycheck. I like the risk reward of my own business but there was a ton of financial sacrifice for many years.
8. The best new business owner is the one with a spouse that has a great job. My wife made more than me for 12 years. It was the running joke but at times I didn’t find it funny. It’s a trend in successful business owners though. It provides the security at home (and the insurance) and takes the pressure off the business to support the family.
9. Don’t bring your spouse into the business. It’s often a recipe for disaster. Financially, emotionally, and for the family. There is more to life than work and when the entire family is thrown into it, work becomes the family’s life. Also see above
10. Self reliance. It is a beautiful thing. Every penny I made has come from my own actions and decisions. It’s the most wonderful feeling in the world and makes all the bad worth while. No matter what happens in life I now have the ability to feed my family because I know how to create wealth by myself. It gives me peace. I still work my ass off but I get to keep everything that’s left over and put it in my pocket. Now, if I can just get it so that’s something’s left over.