SMALL BUSINESS AND FINANCIAL LITERACY
People start businesses for the challenge of being their own boss, to make profit and extract lifestyle. Even not for profits need to generate enough cash to employ people and sustain themselves.
Starting your own business has several financial benefits over working for a wage or salary. First, you’re building an enterprise that has the potential for growth – and your wallet grows as your company does. Second, your business itself is a valuable asset. As your business grows, it’s worth more and more.
Possible benefits in running your own business:
Independence and Autonomy: People are drawn to the idea of being their own boss and having control over their decisions. Starting a business allows individuals to set their own direction and make decisions based on their vision.
Passion and Personal Fulfillment: Some people start businesses because they are passionate about a particular product, service, or industry. Pursuing a business related to one’s interests can be personally fulfilling and satisfying.
Financial Independence: Business ownership offers the potential for financial rewards and independence. Successful businesses can generate profits and wealth for their owners, providing a means to achieve financial goals.
Problem-Solving: Business owners often identify problems or gaps in the market and see starting a business as an opportunity to provide solutions.
Flexibility: Business ownership can offer greater flexibility in terms of work hours and location.
Innovation: Some individuals are driven by a desire to innovate and create something new.
Legacy Building: Entrepreneurs may want to leave a lasting impact on their communities or industries. Building a successful business can be a way to create a legacy and contribute positively to society.
Job Creation: Starting a business can lead to the creation of job opportunities for others.
Personal Growth: Entrepreneurship often involves facing challenges, making decisions, and taking risks. Many entrepreneurs value the personal growth and development that comes with running a business.
That is a long and tempting list of possibilities. Most businesses fail in the first few years and that statistic has remained a constant. Why? Because running a business is hard.
Financially, you take all the business risks. You need to be energetic and keep learning and put into place all the skills you have.
You will most likely be working long hours in your business until, if you succeed, you get to the point where your business is managed, rather than you being more of an employee.
The business risk, plus the long working hours may impact your work life balance. It can be a more lonely journey, than being an employee.
You need to wear multiple hats; sales and marketing, finance and administration and as opposed to a salaried job, your income might fluctuate. Part of risk management is running good systems. Legal and regulatory problems are not fun.
You will need to cope with limited resources in the early stages.
Many people start their own business to ‘be their own boss’. It all sounds great until the reality of the uncertainty of income and the future, the responsibility and the risks come home to roost.
People sometimes take out loans and bind themselves into financial commitments in the process of starting a business only to find themselves in debt and exhausted. It is very important to have a business plan of some sort. If you are self funding the start up of your business then a formal plan presentation is less necessary, but if you are obtaining any sort of funding or equity then you will need to know your products and services, the size of the market for your clients and you will need to present a picture of your possible sales and forecast expenditure.
EDGE SME Financial management Services can help you start and progress in a business.
Despite these challenges, many entrepreneurs find the experience of running their own businesses to be personally and professionally rewarding. Success requires careful planning, adaptability, and a willingness to learn from both successes and failures. Understanding and addressing these downsides can contribute to building a more resilient and sustainable business and an interesting life.