There are many benefits to starting your own business that I’d like to outline here. If done correctly, entrepreneurship is valuable tool to becoming financially secure. So without further delay, here are four benefits to becoming an entrepreneur.
1. Mitigate Job and Income Loss Risk through Diversification
We all know that no matter how stable you think your job is, you are at risk of losing your job due to factors outside of your control. As an employee, you do not control how your company spends their money, outside market factors, or how corporate politics impacts your position. Creating multiple streams of income can mitigate some of the risk that you face as an employee. In addition, a business owner has more visibility into the health of their own company so you can better prepare for job loss. Rarely do employers give their employees sufficient notice where they can find a replacement job before they are laid off or fired. Their job is to do what’s best for the company which may or not be what’s best for you as an employee. Multiple streams of income can also protect you during a volatile economy. For example, if your full time job is in the oil and gas sector, your job security may be a function of the price of oil or geopolitical strife. A side income in e-commerce for example, may make that volatility a bit more palatable.
2. Entrepreneurship Promotes Innovation
Successful entrepreneurs think differently. They try to find solutions to problems. This was what Amazon and other tech startups did during the early 2000s. And its what small startups do everyday. I successfully started a company a few years ago that looked at the gaps in the enterprise e-learning industry and based on these gaps created a SaaS product to serve those needs. You don’t have to be a tech guru to create a startup. Plenty of non-tech startups are solving real problems. Entrepreneurship promotes innovation with drives the economy. According to Fundera, small businesses added 1.4 million jobs and 39% of those companies had less than 50 employees.
3. Entrepreneurship Teaches Responsibility
In order to run a business you need to learn quickly how to evaluate profits and expenses. A bootstrapped company cannot afford to not budget, evaluate cash flow, or have high expenses. An added benefit that I learned is to involve your spouse and kids so that the entire family learns how to budget, how much to sell your widgets for, and how much profit the business will make. My older kids, ages 12, 10, and 8 help me with my Amazon business and I hope that this will teach them to be self-reliant as they get older and eventually start their own successful businesses.
4. Entrepreneurship Enables a Higher Quality of Life
This is what drew me to becoming an entrepreneur. It’s the idea that you can take steps to improving your quality of life. It’s the idea that you can work on what you want to work on, something you are passionate about. It’s the idea that you can work from home or you can run your business passively while you are out traveling internationally. Entrepreneurship can help you accomplish these dreams. For the past few years, I was lucky enough to where my business was running while I took my family on a 3 week vacation to Malaysia 2 years ago and then a 3 week vacation to Hawaii last year. Yes, I checked in with my team regularly, attended some meetings as well, but it was liberating that I can take trips like these with my family and my business can continue to run while I take a step back. My goal is to find businesses that I can turn into passive income. When I have enough passive income coming in, I won’t be relying on a full-time W2 income. This will free up my time to travel more and have the freedom to choose what I want to work on.
Now, I’m not saying having a W2 income is bad. It can be great. Especially if you enjoy your work, like your co-workers, and work for a company whose values are aligned with yours. In fact, I always encourage young people to start their career working as an employee. You’ll learn best practices in your industry, how to create efficient processes, how to work with others, and how to handle difficult situations. And working in a field such as engineering or sales can play a huge role in achieving financial freedom. Entrepreneurship, however, can be a valuable tool in your financial tool belt.