There’s a set of reasons why motivational speakers and finance experts push their audiences to start their own businesses. For starters, it starts you on the path towards financial independence. There are many other benefits that you could reap when you invest in your business or in someone else’s company.
Let’s take a look at the five biggest reasons to invest in a business. You’ll want to learn how to evaluate investment opportunities coming your way after learning these reasons.
Reason 1 – You’re Investing In More Than Just the Business
Most people view the business investment as just putting up money as capital and then waiting for the returns to come. That’s only partly true. Your capital contribution is vital to putting up the foundation for the business, and to funding its early operations. However, your money is worth more than just laying down the groundwork for the fledgling enterprise.
Starting a business means investing in opportunities for other people to grab. The new business will need a core team of employees at the start. You’re giving people the chance to work in a field that they are experts at. Starting your own company means you’re giving people a shot at earning money while growing their skill sets.
You’re also investing in a legacy. A successful business will always leave behind a memory in the minds of its customers, employees, and even its competitors. Your community will remember your brand as a reliable partner in their daily lives.
Reason 2 – You Get to Exercise Control
You don’t get to exercise control much when you’re a full-time employee. In fact, the traditional employee has little to no control over how their workday goes. The company dictates what time they should come in for work, and what time they could leave the office. Their job description literally describes the scope and limitation of what they should do in between those hours.
Entrepreneurs, on the other hand, have the advantage of controlling the flow of the business. These businessmen can exert a degree of control over the direction that their enterprise is taking. You can, for example, dictate where profits go and how your business manages its cash flow. You can also choose to reinvest your profits back to the business to boost its working capital.
You also have the freedom of taking a holiday whenever you need or want to. All you need is to put a reliable management team in place. This team will watch over the business while you’re away on vacation. The only trade-off is you allow them the same benefit, within reason. Each team member needs to unwind to avoid burning out, after all.
Reason 3 – You Create a Source of Passive Income
Passive income is revenue that grows itself even while you’re asleep. An entrepreneur can actually earn money even if they’re not working at their business. Your business will continue to generate income for itself as long as you have an expert and trustworthy labor force in place.
However, you’ll need to invest time in setting up workflows and processes that your team can imitate or even improve on. Your employees will function the way you expect them to when they know what they need to do for the business.
It is your job, at least when setting the company up, to train them in what needs to be done. You simply turn over day-to-day management to a trusted leader in your organization when everyone’s ready. This leaves you with enough passive time to pursue other concerns.
You could use this time to invest in additional training and gain skills that you can pass on to your team members. This route can help you become a subject matter expert and earn income from providing training to employees of other companies.
Reason 4 – Your Business Contributes to Your Community’s Economy
Small businesses are crucial to keeping a community’s economic development moving in the right direction. You are contributing to this by simply starting your own business and serving customers in your community.
There are many ways that entrepreneurs can contribute to the local economy. For instance, businesses keep trade going in the market. Customers come to you for your goods or services. You render these services in exchange for cash, the default currency of today’s markets. This cash goes into your revenues and is disbursed throughout the market.
This is where the business’ effect on the economy is felt. For example, you use this cash to purchase more inventory from your vendors. Your vendors use the cash to pay their employees as well as purchase more raw materials. The cash moves through several points in the market and circulates around the local economy.
Cash flow also pays your employees their wages. Employees use their money to purchase necessities or acquire services from other providers. Their actions also circulate more money into the economy and stabilize it.
Last but not least, your revenues contribute to government revenues through state and local taxes. Your taxes go into various development projects including infrastructure and government-funded community services. Your and all the other companies in your local community all contribute to making the local area a better place for all.
Reason 5 – You Get to Experience a Sense of Self-Fulfillment
Starting your own business gives a sense of self-fulfillment. You get to start your business from scratch and watch it grow from a startup to a successful brand. You have the opportunity to create a work environment that represents your ideal workplace. You also get to start a business based on something that you’re passionate about.
There’s also the sense of accomplishment from knowing that you’ve contributed positively to the economy. You provide your employees with their hard-earned wages. You also know your taxes are going to fund vital infrastructure and development projects. All of these will benefit your community.
Steps to Take Before Investing In Your Business
Starting a business begins with identifying a market that you intend to provide with goods or services. This step involves in-depth feasibility studies to find your customers’ specific pain points, see what your competitors are doing about it, and how you can introduce something new or unique to the consumers.
Identify Your Unique Selling Point Through a Feasibility Study
Uniqueness is an attribute that you and your team must pay close attention to. Your market might already be saturated with businesses that offer nearly the same products or services. You must stand out among your competitors if you want to “steal” their share of the market. Take time to identify your unique selling point, and market it aggressively. This helps build anticipation before launch.
Feasibility studies also give you hard facts and statistics that give you all kinds of information about your niche market. This information will be crucial to your business planning. They can, for example, identify how much capital you need. You could also use the statistics to calculate your return on investment.
Build a Convincing Business Plan
Take all of this data and write your business plan. Use the business plan to document in detail the steps you intend to take to earn money. You can use this white paper to highlight your perceived edge over your competitor and how you intend to take advantage of that. You can also utilize the business plan to highlight the exceptional talent that you’ve brought aboard to help you manage the business.
It’s important to take your time with your feasibility study and your business plan. These two documents are crucial in convincing potential financiers to lend you the money for additional capital. They demonstrate that you’re willing to go the extra mile to get the business off the ground.
Study the Legalities of Starting a Business
There are various legalities involved in founding your own business. Incorporation is already a diverse topic on its own. You can choose to incorporate as a corporation or a limited liability company. You can also choose to declare the business as a sole proprietorship.
Each of those options has various attributes, advantages, and disadvantages that you need to be familiar with. They differ in tax declarations and benefits. Some constraints might be imposed on investor involvement and investment structures depending on the type of incorporation you select. Consult a corporate lawyer on the best path for you to take.
As an entrepreneur, you must be familiar with the legal concerns in starting a business. Having ample knowledge could give you protection from unfair negotiation terms, and help you avoid violations of the law.
The Bottom Line
Starting a business is a very rewarding endeavor. You, as the entrepreneur, get to help other people by offering them a job and a source of income. Your business also helps them exercise their skill sets and become better individuals as a result.
Your business is not just earning money for itself. It is also earning revenues that help fund government projects through taxes. You help introduce improvements to your local community that will help make everyone’s lives better and more productive.
The enterprise also helps to keep money circulating in the economy. Your business can start a loop of money going around yourself, your customers, and your business partners. You also help improve every person’s spending power by keeping the economy healthy and productive.
However, you will need to invest time and effort to understand the process of starting a business. These include identifying your unique selling points over your competitors. You must also build a knowledge of the different incorporation options available and any of the legal concerns that may arise.