Pros and Cons of Starting Your Own Business by Kim Kiyosaki

Pros and Cons of Starting Your Own Business

Do you have what it takes to go out on your own?

More and more often these days, you hear about people who are walking away from corporate jobs to pursue their passion on their own. These self-employed and independent workers are lured into this lifestyle by flexible schedules, the ability to work remotely, and a chance to cherry-pick the projects that are of most interest to them. Who wouldn’t be?

Now, let’s look at a couple examples of how people are eschewing the traditional corporate ladder climb (which is a complete scam, by the way) in favor of calling the shots themselves:

  • Network marketing. You choose the company, sell their products, and invite others to join the company. Not only do you make money from the products you sell, but you also receive a percentage from the product sales of those you brought into the company (aka, passive income). This is a great choice for those who want to work with a company that has already figured out its business model and systems — plus, they’ll often provide the training you need to be successful.
  • Starting your own business. My friend Marilyn’s weak spot was designer handbags. Most of her luxury spending was on the latest Louis Vuitton, Armani, Prada or Gucci purses. Her friends would occasionally ask her if they could borrow her bags. Jokingly, one day her best friend said, “You would make a fortune from just renting out your fancy handbags.” The lights went on — and today, Marilyn makes a healthy profit every month from her small boutique of rental handbags. You can do this too: Look for a problem that exists where you can provide an unconventional solution! Or take a skillset or hobby you have (such as bookkeeping, photography or travel planning) and find clients who need your services.
  • Real estate investing. There are two reasons to invest in real estate: cash flow (an ongoing stream of income) from rental properties and for capital gains when you buy and sell (or flip) properties. If you’re resourceful, you can invest with little to no money down.

The Pros of Owning Your Own Business

Getting started in business simply begins with an idea. We all have ideas, it’s just a matter of rising to the occasion and putting that idea into practice. First, let’s examine the pros of this choice:

  • Control. You have full control, including over your income, expenses and debt.
  • Leverage of OPM (Other People’s Money). If you choose to raise money for your business, you can fund the start-up or growth with investors’ money instead of your own. You can learn more about how to leverage OPM here. If you are investing in someone else’s private company, then you are the OPM.
  • Leverage of OPT (Other People’s Time). Eventually, OPT can replace your time completely. If you are working in someone else’s business, then you are the OPT.
  • Unlimited revenue. There is no limit to how much revenue you and your company can make.
  • Tax advantages. Most of the tax law, in most countries, is geared toward reducing the taxes of business owners. Almost all business expenses are deductible, meaning you deduct them against the revenue, which reduces the company’s taxable income. If you are investing in someone’s private business, the losses from the business are deductible against income from other passive business or real estate investments. Gains often are subject to the lower long-term capital-gains rates.
  • Flexible hours. You set your own hours.
  • Freedom to express yourself. You can fully express who you are and what you stand for through your business.

And Now a Few Cons

Like anything in life, you have to take the good with the bad. A few downer points for owning your own business may include:

  • Difficult. Operating a business is the most difficult of the four asset classes to get into and sustain (the four asset classes are owning a business; real estate; paper, like stocks and bonds; and commodities, like gold). If you are thinking of investing in a private business, this is a major factor to consider and is why the track record of those operating and growing the business is so important.
  • High failure rate. Nine out of 10 businesses fail with the first five years.
  • Long hours. This isn’t a 9-5 job. You will likely work nights, weekends and holidays.
  • No guarantee. There is no guarantee of a steady paycheck.
  • People. You must deal with and manage people — employees, clients, consultants, vendors, etc. — along with their various personalities and moods. This can be quite stressful if you don’t enjoy this work.

Despite these few cons, hundreds of thousands of women just like you have succeeded in going out on their own — you can read some of these inspiring stories in my book, It’s Rising Time. Are you ready to rise up and do what it really takes for the reward of financial freedom?

Original publish date: November 08, 2018