Should You Start a Business? Everything You Need to Know

Starting a business can be incredibly rewarding, but life as a business owner may not be for everyone. If you are asking yourself, “Should I start a business?” consider the various factors involved in business ownership. For example, think about why you want to start a business, how much money you want to make, and whether you understand the role of a business owner.

This article will examine these questions and the other significant points to consider when determining whether starting a business is right for you.

Can You Be a Business Owner?

If you’ve never owned a business, you may wonder, “Can anyone start a business?”

When I began my own experience with business ownership, I knew close to nothing about the process or whether I would be capable of all the responsibilities and tasks involved. However, I soon learned that business ownership is both achievable and rewarding.

By starting small and taking business ownership one step at a time, you will slowly but surely gain entrepreneurship skills through each of your experiences. Even if you’re doubtful of your capabilities now, the skills you learn will help you build a successful business.

As with most aspects of business, confidence is key. If you’re not confident in your abilities, then customers, clients, and vendors may be less likely to work with you, especially if you’re a new business. Confidence will also allow you to take decisive action, which is an important skill to have as an entrepreneur.

So, before reading on, decide now: You can be a business owner.

Consider the Qualities of Business Owner

There is no “entrepreneur type.” Anyone can become a business owner with the right mindset, perseverance, and confidence. Successful business owners tend to excel when they possess certain skills that elevate their leadership, charisma, and decision-making.

While you don’t need every trait listed below to be a good business owner, having (or developing) a few will make it easier.

Desire to succeed
Curiosity
Stubbornness
Confidence
Drive
Rebelliousness against authority
Persistence
Negotiation skills
Positivity
Willingness to take chances
Resilience
Problem solving
Adaptability
Enjoying solitude

Mull over these traits. Ask close family and friends if they see these traits in your personality. Even if they say you don’t have them, that doesn’t mean you shouldn’t start a business. You can acquire many of these skills over time as you gain practice and experience on your business-founding journey.

If you are concerned that you don’t express many of these traits, proceed cautiously. Start small with your business to slowly pick up and develop key business traits.

Why Do You Want to Start a Business?

Reflect on what’s motivating you to start a business. Is this undertaking something you want, or is it what someone else wants? You’ll likely be able to identify with a few of the following motivators that typically prompt people to start their own business:

Calling the shots
Learning new skills
Making more money
Working from home
Solving more problems
Possessing a flexible schedule
Having true job security
Building a family business
Creating jobs for your community
Improving your brand
Managing and tracking finances
Living with more risk and uncertainty

Once you know your reasons for starting a business, you can choose a type of business that fits your desires. For example, suppose it’s important for you to operate a business that provides jobs to your community. In that case, you won’t want to be a freelancer, as freelancers typically work independently without managing staff. Or, if you’re starting small as a freelancer, you could have a plan to transition to a more significant business.

Reasons Not to Start a Business

So, what reasons might stop someone from deciding to start a business? Well, there are several explanations as to why this line of work may not be fitting for everyone.

Financial Considerations

Successful business ownership requires a lot of hard work, and it can take time to see the outcomes of that effort.

Furthermore, your business may have the time-sensitive actions required that can involve paying fees. Things like incorporation fees, filing costs, taxes, insurance, and even other startup expenses like equipment and supplies can add up.

That said, people in poor financial positions may want to wait until they can afford the potential monetary setbacks associated with initial business ownership.

Motivation & Effort

Additionally, starting a business requires motivation. Without the drive to maintain a strong work ethic and stay disciplined in carrying out your business practices, you won’t be able to sustain your responsibilities as an owner. Your effort and perseverance are crucial to the success of your business, so consider whether you would be willing to put in the work, rain or shine.

Leadership

Some people don’t like the idea of leadership, but if their business requires employees or contractors, they will likely have to take on some of this responsibility. Fortunately, not all businesses require extra help.

In my own business as a writer, I carry out all of the responsibilities of my work alone. While I don’t need to manage or lead anyone else to keep my business afloat, this also means I need to wear all of the hats involved—from marketing and acquiring new clients to billing my customers, each of these tasks falls on me.

This just goes to show that there are pros and cons to sole proprietorship, but if your dream business is impossible to sustain alone, then you should consider whether you are willing and capable of taking charge of other people.

How Much Money Do You Want to Make?

Now, let’s address the big question on everyone’s mind—is starting a business worth it financially?

Unfortunately, the answer is: Not always. To approach business ownership with realistic expectations, you must plan out and understand the best, average, and worst financial result of being a business owner. You cannot predict what will happen with the economy, your industry, or personal matters. Therefore, you must prepare for anything.

I once knew someone who had been co-owner of a business for five years. She lamented that while being a business owner has its perks, she wasn’t financially secure. After five years in business, she was still doing twice the work of her previous corporate job and making a third of the pay. She ended up leaving the business and partnership within the year.

Forming a thorough understanding of why you’re starting a business may help you stay motivated to work through the potential decrease in your salary.

For example, is it more important to you to “call the shots” than make more money? Is it more important to create a business to pass on to your children instead of contributing to your 401(k)? These are the priorities you should identify as you consider business ownership. Focusing on your reason for starting a business will keep you driven to continue it even when times are tough.

What Do Business Owners Do?

Before diving headfirst into becoming a business owner, you should know what day-to-day life is like and have an accurate understanding of what to expect in this role.

Consider how daily life as a business owner would differ from your current life. Also, determine what tasks the average business owner in your desired field does on a daily, weekly, and monthly basis.

Life of a Business Owner

Ultimately, a business owner takes on an authoritative role when it comes to all areas of the business’s management. If you encounter a problem, you are the person responsible for coming up with an appropriate solution.

When you start a new business, you will find yourself needing to solve many problems and make many decisions. As the business grows, you’ll make fewer decisions and solve more significant problems. Amazon founder and CEO Jeff Bezos is well-known for saying he only tries to make three good decisions a day.

If problems stress you out, this doesn’t mean you don’t have what it takes to be a business owner. Instead, it is likely that you just need to change your mindset. Try to look at problems as opportunities instead of seeing them as frustrations, and change your thoughts from “I have to solve this problem” to “I get to solve this problem.”

Adopting a more positive outlook will help you feel more confident about business decision-making and allow your skills to improve over time.

Tasks of a Business Owner

A business’s recurring tasks will depend on its type and size. For example, the tasks required to operate a small tutoring business differ from those of a complex restaurant with employees. However, certain tasks tend to apply to many different kinds of businesses.

Consider what your life will be like frequently managing these tasks:

Daily operations
Decision-making
Sales calls and meetings
Customer service
Marketing strategy
Manage technology
Problem-solving
Creating systems
Implementing software
Tracking income and expenses
Local networking

When first starting a business, you may need to do everything yourself, which can make the process feel overwhelming. That’s why it’s essential to start small and slowly learn and grow your business as you gain experience. After all, starting a business won’t be enjoyable if you have 100 new tasks to implement.

Remember, you don’t have to do all of those tasks on your own forever. As your business makes money, you can scale up and introduce more members to your team. By choosing to hire employees or use contractors, you will be able to delegate tasks to other staff members, and your daily operations will become less time-consuming.

Entrepreneur, Small Business Owner, or Something Else?

Should you be an entrepreneur or a small business owner? Understanding the differences can help you determine the route you should take when starting your own business.

What Is an Entrepreneur?

An entrepreneur may start as a small business owner, but they usually don’t stay one for long. Entrepreneurs tend to create fast-growing businesses and are more willing to take risks than small business owners, taking on investments like venture capital. What distinguishes entrepreneurs from other businesspeople is that they find their success through great risk and often create businesses that grow nationally or worldwide.

If this sounds like something that excites you, then you’ll want to choose to start a business that will be able to grow. For example, you may want to start a McDonald’s franchise instead of a Chick-fil-A franchise. McDonald’s allows its owners to open multiple locations, whereas Chick-fil-A does not offer multiunit franchise opportunities to initial applicants and instead limits ownership to only one location.

It is important to know if you want to be an entrepreneur because if you start a business that limits your overarching vision, you could get bored quickly and become unsatisfied in your business endeavors.

What Is a Small Business Owner?

Although all small business owners have entrepreneurial traits, not all of them should be considered entrepreneurs. For instance, some people pursue business ownership because they like the idea of owning one business, working reasonably regular hours, and working directly with customers. If this career lifestyle interests you, you may be destined to be a small business owner.

It’s important to know if you are a small business owner type so that you can form a realistic notion of what successful business ownership will be like. Otherwise, you may feel pressure to grow a big business and succeed like the entrepreneurs on the covers of magazines. However, small business owners run most businesses, not entrepreneurs.

You do not need to feel the stress and pressures of entrepreneurship as a small business owner. Instead, focus on growing your business at your own pace.

What About Something Else?

Highly creative individuals tend to be entrepreneurial. Now, keep in mind that being highly creative doesn’t guarantee success as an entrepreneur. If you’re too creative and move from one product or idea to the next, you may lack the focus necessary to succeed. Creativity alone will not get you far, as you’ll still need to build your business acumen.

Side note: Many highly creative individuals with entrepreneurial traits tend to create growth startups. These founders tend to see the world in ways others do not and think of uniquely new ideas. Think of Apple, Facebook, Airbnb, and Uber.

You Don’t Have to Choose

When first starting out, you don’t have to choose if you want to be an entrepreneur or a business owner. Most franchises start with a small business owner who becomes more entrepreneurial, so they start to franchise the business.

For example, it took the owner of the sandwich business Jimmy John’s 11 years to create the branding and business systems before he began franchising. Remember: think big, start small!

Learn by Starting Small

As a first-time business owner, you may be excited about the idea of owning a big business right away. However, that’s not exactly realistic, as it’s tough to get funding as a startup.

For example, I once knew two aspiring business owners who wanted to start a video gaming business that served food with a full liquor bar. They already had written their business plan and chosen a location. Their only problem? They needed a $600,000 loan. Unless they found a wealthy individual willing to invest that sum of money, the business would never open because banks don’t typically lend to startups.

Ultimately, a business consultant recommended that they start as small as possible with a more affordable location that could be opened for a fraction of the cost. To get a loan from a bank or get attention from an investor, they first need to build up a loyal customer base with a proven business model.

With your own business, don’t be afraid to dream big. Dream as big as you possibly can. Go for it. But start small. Even the biggest and most successful companies today started small. Amazon started by selling books online. Facebook began on a college campus. It may sound counterintuitive, but starting your business small will give you the best opportunity to one day go big.

How to Start a Business

Once you have decided that starting a business is the right decision for you, you can start making moves to get the process started.

Starting a small business can involve various steps depending on the circumstances surrounding your ideal trade. Factors like your business industry, ideal business structure, finances, and other aspects can influence the path you take and the tasks involved in getting the ball rolling.

However, the following initial steps and decisions are generally necessary for every new business:

Come up with a business idea.
Test your business idea.
Develop a business plan.
Acquire funding.
Choose a business structure and register your business.
Get your business insured.

Where to Start

These days, you can start a business from practically any physical location, as long as you have internet access and a dream. But figuratively, you should start your business from a place of optimism, practicality, and safety.

Businesses thrive when they are developed following a plan that is informed, focused on growth, and considerate of risks. Your business plan should account for potential threats to your success and be tailored according to your market research.

For more information on the processes involved in starting individual businesses, check out the information provided in each of these detailed guides:

Startup Costs

No matter what business model or industry you choose, your business will likely have to pay startup costs. Some of these costs will be required. Other costs are not mandatory but would help you set your business up for success.

Ballpark Startup Costs

So, how much can you expect to dole out to get your business off the ground? Well, required startup costs will depend on the type of business, the business structure, and the business’s location. These can each influence whether or not your business will have associated fees.

The simplest businesses can expect to pay an initial sum of a little over $12,000, according to Bankrate. This cost will include some one-time startup expenses, like incorporation/business registration fees and equipment and supply purchases, and therefore the business’s subsequent monthly costs will be lower than this initial amount. Still, small business owners spend about $40,000 on average throughout their first year, per Shopify.

Startup costs for small businesses can include the following expenses:

Business entity registration
Taxes
Small business loans
Equipment & Supplies
Inventory
Employee wages
Storefront
Utilities
Marketing, advertising & research
Website
Insurance
(Optional) Emergency funds

For more information and examples of common small business startup fees, check out this helpful resource: Startup Costs Every New Small Business Owner Should Know.

Legal Requirements

It is important to check what fees are associated with your business, as oftentimes, these are legally required to practice your business within your area.

Legal Entity Registration

Businesses need to register as a legal entity, or business structure, with the state it’s operating in. The different types of business structures include sole proprietorship, S corporation (S-corp), partnership, limited liability company (LLC), or C corporation (C-corp). On average, it costs $500 to $3,500 to register a business entity.

Taxes

Legally, your small business will need to pay taxes on its profits. Small business income taxes may differ based on their type of business structure. To calculate your small business income taxes, you will have to complete the tax forms associated with its particular type of legal entity.

For example, if your entity type is an LLC, you won’t pay corporate-level federal taxes. On the other hand, if you own a C-corp, your revenues will be “double taxed,” initially at the corporate level and then at the individual shareholder level when distributions are made.

These distinctions are crucial for calculating small business income taxes. Different entity types may also have additional regulatory requirements that they must abide by to stay in good standing with their state of incorporation.

The federal corporate tax rate is currently at 21%, and the state tax rates usually run between 2.5% and 11.5%. To simplify their taxes, most business owners aim to set aside approximately 25% of their profits for taxes.

One way to avoid mistakes during tax season is to have an accountant or certified public accountant (CPA) file your business taxes. They will be able to tell you what your business owes and may be able to inform you of any additional expenses.

Frequently Asked Questions (FAQs)

These are some of the biggest questions I hear from friends and colleagues considering starting a business. Expand the sections below to learn more.

Whether you will find starting a business to be worth it will depend on your experience as a business owner. There may be financial drawbacks to starting a business and new obligations and responsibilities involved. However, approaching business ownership with an informed and practical perspective will allow you to make decisions that bring your business success.

You shouldn’t start a business if you find yourself financially unstable, lacking motivation, or unwilling or unable to dedicate the time and energy to your entrepreneurial pursuits. Each of these aspects is necessary to founding and maintaining a successful business. Therefore, you should be at a point in your life where you have these qualities and possess realistic expectations about business ownership.

A successful business owner should be passionate about their business and possess qualities like resilience, adaptability, and strong decision-making skills. It is also advantageous to be skilled in problem-solving, financial administration, and team leadership.

Bottom Line

If you’re still unsure if you should start a business, that’s OK. Ultimately, to determine if you can make it as a business owner, you’ll simply have to try. If you don’t give business ownership a shot, you may be left always wondering, “What if?”

But remember, don’t gamble all your finances on your business idea. Start small, test, experiment, learn, and grow. Your business may or may not work out—but know that it takes the average entrepreneur 3.8 tries before finding prolonged success. Either way, you will grow in skill and experience by trying.

The next step in starting a business journey is to choose a business to start. If you’re ready to take the leap, our guide to developing business ideas can get you started in the right direction.

About the Author

Madeline Clarke