Should Business be All About the Money?
It’ an interesting concept to ponder; How much emphasis should a business owner place on profit?
Individuals may have a range of motivations for deciding to start a business or change from employment to business ownership. For some people, business profit may not be the primary motivator going into the venture. Survey any group of business owners about their reason for starting a business and you will most likely find some common answers along the lines of:
- Improved work-life balance
- The ability to choose working hours
- The ability to work on a passion
- The satisfaction of “building something for myself”
- It may just be an escape from an unfulfilling job
In other words simply “making more money” may not be the primary motivator for choosing business over employment, however in most cases, making a significant profit is closely linked to their primary motivator. For example;
- You can’t have work-life balance without sufficient income to pay the bills plus life a comfortable lifestyle
- You can’t choose your own working hours if you do not have sufficient income coming in to cover staff to work for you
- It’s all good and well to build something for yourself instead of building someone else’s empire, but business profitability still requires focus.
Business Ownership is Not Easy
There’s a strong case to support the argument that building something for yourself is more rewarding than working for a boss. This has certainly been my experience in business. Sure there are rewarding jobs (my first job was as a paramedic which is unquestionably rewarding), but there’s just something about building a successful business. It’s a type of satisfaction that is hard to explain.
However for every fleeting moment satisfaction at the point of owning a successful business, there were 50 hours of blood, sweat and tears that went into building that business to the point of success.
The emotional weight of small business ownership is relentless;
- There’s compliance to worry about
- Staff to be paid
- Customer issues and complaints to resolve
- Administration tasks that won’t go away
- Sales and marketing campaigns to be launched
And as a typical small business owner, the person most likely to be central to all that is you. Even when you’re not actively working on the above, you’re most likely spending many many hours thinking about it. So the emotional toil is relentless.
In reality, when you step away from a 9-5 working 40 hours per week, you’re most likely stepping into 50 hours of active work + many hours per week of emotional work as the business owner.
Beyond the constant thinking about business there’s also the risk.
You’ve probably put up upfront cash and that’s either from savings or in the form of a business loan. This means you’re on the hook for loan re-payments or repaying yourself the savings you invested.
You’ve got business overheads and as the business owner, that’s your responsibility to cover.
Getting Paid What You’re Worth
In my opinion, given the additional emotional baggage and risk taken on as a business owner, you should have an expectation that you’d earn 1.5-2 times the amount you could as an employee. I mean seriously, unless you’re going to be significantly better off financially (which translates to improved lifestyle), why put yourself through the hassle of business ownership?
Let’s take a look at what you can earn as an employee and what, in my opinion, you should look to earn from your business as a result of stepping away from these common jobs.
- Registered nurses can earn around $65,000, so using the 1.5-2x rule, should expect to earn $97,500 to $130,000 as a business owner.
- You can become trained to be a veterinary technician with an online course in 12 weeks in the US can earn around $40,000 per annum. So if you’re looking at a business that is animal-related, you want to be profiting $60,000 to $80,000 to justify the business ownership.
- You can pick-up a $50,000 gig as a sales rep, so if your business will require you to be on the front-line selling, you’ll want to be projecting to earn $75,000 to $100,000 as the business owner.
- If you have an interest in internet marketing, you should earn $50 per hour in profit selling SEO services without any formal training. Even at the low end, $75 per hour is what you should expect to profit in any small business that is inter-net related.
The point is, business ownership doesn’t have to be all about the money, but as a business owner you do take on significant responsibility Weight up if you’re willing to take on that challenge and once you jump into business ownership make sure you’re earning what you are worth!