Start a Business or Get a Job?

Posted on July 19, 2011 by Stephan Baldwin

Do want your own business or do you just want a job?  In this article, part 3 of 6 from The Educated Franchisee, we will discuss the difference between being an employee and owning the business. 

Many perspective franchisees approach being a business owner the same way they approach employment – with a salary mentality.  Let's say they made $100,000 a year plus benefits in their most recent job.  They tend look at the first year cash flow of the target franchise hoping to immediately replace the  salary.  They quickly discover that it is really hard to find a business in which you can reliably clear $100k in the first year of operation.  I know that YOU would never look at things this way….  But many people do.  Here is the long and the short of it - if you are broke and need income today or need immediate gratification, business ownership probably isn't for you.

But if you want to build wealth, check this out….

By the third year, you've increased your revenue and your margins.  You have made almost as much as at your J-O-B and in terms of buying power, you have created much more.  Owning a business has tax benefits that would easily outweigh the $18k difference from Entrepreneur to Employee.  And you now have an asset worth approximately $250,000 – almost TWICE what you originally put into the business.  Can you sell your job??  I didn't think so.  Can you sell your business – Yes Sir.

The chief cause of failure and unhappiness is
trading what you want most for what you want now.
– Zig Ziglar.

Now some people will pipe up and say what about those benefits that big company was offering you??  The great 401k matching something like 8%... as a business owner you can decide on a much more favorable plan and there are affordable ones, even for very small companies.  Health insurance? Same goes here, you can find very affordable plans either for just major medical or group plans and as a business owner, there are some great tax benefits to all of these benefits for the business.

But the real moral of this story is in year 10.  You now have a business you love and you're working for your favorite person (you!).  You have opened two more locations so now you have three locations and you have a positive cash flow of $270K per year and the business is worth almost a million dollars when you decide to sell it.  That is the American dream. 

Read Part 1: What's Stopping You? and Part 2: The Perfect Franchise.

This article series is based on "The Educated Franchisee – The How-To Book for Choosing a Winning Franchise" by Rick Bisio - Available through all major resellers.  For more information on the book and Rick, please click here.