A business is a system that continuously acquires raw materials as input, converts the inputs into a valuable product or service, attracts customers, sells the product or service to customers, pays the people who do the work, and pays the owners. In the United States in 2024, 99% of all businesses are small businesses, and about 45% of the labor force is employed by a small business. And of these, 80% operate without any staff, meaning the small business owner is self-employed. That means about a third of working people in the United States are self-employed. Note that this is similar to the number of people who are freelancers so there is some overlap between who is considered a freelancer and who is considered self-employed. However, for this discussion we consider a “business” to be something that employs other people to do the work. For this reason we’re going to focus on the businesses that employ more than half of the labor force — the 20% of small businesses that have staff, and the medium and large businesses that by definition have employees, who all together employ more than half of the labor force. Only about 10% of working people are business owners, and the vast majority of these are small business owners.
Advantages of owning a business:
- Set your own hours
- Use other people’s time and other people’s money to become wealthy
- A mature business can operate without you, freeing up your time to pursue your other interests or create another business
- If you’re successful, you can make a lot more money than you could working for someone else
Disadvantages of owning a business:
- You may need to work long hours, especially at first
- You’re responsible for what your business does, so you have to ensure employees and contractors are doing the right thing and don’t create liabilities for you
- Most new businesses fail within the first 5 years
How to get started:
- Learn the steps to start a new business.
Compass
Return to wealth plans or financial security plan.