Small Business Basics
Benefits and Risks
(Date posted: February 20, 2009)
This business basics page is meant to give you a balanced view of having your own small business. Therefore it reveals both typical benefits and possible risks. I suppose most people are aware of the potential benefits of a small business. However, I also want you to be aware of the possible risks.
The topics below should help you concentrate on the benefits and avoid the risks of being in business. But the success or failure of any business venture you start is entirely up to you.
Here are the topics:
Benefits of owning a business venture
Risks of owning a business venture
The other pages in this section will acquaint you with basic business matters and help you decide whether to start your own business. However, that decision is entirely up to you.
Before using this information to start a business be sure to read the following notice: Disclaimer
The best way to benefit from a business venture is to make it into a success. I have listed some of the potential benefits in the topics below.
Being your own boss
A successful small business venture lets you be your own boss. You decide how to run things, what is important and unimportant, what products you will sell, and so on.
If your business is successful, you will gain stature in your community. People will look up to you and ask for your advice or opinion. You will become known as a "take charge" person.
Developing your experience and skills
It's always possible to lose your money and possessions. However, you can't lose the experience and skills from starting and running a successful business venture.
Once you learn the business basics of how to build a profitable business venture, you have something more valuable and lasting than almost anything else.
Some people just want to help others. You can use a small business venture to give advice, provide training or counseling, help the disadvantaged, and so on. You can set your fees just to cover your costs and expenses, or you can make a profit. It's all up to you.
(I flatter myself by believing that this website can help other people. Maybe you can find some way to help people yourself.)
You can use your business venture on a part-time basis to earn extra cash. You may even make it into a full-time operation and use it for your livelihood.
A small business venture can be much more flexible than a larger business firm. You can use it to exploit suitable opportunities as they arise in the marketplace.
But keep in mind there is no guarantee of making money.
Putting your ideas into action
Perhaps you have some idea you want to try out. Maybe you are creative and want to sell your creativity to others. Using these business basics to help start your own small business venture allows you to produce whatever you can imagine.
Have you ever used some product and then said to yourself, "I could make a better one than that!" Well, this could be your chance.
You may encounter problems and risks when starting and operating a small business venture. (However, by knowing the possibilities, you will be better able to avoid them.)
I have listed some of the possible risks in the topics below.
Getting into disputes
As a business owner, there is always the possibility of getting into disputes. The two main groups of people or organizations you deal with are customers and suppliers. You need to keep good relations with both of these groups.
Following are the two main reasons for getting into disputes:
- Failure of both parties to come to a "meeting of the minds"
- Failure to keep promises or agreements made
Meeting of the minds -- This means that both parties to a proposed transaction understand the complete agreement. This understanding should explicitly include any assumptions and expectations by either party. It is best to have the complete agreement written down so both sides can review it. Then they can resolve any apparent problems before any transaction takes place.
Keeping your promises and agreements -- This means just what it says. Don't make any promises or enter into any agreements you can't keep. Write a summary of any promises or agreements you make. Keep these summaries in a special journal. The summary should identify the other party, include any deadline, and describe the desired results. You then can add these commitments to your to-do list. Later on, you may want to prepare a work plan showing how to achieve the desired results. These measures will help you keep your promises and agreements.
You lose money when your costs and expenses exceed your sales. You need to increase sales or reduce costs and expenses, or both. The information in this Business Basics section and other sections of this website can help you avoid this problem.
Following are steps that increase your chances for making a profit:
- Find an opportunity in the marketplace that excites you and matches your capabilities.
- Verify that there is an adequate demand for your product.
- Design an advertising program that you can afford. Then test and perfect it as you begin business operations.
- Start out small. Then expand your business venture after it becomes profitable.
- Control costs and expenses when planning, starting, and running your business venture.
Failing to satisfy the government
Governments impose various fees and licenses, registration requirements, rules and regulations, and taxes on business firms. In addition, there may be special requirements before a firm hires any workers, engages in dangerous operations, damages the environment, or becomes a nuisance in some way.
To avoid any problems with the government you need to determine their requirements and decide how to obey them. Do this before starting business operations.
However, if your business venture is small enough, it may not be subject to all of the above requirements.
A local attorney, accountant, or bookkeeper may be able to advise you in this matter.
Spending less time with family and friends
There are only so many hours in a day. So you don't want business operations to take too much of your time.
One way to reduce the time spent on business operations is to study and apply the ideas from Chapter 16: Use Time Saving Tips in my free Magic Success Secrets ebook.
Trying to handle too much
If you lack business training and experience, you may have too much to handle when starting a new business venture.
The better way is to get any needed training and information before you start business operations. Start by quickly reviewing all the sections on this website. Then you can study those sections, pages, and topics that appear to help you.
The rule is -- start out small and gradually expand operations as your experiences and skills develop.
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