The Top Reasons Most Entrepreneurs Start Businesses

The reasons most entrepreneurs start businesses

To understand why entrepreneurs take the risk of starting their own businesses, go directly to the source. Many surveys and researchers have asked small business owners what compelled them to start on a path to entrepreneurship. Here are some findings.

Freedom and passion, not money, is the main motivation.

A Cox Business survey found that more than half of small business owners start their own businesses to be their own boss. They were also motivated by the idea of creating something from the ground up. Nearly two-thirds of respondents said they started their own business for one of those two reasons.

Meanwhile, money is not as much of a factor for many small business owners. Only 8 percent of respondents said money was their main motivation.

Small business owners are also dedicated to building their businesses. The research revealed that 43 percent of business owners have never considered closing their business.

Entrepreneurs want to share their ideas with the world.

Perhaps it’s because they can see a gap in their existing market. Perhaps they want to share their creativity with their industry. Research from Surety Bonds revealed that for most entrepreneurs, it all starts with that “aha moment” where an idea is first sparked. In a 2021 survey of business owners, 28.9 percent stated they were driven to start their endeavor because they wanted to bring an initial idea to fruition. Additionally, 40 percent of survey respondents were inspired to resolve unfulfilled needs they observed within their industry.

Benefits of starting your own business

It takes a lot of hard work, but it’s worth the rewards you’ll reap. Some of the top advantages of starting your own business include:

• Setting your own schedule: When you’re the boss, you get to define your hours. Being an entrepreneur can give you increased freedom and flexibility in how you structure your day to day. 
• Gaining increased earning power: As a business owner, you’re not locked into one paycheck amount from your employer. The more you’re able to grow your business, the more money you have the potential to earn. 
• Doing work you find meaningful: If you’ve been motivated to launch a business, chances are it’s about something you care deeply about. Fulfilling your passions through your everyday work is a reward you can’t put a price on. 
• Accessing additional tax breaks: Entrepreneurs are eligible for additional tax breaks. When it’s time to file your taxes, you’ll be able to claim several business-related expenses to reduce your taxable income. 
• Building your dream team: When you’re in charge, you get the final say in hiring, which means you can put together your ideal staff. You’ll be able to hire employees who embody the mission you envision for your business.

What entrepreneurs should know about starting a business

Preparing for entrepreneurship is exciting, but it can be a big challenge. You’ll need to cover the following bases when it’s time to launch your business. 

Writing a business plan

A business plan clearly defines your venture’s efforts and focus. It serves as a road map and a contingency plan for navigating potential problems.

Writing a business plan can help you determine and narrow your business goals. It’s also essential for funding. Lenders want to see that you’ve considered your ideas thoroughly and how they’ll generate a profit.

Choosing a business structure

Whether you work at home or in an office, you must choose a legal structure for your new company. A small home business can become a sole proprietorship in a few simple steps with little paperwork. Be aware that this structure intertwines your personal and business finances, meaning issues on one side could affect the other.

Another option is to incorporate your business as an entirely separate business entity. This way, you can file taxes, own property and handle lawsuits without affecting your finances. To incorporate your business, you’ll file articles of incorporation that establish your business’s legal status.

Creating a marketing strategy

For your business to be successful, people need to know it exists. A business marketing plan can help you identify potential buyers, connect with them and turn them into returning customers. Outreach campaigns, product promotion and customer engagement are all key components of marketing.

To create an effective marketing plan, you must know your brand and the audience you want to reach. From there, identify the core problems your business solves and market your company as the solution.

Paying taxes

Forms, deadlines, records — they all make filing small business taxes a hassle. But if you handle your business’s documents and payments throughout the year properly, you can avoid a lot of frustration come April.

You’ll need to track your business’s expenses, store receipts and create income reports. This information is crucial to properly filing your taxes and claiming deductions that reduce your business’s tax liability. You can file your taxes yourself with online tax software like TurboTax, a popular tool for small business owners. Read our review of TurboTax to see if this tool is right for your business.

Hiring professionals

You might be great at managing your business’s operations, but there are plenty of areas in which you’ll need expert help. That’s why many entrepreneurs hire business professionals to oversee or handle certain aspects of their startups.

If your expense report or list of write-offs is getting lengthy, consider hiring a certified professional accountant to handle your taxes. This way, you can have peace of mind during tax season.

Another important professional to hire is a lawyer. A study by the United States Chamber of Commerce found that tort costs for businesses with less than $1 million in revenue average about $35 per $1,000 in revenue. If your business is sued or needs to file a lawsuit, an attorney can review the case and help you navigate the legal process.

Hiring employees

As your business grows, you might realize you can’t handle all its operations alone. Hiring the best employees can streamline your operations so your business can grow and function effectively.

Whether you’re bringing on one member or recruiting a few hundred, create a detailed hiring plan. First, identify precisely which positions you need to fill. For example, when hiring for a startup, you may need a product manager, tech help, a sales manager and a dedicated customer service representative. You’ll also need to decide whether you want to use a recruiting agency or post an online job ad to connect with potential employees.

Implementing a successful onboarding process

After hiring crucial team members, onboarding your new employees successfully is essential. A thorough and thoughtful onboarding process helps ensure your new employees start on the right foot and are set up for success. Part of this process includes welcoming them and ensuring they have all the tools they need to perform their job function. You should also plan for sufficient training, provide a detailed overview of operations in an employee handbook and ensure all paperwork for payroll and operations is completed. 

Take your business idea from dream to reality

It’s not easy to start your own business, but all rewards carry risks. Entrepreneurs are all motivated by different and often personal reasons, but no matter what industry they’re in, they all have one thing in common. Their business journeys all started with an idea that they were passionate about. If you’ve got a business idea and your heart is 100 percent in it, it’s worth the time and effort to bring it to life. 

Natalie Hamingson contributed to this article.