Successful Business Owner: Steps to Becoming One!
Every entrepreneur wants to be a successful business owner. We all want to be in charge of our lives and our businesses. However, most of us tend to miss the subtle differences between being a business owner and being an employee.
You can still be an employee even when you own your own business. This is because, instead of claiming ownership, you are simply trying to micromanage like a business manager and neglecting the most profitable ways to take proprietorship of your business plan.
Business ownership translates to having responsibilities as well as freedom.
Who is a business owner?
A business owner is an individual or a group of people who invest, operate, and know when and how to delegate their business functions.
Being a business owner doesn’t mean that you have to control everything that goes on in your organization. A good business owner knows the difference between running a team and running a company.
If you own your own business, whether it is big or small, you must learn how to hire the right employees and let them take charge in matters that they excel in. Being a business owner, you already have an array of responsibilities. You are the ultimate decision-maker in all the financial and operational aspects. Therefore, it is necessary to let others handle tasks that will assist in making profits for your business.
That’s what being a business owner is all about – taking charge at the helm of the ship while your employees are still capable of running the company like a regular organization. You must have the freedom to take time off for your personal work, a vacation, or a holiday to spend time with your family.
It is about minimizing your load because you are an owner, not a self-employed freelancer who manages everything from start to finish.
A business owner is the sole person in the company who may be working hard for a living, just like any employee, and receive a monthly income. Still, they are the only ones who get a share of the gross profit from the company’s revenue. You are the one who will make the ultimate decision of how to delegate funds and keep your company afloat at the end of the financial year. Therefore, you need to be a leader rather than a boss of your business.
What are the qualities of a business owner?
A business owner must have certain qualities that separate them from an average employee at the organization:
They must have the ability to prioritize business functions
A business owner must know what is important and requires their attention instead of delving into the smaller operational details. The everyday tasks can be handled by capable employees who excel at them. You need not spend time managing small mistakes or losing your time and energy over something that a manager or an employee can handle.
As a business owner, your priority should be to look at the bigger picture and guide your employees towards the company’s success. Time is of the essence for a business owner. If you are busy putting out fires and handling menial tasks, then there is really no need to have employees, is there?
They must know how to delegate tasks efficiently.
A good business owner knows how to hire efficient employees, even if they are in small numbers. You must know how to identify people’s strengths and delegate tasks according to that. Each employee you hire has a special skill that can benefit your business greatly. Therefore, instead of micromanaging those tasks, you can let them handle them efficiently.
As long as the employee can reach the ultimate goal, there is really no need to be looking over their shoulder. The reason for this is, you may have a tried and proven method of doing something that yields results. Yet, with the ever-changing times and business opportunities, your employees may have developed a better way to get the job done.
It is crucial that you identify these opportunities and delegate the tasks accordingly so you have more time to develop your business plans for maximum output.
They must be capable of handling multiple business functions.
As a business owner, you are required to wear multiple hats. You will need to ensure that the investments in your company are yielding tremendous returns. You have to look after various operational details to ensure that every sector of your company is running smoothly, whether it is research and development, sales, production, design, etc. You also need to make sure that your human resource factor is well managed. Not to mention, there are the marketing and financial aspects that help generate revenue for your company.
These tasks are not easy and definitely require your utmost attention. As a business owner, you must be able to handle all the functionalities mentioned above with ease. Trust us when we say that if you take the time to develop and execute your business plan efficiently, then as a business owner, your company will yield massive returns, which will make it all worthwhile.
It is ideal to have a mentor to guide you as a business owner so you make the right decisions for your organization or small business and nurture it with excellence.
Must be willing to make financial sacrifices for the business
You may think that starting your own business means you will be earning large profits to stabilize your life quickly. But that cannot be further from the truth.
A business owner will be required to reinvest their profits and sometimes even endow their personal savings in the initial stages of the business. At this point, your business needs to grow steadily; therefore, the profits you make must be utilized in the best possible way to maximize output, thereby the revenue. Nonetheless, it is not all bad news, once you have stabilized your business functions, learned how to invest efficiently, and created a substantial name for your company, the revenue you generate will be worth all the financial sacrifices. You can then grow your business exponentially and earn your financial freedom at a point where you no longer have to worry about the commercial development of your company.
They must be able to make sacrifices on a personal level.
If you are inclined to start your own business, then you need to keep in mind that in the initial stages, life is going to be very difficult. You won’t be working a standard nine to five with a steady monthly income. Rather, you will be required to spend long hours developing your business plans, meeting with investors, reaching out to potential buyers, and basically dedicating major hours to initiate your company.
You may think that you missed your vacation with your friends and family, you don’t get to spend time with your loved ones, you don’t even have the time to nurture and pamper yourself. However, these personal sacrifices are short-term.
Once you have successfully launched a prospering company, as an efficient business owner, you will have ample time to make up for those missed vacations, the times you missed learning about what is going on with your loved ones. You will have the independence financially as well as personally to invest time in yourself. The little sacrifices along the way are nothing compared to the humongous returns you get for a little bit of extra hard work.
Different types of business owners
Business Owner is an umbrella term that covers various types of business proprietorship. You can be one or the other, and sometimes even multiple types. Let us take a detailed look at what kind of business owner you can be:
Being a sole proprietor
This is the simplest, most beneficial business ownership that requires very little effort.
As the name suggests, a sole proprietor is the one and only investor, worker, and benefactor of the business. The business and the individual act as a single entity; therefore, all the profit goes directly to the sole proprietor.
There is limited taxation when it comes to this form of business ownership which is definitely a plus point. However, you must note that as a singular entity with no distinction, the sole proprietor is fully and entirely liable for all malfunctions and business obligations. If the business succeeds in the initial trial period, then the proprietor is the only patron who stands to gain from the revenues and profits. However, if they incur any legal liabilities, financial obligations, or business failure, then they are the only ones who must bear the consequences. Their personal assets are merged with the company; therefore, in case of all legal and financial accountability, everything they own, including houses, cars, etc., is all fair game.
These cons, though severe, are outweighed by the tremendous pros that a sole proprietorship business plan offers.
Owning a Limited Liability Company or LLC
A limited liability company commonly referred to as an LLC is a safeguarded form of a sole proprietorship. In this form of business ownership, the company assets are treated as a separate entity from the personal assets of the owner.
As the name suggests, this kind of company holds limited liability and is not subject to humongous federal taxation. Depending on the state where the trade functions run, the owner is only obligated to pay for the personal business tax and any small state taxes.
Another benefit of owning a Limited Liability Company is that if the business fails, faces a lawsuit, or goes bankrupt; then only the business assets will be sized or sacrificed. Any personal effects of the owner remain completely safeguarded from all liabilities.
Building a corporation
When we speak of business owners running corporations, there are several entities to be taken into account:
It is a form of special business ownership that helps avoid double taxation on the income of the company. These corporations use a sophisticated form of trickling down profits and losses to the various stockholders of the company. As business owners, they still earn a substantial amount. However, all accounting is balanced by appropriate divisions among stakeholders. However, you must note that once the company reaches a specified revenue amount that surpasses the special election, the business owner will incur double taxation.
This is a low-liability form of corporation. Stockholders buy into the company, thereby entitling them to decision-making capabilities while investing in the company. The business owner’s personal assets remain detached from that of the company. All these pros make a C-corporation quite a profitable venture. However, the corporation must pay double taxation on dividends and profits, which makes for a substantial hole in revenue.
It is a benefit corporation designed for public welfare while still accounting for profits. In other words, the corporation, be it private or government-oriented, works towards benefiting the community, but the stakeholders of the company still earn substantial profit delegations. Since the profits are distributed among stakeholders, a B-corporation does not get any special tax benefits despite their dedicated efforts towards communal welfare.
As a corporation solely dedicated to serving the common people, a non-profit organization is exempted from all manners of taxation. As the name suggests, there is no profit earned by the company, and all income must be dedicated to the work of the organization. Besides paying their employees for their hard work, non-profit organizational members and stakeholders do not share any income or revenue generated from the education programs, literary and scientific accomplishments, charity events, etc.
These corporations are close-knit organizations where the shares and stocks of the company are only available to those involved with the business. No matter how successful the company becomes, non-members cannot partake in investing in their stocks. All benefits are shared solely among those who have a stake in the company directly, while the liabilities do not trickle down to the personal assets of the stakeholders.
Engaging in a partnership
A partnership allows more than one business owner to participate in the profits and losses of the company. As you can see, there can be more than two or more members involved in a partnership. By law, these partners share unlimited liability in the company.
Let me explain that. As we have seen before, limited liability is the business owner’s accountability for a specified amount pertaining to their investment. However, an unlimited liability implies that the business owners must attend to all the debts and liabilities of the company, no matter how large the sum may be.
On the plus side, indulging in partnership opens up horizons for more capacity to acquire investors with very low costs for startup since the initial investment is divided. Thus, the profits will also be shared. Suppose you can work harmoniously without much disagreement and comply with taking up responsibility if unlimited liability criteria come into play. In that case, a partnership is a very profitable venture with a multitude of benefits.
Partaking in a cooperative business plan
Lastly, let us talk about one of the most close-knit, profitable business owner solutions that incur less risk – The cooperative program. In this kind of company, a cooperative or community of people get together to form a private business plan.
Generally, there is a board of elected members who organize the operational functions, but for the most part, each member of the cooperative is engaged in the income.
Mainly, the cooperative company has a select number of members, and their products and services are dedicated to the welfare of the partaking people. The amount of profit is distributed among the members for their hard work, instigating team spirit and camaraderie.
Only the members can buy shares in the company, which is otherwise unavailable to outsiders. This supportive and cohesive program actually helps business owners earn substantial amounts, share the risks, and only pay taxes on their highly beneficial income. However, the problem is, it is not easy to get funding from outside the cooperative as it is limited to members.
Differences between self-employed, business owner, and an entrepreneur
The terms self-employed, business owner, and entrepreneur are often misconstrued to mean the same thing. However, we assure you, they are as different as apples, oranges, and mangoes.
Let us see how these terms differ from each other.
- A self-employed business person can work on a contractual basis or they can develop a small business. They can be part-time or full time employees at certain existing organizations or sole proprietors who only work based on their demand. Their income potential is limited to their personal brand or the business brand they develop; therefore, the tax benefits are great. A self-employed business person may or may not own the rights to any business per se. They are in business for themselves; thus, all the profits and liabilities are incurred in equal measures.
- Entrepreneurs, on the other hand, are a certain type of business owners. Their trade model is based on a new idea or concept that is otherwise not practiced. They build a brand based on this concept, and moving forward; it is the unique selling point of their company. This may be a large or small business plan, but it is built from scratch with like-minded business people. The central idea still revolves around the original concept, and it is further developed to draw in investors. Their growth is always substantial and unique.
- Finally, coming to business owners, there is a particular point that sets them apart from entrepreneurs and self-employed professionals. Business owners need not build a business from the ground up. They can invest or buy into a business and take ownership as per their share-holding or stakes in the company. A business owner is a leader who guides the company to a prosperous revenue system with a carefully designed business plan. They have capable people to whom they can delegate the tasks as required while focusing on the bigger picture. Among the three, business owners certainly enjoy more freedom both personally and financially as the company is based on a shared concept.
How to be successful as a business owner?
In order to become a successful business owner, it is important to lead a disciplined and organized life.
A business is an entity that grows the more you nurture it. Therefore, following these steps below could help develop your business into a huge success.
Understand the value of money
When starting a new business, it is vital to keep in mind that every investment you make, every loan you take is a step towards improving upon your business plan. It will take some time to establish your success, and then you can expect to live luxuriously. Until then, you must focus on saving and investing towards building the trade that will earn you your financial independence.
Don’t jump into a business without understanding the market
It is primordial that you analyze market conditions in your niche before you delve into a business plan. It is not an impulse buy at the register. You need to specify realistic goals and create a concrete plan based on the careful understanding of market demands.
Develop a realistic business plan
Developing a realistic business plan means your concepts must be clearly grounded in the balance of probability. Whether you are into production, servicing, or investing, you must be able to identify unrealized gains and capitalize on them. Your business plan must not be fool-proof, but you should have contingencies in place if something goes horribly wrong.
Improve your skills of negotiation
The power of negotiation is a handy tool for every business owner. You must know the current market conditions like the back of your hand and negotiate better deals when buying and selling your products and services. This is to say, buy low, sell high should be your mantra, but at reasonable terms.
So, there you have it. The ultimate guide to becoming a successful business owner and multiplying your profits while still earning personal and financial independence.