Have you ever come across an ad that’s motivating you to start a business and earn money without taking any risks or putting down a lump sum of money and they mention in the ad something along the lines of “running a
business takes a lot of risks, a lot of money, years to pull up, and a certain level of intelligence… It takes none of those things… Society lied to you” and so on. The part where it mentioned “society lied to you” is absolutely false. I’m not saying that society is never wrong about anything or they never lie about something, but most of the time society doesn’t lie to you.
Starting a business takes a tremendous amount of time, money, and a lot of risks. I know a lot of you at least know what’s like to work long and hard at your job, but the key difference between what you’re doing at your job and what an entrepreneur is doing is uncertainty. You and your boss have a labor contract which guarantees that you will get paid for your time and your hard work, but that’s not the same for the businessperson because there is no labor contract. If you’re trying to start a business nobody is gonna come to you and say “I will pay you if you take out a business loan, or if you rent building X, or spend X money in marketing, etc.”. There is none of that. You sometimes have to spend a ridiculous amount of money hoping that the profits that you receive will compensate for the loss. You’re income as an entrepreneur relies heavily on the success of your business.
Having said that, there are a few important details that you should know about how many businesses actually succeeded. 80% of startup business fail in their first year and a half according to Bloomberg. This is due to the fact that they run out of money. As mentioned earlier, you sometimes have to spend a lot of money on a project. But running out of money is not the reason why businesses fail, it is the effect of their failure. The cause of business going belly up is a bit complex, but it boils down to not meeting the needs of the market. You’re not the only one who’s trying to get people to buy your stuff. There are other players in the market who might have spent a lot of money on marketing for example because they can afford it or they’re crazy enough to do so, and they might have also done some careful research on how to make a unique product while at the same time satisfy customers.
And that’s another challenge you have to deal with because you have to stand out among your competitors. For example, how can you make a really fast car without having to emit any greenhouse gases? Coming up with something innovative and possibly revolutionary will put you way on top of the pyramid and will keep you there for a long time. So innovation is key here, otherwise, you would have to compete for lower prices until one goes belly up because they couldn’t afford the lower prices and that could be you.
This does not discourage people from starting a business. We would love it if we have competition, it would be good for the economy. But we also want you to be aware of what you’re getting into.