Finance at your Fingertips by Moses Ayiku, Jr. MBA OP/ED
This week, I will shed light on another investment option that is available to all of us. One can consider starting a new business. This is an option in terms of investments one can make.
Even during the pandemic, many people used the opportunity to start a new business. That was a tough time to start a business, yet people did it. In fact, research shows that many people do start successful businesses during economic down turns. We saw it during the Great Depression of the early 1930s and we saw it again during the Great Recession of 2008.
Why do people start their own businesses? There are several reasons that motivate some to start their own businesses. One reason could be the desire to increase their income. Some folks recognize that their full-time jobs do not provide the income that they desire to live the lifestyle that they desire. This leads people to identify unique skills that they possess which could be monetized.
Someone for example may be an excellent public speaker. They could develop a business plan for how to obtain engagements that would enable them to speak and get paid for it. Others may simply want to open businesses to provide services or products that they recognize society may be interested in. We have seen young folks starting bow tie businesses using unique fabrics. Others have capitalized on family recipes that have been handed down through the generations. For example, we have businesses that provide baked goods using family-owned recipes.
Many people who establish businesses are also interested in being their own bosses. After decades of working for others, some realize that they would be much happier working for themselves than working for others. The added bonus for such people is the opportunity to earn much more than they were making working for others. It must be stated though that when one sets up a business, there is no guarantee that that business will make a profit. A new business will always face a certain amount of headwinds. However, it is possible to start a new business and grow it into a profitable enterprise.
These days we also have people who have created unique, new and innovative products that they then are able to bring into the market successfully. The advantage of such businesses is that they provide society with amazing options. Let us consider Uber and Airbnb. Uber was set up to provide transport services. The beauty of their business model is that the company does not own any vehicles, yet it has grown to become a multibillion-dollar business with a global footprint. Uber provides the apps and methodology for individuals to sign up as drivers and provide transport to the public.
Drivers who do not have suitable vehicles are even assisted by Uber to obtain vehicle loans to acquire used or even new vehicles that they can then use to provide transport to the public. The car payments are usually taken out of their earnings. The advantage of Uber to the drivers is that they get to schedule their own time for working. They can decide to work as little or as much as they desire.
Given the fact that diverse transport options existed before they were set up, one can recognize that Uber did its homework well and really found a niche for itself. To this day, Uber continues to obtain an increasing number of clients. One major reason for this is that the Uber service is available at a considerably lower price than taxis for example. In fact, many taxi services continue to bemoan the existence of Uber which is direct competition with their service. Uber will most likely continue to attract an increasing number of clients as more people recognize that it is safe, fast and affordable.
Airbnb is quite similar to Uber. People are able to rent homes or rooms for periods of time. Airbnb does not own these properties. Like Uber, the properties are offered on the platform by individuals that would like to earn money from their properties. Airbnb focuses on setting up the rules and guidelines and a payment mechanism that satisfies bot the public as well as the home providers.
Regardless of the particular investment option you choose, there are div3rse ways to earn additional income. Some have set up e commerce sites where they are able to earn income even as they work full time with an employer. Others have also invested in franchises and used that to establish their businesses.
Regardless of the business one chooses; the important thing is to be aware from the beginning that setting up a business requires investments in the form of capital as well as time. Those that have the capital but do not have the time choose to invest in stocks and other financial securities.
Keep in mind that setting up a business requires dedication and sacrifice. A profit is also not guaranteed. Having said that, we have seen in our lifetimes a number of businesses grow and provide their owners with large incomes that enable them to live a lifestyle of their dreams.
Business can be quite rewarding, and this is a major attraction for new business owners. If you want to start a business, do your homework well, research the opportunity thoroughly and write a business plan. Learn as much as you can about the business you are about to enter and that will give you an advantage.
Within many communities throughout the country, there are business development organizations, some of which provide free consulting to new business owners. One of these entities is the Small Business Administration (SBA) which provides free consulting through the Small Business Development Centers (SBDC’s). The SBDC’s are present in every single state. Take advantage of these free resources should you decide to start your own business.
Please feel free to share with me your questions and experiences on stocks and investments. I will do my best to respond, and, in some cases, I will write on some of these questions.
Your questions and comments can be sent to localtalknews@gmail.com.
