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It may seem like the coolest new trend online right now to be taking your hobbies and turning them into side gigs, side hustles and even full-time businesses. If you have been hopping on the bandwagon though, make sure you have a solid foundation and clarity on WHY you are starting the business.
When I ask business owners why they started a business, I seldom hear the reasons I am about to share with you. Most of the time it is generally financial freedom and the ability to work if and when they want. If you dig a bit deeper though, there are a few, arguably less glamorous, benefits of being a business owner that most people do not consider.
We often assume that business owners take on much more risk and are more adventurous with their money. The interesting thing is that if you are staying employed in a job that pays a steady salary, you are actually losing money. I bet you would be surprised to hear that being a business owner in 2022 is actually a very pragmatic and risk-averse way to earn money. Of course, it depends on the type of business, but simply falling into that category of 'business owner' can unlock some great benefits.
Here are three reasons owning a business and making your own money is not only a good idea but a must in 2022:
(1) INFLATION
If you have not seen the news (and if not, I don't blame you,) you are seeing that inflation is hitting new highs. This is because there is a lot more money in the market circulating (hello PPP) than there was two years ago, and therefore the value of the US dollar has declined. That is why you see soaring gas prices and higher bills. Along with this, we have also had supply chain issues that add to the higher cost of goods.
Why does this affect you? Because that job that pays you a steady salary and gives you a 3% every year is actually not even keeping up with inflation. Your cost of living increases at a higher rate than your pay increases and therefore you cannot maintain your lifestyle. Owning a business to supplement your income is an option to be able to restore your income to levels that support your needs and wants. It also puts you in the driver's seat to control pricing and costs so you can maximize what you take home and not be subject to a stringent corporate budget.
(2) TAX SAVINGS
Wait a sec... If I make more money don't I need to pay more in taxes?
Not necessarily.
The TYPE of income you earn matters. The US Tax Code is thousands of pages long and 95% of it is made up of ways to avoid taxes through deductions and credits. Spoiler alert: most of these have to do somehow with business owners. Why? Because business owners help stimulate the economy, create jobs and fuel commerce. The tax code actually rewards this by incentivizing American citizens to start and run their own businesses. There are hundreds of deductions available to those earning business income.
When you earn income solely as a W-2 employee, you have very limited tax deductions unless you contribute significantly to retirement funds, which even then may only be tax-deferred (meaning you still pay the taxes, just later in life.) Business expense deductions enable you to "write off" ordinary and necessary expenses to operate your business, even if you also benefit personally from these purchases.
(3) WORK HOURS
This one is less about money but just as important. If we learned anything in the last few years, it is that time with family and loved ones is precious and that there is a greater need to be flexible in today's work environment. I used to work in a corporate job pre-pandemic and I remember 1.5 hours of commutes each way plus eight hours in a chair at the office. Many corporate managers still expect this same type of schedule working remotely to this day. It is just not practical with our children, pets, and lives in general demanding more of our time.
As a business owner, this affords you control of your calendar. Want to not work Fridays? Cool. Want to start your day at 10? Cool. It is all up to you. You can even choose to work with clients in a particular time zone that affords you the hours of availability you need to show up at your best.
I have never liked the term work-life balance. I don't believe the two elements are distinct. I believe work is part of life and must be integrated in a healthy way into it. I also don't like to hear about time management. I believe in energy management. Maybe I only have enough focus for a given day to do one client meeting, not three. Maybe I am just not in a creative space for content on a given day. That is okay. As a business owner, you can play to your strengths in a given day and adapt. It is about not just managing your time, but controlling what energy you allow yourself to be exposed to. You have very little control of that as an employee, especially with looming deadlines and bosses calling.
There is immense opportunity, especially online, to build a business for yourself and create massive financial opportunity. Even if you do not intend to go full-time, simply having a "side hustle" is a fantastic way to build up your business skills, reinvigorate your energy and take advantage of some financial benefits along the way.
READY TO GET STARTED?
Ready to start your own business? We have some fantastic resources in Fitnancial Foundations, an online course designed for early-stage business owners looking to build up their financial skill set as they leap into entrepreneurship.