The risks associated with NOT starting your own business

By Dr Daleen Smal | Passive Income

Oct 21

Are you on the fence about starting your own business? Are you perhaps happy earning a salary?

Here are the pros and cons you need to know about, and the risks associated with starting a business.

Also, the risks associated with NOT starting a business.

Evaluate the following investment opportunity:

  • The investment requires almost all your time.
  • If all goes well, you may earn a return equal to the inflation rate, maybe 1% or 2% above inflation.
  • The risk you take is that you may lose that in a single day for reasons that you have no control over.
  • In this investment, there is a cap on the upside, but the downside is unlimited.

This does not sound like a good investment deal, does it?

Well would you be surprised to learn that millions do this every day when they go to work for someone else?

They can lose their job and income at any moment, without warning and without being at fault, and on the other hand they only receive increases equal to or just above the inflation rate, year after year.

In an Internal Revenue Service (IRS) report of January 2015 about the ‘The 400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year for the years 1992-2012’, the income statistics show that the income of people on the list average $335.7 million in 2012.

When analysing the numbers, it becomes evident that the income of the 400 highest earners in the United States came from the following sources:

Sources of Income of Top 400 Earners in the USA, 2012

Salaries 7.52 %
Interest 4.38 %
Dividends 16.17 %
Partnerships and corporations 13.71 %
Capital gains 56.85 %

 

About 7.5% of the Top 400 earners received salaries, 4.4% received interest, 16.2% dividends, 13.7% received income from partnerships and corporations, and 56.9% through capital gains.

This breakdown shows that huge wealth does not come from employment by earning a salary, low-risk income investments such as bonds receiving interest, or investments in shares on the stock exchange that pay dividends only.

Yes, there is no question you may earn a comfortable living doing this – about 30% of the top 400 income earners did.

The results show that having a business, i.e. sharing in profits and capital gains, is where the big financial gains and wealth come from for roughly 70% of the top 400 income earners.

It is also true that wealthy people do invest their profits from business ventures also in stocks and bonds and other investment vehicles to create more passive income.

It is evident that becoming really wealthy comes from investing in your business education and in leveraging. We have talked about this before.

First of all, you leverage yourself and what you have in terms of knowledge, skills, money, and time.

Secondly you leverage the knowledge, skills, money, and time of others by building teams, systems – and by taking risks.

Perhaps you are already a professional person and would prefer to invest in your own business. Maybe you just do not want to work for a boss anymore and want to start your own business. It is also possible that you simply want to increase your wealth by playing the game more intensely by starting your own business.

There are more benefits to being an entrepreneur than only financial gains, provided you do it correctly.

Most entrepreneurs that I have come to know feel wealthy not only financially but also emotionally. They have found their purpose and are living their dream.

Wherever you are on your wealth journey, we're here for you.

Get the tips, strategy and actionable advice you're searching for delivered straight to your inbox.

🔒 We will not spam, rent, or sell your information. Powered by ConvertKit

They have found the secret of being a co-creator. They sparkle with excitement when they talk about what they do.

They are enthusiastic when discussing their challenges, their purpose and fulfilment, and the thrill of their everyday lives.

Just as for employees, the downside for entrepreneurs can be unlimited. You may go bankrupt if you do it wrong.

The crucial difference is that the upside can be unlimited both financially and emotionally, IF you do it correctly.

There is no reason why this cannot be your life. You can start your own business. It does not need to be big. It can be your hobby that you are stepping up on but doing part time. It can be bigger.

You know my philosophy by now: nothing is limiting you apart from you. Find out what your passion and interests are and start planning and taking action to live your dream.

Take a chance and back yourself. Live life on your terms, experience the feeling of true empowerment and control your own destiny. The best way to forecast your future, is by creating your future.