Good Reasons to Be
You might want to become a Bootstrap Entrepreneur for lots of reasons. Let's look at some basic ones.
Control and Flexibility
Gaining control over your life, while doing something you believe in, is one sound reason to start a business of your own. Another is flexibility to work the hours you want. Of course, experienced entrepreneurs often say, "I have the freedom to work the hours I choose: eighty hours a week."
Fortunately if we do the right things, all the extra hours we put into the business will be doubly repaid down the road.
More importantly, to paraphrase Confucius: "Find a business you love, and you will never have to work another day in your life."
When you have so much fun in your business that you can't tell your work from your play, why would you want to stop at 5:00 P.M.?
The United Sates government encourages small business formation. An entire department, the Small Business Administration (SBA), aids independent entrepreneurs in starting and succeeding in their own businesses. Although the SBA defines a small business as having up to five hundred employees, about 13 million businesses in America have fewer than five employees (over 80 percent of all businesses).
Your tax benefits as a Bootstrap Entrepreneur can be terrific. Your accountant can guide you best. Ask about operating your car or truck as a company vehicle (with proper signage and for proper purpose), acquiring office equipment, getting write-offs for space in your home used exclusively for business, and obtaining deductions for travel, business meals, entertainment, and other business needs, which may be combined with personal travel or entertainment.
A corporate paycheck might have to be 30 percent higher than your business income for you to enjoy he same after-tax standard of living.
For many Bootstrap Entrepreneurs, owning a business is the cornerstone to their financial plans. Your profit potential in the early years may be less than you want but don't overlook the potential to increase your net worth.
Net worth is what you own minus what you owe. Besides income, a well-managed business can build increased net worth every year. It's like putting money in a savings account.
For example, let's assume you invest $40,000 in a new business and you borrow the money to do it. Let's also assume you build the business so it has a good reputation, a solid customer base, and a healthy volume of sales. The business is now worth much more because of your efforts.
In the first five years if someone asked you how much money you took out every year, the answer might be so little as to be embarrassing. But look again at what you "saved."
If you paid off your original investment bank loan from business revenue, that's like $40,000 you saved--your net worth is now that much higher. Even better, a profitable business with a promising future could have a market value of $100,000. That's real "savings" in your account--an average of $20,000 per year!
How much would you have to earn as an employee to save $20,000 per year?
Now, let's go a step further. Suppose you choose to sell your business. You might take $20,000 down and $80,000 over a period of four years. By adding on a reasonable rate of interest, you are likely to receive more than $25,000 per year.
Take your choice. Quit working, and get by on $25,000 for a few years. That way you gain back all those extra hours you put into your business. Or if you prefer, start a new business, and do it all over again. Obviously, some businesses may not do as well as this example, and some may do much better.