Why Start a Business?

Photo by Gabriel Matula from Unsplash

Tip: I built a conglomerate and emerged the richest black man in the world in 2008 but it didn’t happen overnight. It took me 30 years to get to where I am today. Youths of today aspire to be like me but they want to achieve it overnight. It’s not going to work. To build a successful business, you must start small and dream big. In the journey of entrepreneurship, TENACITY OF PURPOSE IS SUPREME (Aliko Dangote. Businessman and Entrepreneur)

According to research majority of millionaires and billionaires are self-made and have made it through creating or being part of a business.
If you have already decided that you want to start a business of that one thing you are very passionate about, then consider the fact that with starting this business you need to understand that businesses take a lot of commitment, dedication, hard work and constant evaluation in order to flourish.
Do not expect to get financially wealthy overnight. Below are a few reasons to start a business.

Reasons for Starting a Business

1. Reach your Dreams

If you have always wanted to be wildly successful, starting our own business could be a great start.

2. Leave an Inheritance

Pass the business down to your children and grandchildren.

3. Abundance of Resources

With the dominance of the Internet, it’s easier than ever to find resources you need, including loans, grants, mentors and even startup capital.

4. There’s Nothing Stopping You

What’s really keeping you from being an entrepreneur? Of course there are risks, but there’s nothing forcing you not to take them.

5. Make the World a Better Place

This may seem like an unrealistic goal for you right now, but your business really could make the world a better place.

Benefits of Operating a Business

There are many benefits to starting your own business and these are some among many

1. Rewards

Not everyone defines reward the same way. For some it might be seeing a new venture grow and succeed.For others it may be conquering the unknown and striking out on their own. However you define reward, starting a new company might hold that promise for you.

2. Being Your Own Boss.

When you start a business and are self-employed, you are your own boss and ultimately control your own destiny.

3. Income.

Whether you view starting a business as an economic necessity or a way to make some additional income, you might find it generates a new source of income.

4. Flexible hours

Owning your own business is hard work and often requires long, odd hours. In some cases, having your own business may allow you to have more flexible hours.Many stay-at-home parents, for example, choose to become entrepreneurs.

5. Purchasing an existing business

While it may not be viewed as “starting” a business, purchasing an existing business has proven beneficial for many business owners—but it undoubtedly requires both financial and time investments.For businesses that are already profitable, these new business owners jump past the true startup phase into running a mature business.

6. Income

Whether you view starting a business as an economic necessity or a way to make some additional income, you might find it generates a new source of income.

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Challenges of Operating a Business

Although there can be many benefits to starting your own business, you will also face challenges and some of these are:

1. Loneliness

It’s a rarely mentioned problem of entrepreneurship, and many new business owners aren’t prepared for it until it happens.Being an entrepreneur is lonely. It’s a singular position, so you won’t have teammates to rely on (completely).You’ll be working lots of hours, so you won’t see your family as often.And your employees will be forced to remain at a bit of a distance

2. Decision-making

Believe it or not, this is probably the most stressful challenge on this list. New entrepreneurs are forced to make hundreds of decisions a day, from big, company-impacting decisions, to tiny, hour-affecting ones.Decision fatigue is a real phenomenon, and most new entrepreneurs will experience it if they aren’t prepared for the new level of stress.

3. Being the Visionary

As the founder of your startup, you’ll be expected to come up with the ideas.When a competitor emerges, it will be your responsibility to come up with a response plan.When your team hits an impenetrable obstacle, your job will be to come up with an alternative plan to move forward.This demands on-the-spot creative thinking — which should be an oxymoron, but entrepreneurs rarely have the luxury of time.The less experience you have, the more pressure you’ll feel from this, and the harder time you’ll have coming up with acceptable plans.

4. Rule-making

It’s fun to be the boss until you have to enforce something.Sooner or later, you’ll have to come up with the rules your business follows, from how many vacation days your workers get to what the proper protocol is when filing a complaint about a coworker.These details aren’t fun to create, and they aren’t fun to think about, but they are necessary for every business

5. Abandoning Another Career

If you’re going to dedicate yourself to starting and nurturing a business to success, it’s going to be nearly impossible to simultaneously manage another career.Walking away from a promising, steady long-term opportunity for something unpredictable is scary — especially if you’ve never run a business before.Unfortunately, there’s no easy way to address this. Just think through your decision logically, and don’t ignore your instincts.

6. Team Building

This is especially hard if you’ve never run or managed a team before, but even if you have management experience, picking the right team for a startup is stressful and difficult. It’s not enough to find candidates who fill certain roles — you also need to consider their cost to the business, their culture fit and how they’ll work as part of your overall team.Such considerations are exceptionally hard when you’re under the pressure of filling those positions as soon as possible.

7. Financing

Experienced entrepreneurs don’t have it easy when it comes to funding a new business, but they do have a few advantages over newcomers.They might have a pool of capital from a business they previously sold or a steady stream of revenue they can use to fund a new business’s cash flow.Even if their first business went under, they’ve likely made investment contacts and client connections necessary to give them a leg up in a new enterprise. As a new entrepreneur, you’ll be starting from scratch, which means you’ll need to start networking like crazy and thinking through all your possible funding options before landing on one.

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Creating a Valuable Partnership

Photo by Melissa Askew from Unsplash

Tip: “Great things in business are never done by one person they are done by a team of people.”(Steve Jobs, Co-founder, Chairman and CEO Apple Inc.)

Many small businesses such as professional practitioners, retail, service providers are organized as partnerships. Partnerships are very essential in the business world and are in fact considered as the second stage in the evolution of the business first being sole proprietorship.

A partnership is an agreement between two or more people who have decided to enter into business with the intention of earning profits.

Partnerships may be established formally by means of a partnership deed or agreement. The partnership agreement is a very important guide for partnerships to exist in harmony.

Contents of a Business Partnership Agreement

  • Names of the business partners
  • Nature and kind of business
  • Capital contributed by partners
  • Interest on the Capital (if it exists)
  • Salaries paid to the active partners
  • Drawings to be made by the partners
  • Interest on the drawings(if it exists)
  • Duties of the partners
  • Valuation of good will
  • Duration of the partnerships

Benefits of Starting a Business Partnership

1. Skills and Experience

Starting partnerships with people who have different qualifications

gives the business potential to thrive.

2. Risk is Spread

With an increased number of business owners, the losses incurred are

shared among many.

3. Effectiveness

Different minds encourage creation of better products and services

even if they are non profit or for profit.

4. HR Development

Competence among workforce will be encouraged and this will therefore

enhance the staff’s professional skills.

5. Stability and Impact

Achieving greater reach by being effective and efficient implies an

increased and sustained development impact.

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Risks of Starting a Business Partnership

1. Implementation Challenges

Day-to-day demands of delivering a partnership program as a collaborative venture, with all the additional management, tracking, reporting and evaluation requirements that entails

2. Drain on Resources

Commitment of time and energy of key staff in partnership building and project development in addition to any additional financial or other resource contributions

3. Negative Reputation

When partnerships go wrong causing damage to the reputation or track record of individual partners by association.

4. Loss of Autonomy

The challenge of shared decision-making processes; the need for building consensus with partners before action can be taken and the implications of wider accountability (to other partners and to wider beneficiaries)

5. Unlimited Liability

Members have unlimited liability which implies that in the event of the business winding up the proceeds from the business assets cannot cover the obligations therefore partners are calledt upon to raise funds towards the debts incurred.

Types of Partners

1. Nominal Partner:

This is a person whose name is used as if he or she was a member of the firm, but who in reality is not a partner. He or she is liable to the third parties who give credit to the firm on the strength of he or she being a partner in the business.

2. Partner in Profit Only:

This is a partner who only shares the profits but does not share the losses made. He or she does not take part in the management of the business but is liable to third parties who deal with the partnership.

3. Sub Partner:

This is a partner who gets the shares of profit from the firm through one of the partners. He or she is not liable against the firm and is not liable to the third parties for the firm’s debts.

4. Dormant Partner:

A dormant or sleeping partner is a partner who does not actively take part in the day to day partnership activities. Although he or she does not participate in the daily running of the business he or she has a right to the books of accounts and also sharing of profits and losses in the agreed ratios.

5. Minor Partner:

This partner can be admitted to the benefits of the existing partnership with the consent of all the partners. A minor partner is not personally liable for the debts of the firm but he or she shares in the partnership profits and benefits.

Characteristics of Partnerships

1. Limited Life

The existence of a partnership is determined by years set in the partnership agreement.

In case such a detail is not added to the agreement then the death, bankruptcy, inability to carry out specific responsibilities or withdrawal leads to termination of the partnership.

2. Ease of Formation

Apart from registration of the business, partnerships have few requirements.

3. Transfer of Ownership

Even if it is easy to dissolve a partnership, the transfer of ownership whether to an existing or new partner, requires approval of the partners.

4. Management and Operations

Among most partnerships, partners are involved in the day to day operations of the business.

This involvement in the operations makes critical decision making easier as formal meetings are not required.

5. Number of Partners

When there are many partners within a business, day to day critical decision making gets complicated.

Therefore decision making in partnerships tends to work well with a small number of partners.

Dissolution of a Partnership

1. Losses

Considering profits are no longert being generated by the partnership, the partner may agree to dissolve thet partnership.

2. Tragedy

In case something tragic occurs to the business such as government intervention into the business for failing to follow regulations or death of a partner.

3. Expansion

Growth of the business to an extent of requiring converting the partnership into a limited company for day to day operations to continue smoothly.

4. Irreconcilable Differences

Assuming the partners no longert agree on business operations within thet firm then dissolving the partnership is thet rational thing to do.

5. Retirement

Mutual agreement between the parties when one or more of the partners retire(s) or has he’s/her partnership(s) contract expires.

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