The desire to become an entrepreneur is alive and well in the United States. 62% of Americans wish to be their own boss, and among younger generations, whose top aspirations now include YouTuber and TikTok creator, becoming an entrepreneur is still near the top of the list. Being your own boss is very much part of the American Dream for many people. It is typically riskier than working for someone else, but those that are successful have the potential to earn more and control, to a certain degree, when, where, and how much they work.
Success is far from guaranteed, or even likely, but you can improve your odds by incorporating the keys below into your own entrepreneurship journey.
Want to learn more about entrepreneurship? Check out our ultimate guide here: “How to Know When You’re Financially Ready to Start a Business.”
1. You need a great (and unique) business idea.
Around 20% of small businesses fail in the first year and about half fail in the first five years. This sounds obvious, but to be successful, you need a great and unique business idea. That doesn’t mean you need to do something that has never been done before, but your idea must be unique in some way. Lean heavily into your existing expertise and passion. If you’ve worked as a chef for 20 years, you probably have higher chances of success opening a restaurant rather than a bookstore.
For your business to be successful, you must either meet an existing consumer need better than your competition or create/find a need that only you can meet. It is very rare to have the ability to find or create a need that only you can meet, but it can happen in certain markets. As an example, I buy a specific type of envelope for shipping products to customers. Only one company on the planet makes an envelope that is the exact thickness and size I need. Before this company came around, business owners would use oddly shaped envelopes and insert cut-up cardboard from cereal boxes to make them thicker. This company recognized a need and created a product to meet that need. They don’t have any competition because either the niche isn’t large enough to create a viable business for more than one company or no other companies have found the opportunity they did.
Most successful business owners meet an existing consumer need better than their competition (or at least meet the need well enough to stay in business). The market for certain products and services is hypercompetitive and it is next to impossible to become successful and overcome the competition. It’s a good idea to enter less competitive markets where you have a greater chance for success, but keep in mind there is probably a good reason why those markets are less competitive. If you want to open a video rental store you’d probably have little or no competition, but low odds of success.
2. Don’t be afraid to start small (and stay small).
You don’t necessarily need to go all-in on starting your own business. Many businesses can be started on the side while working a full-time job elsewhere (as long as your employment agreement allows it). According to a study from 2023, 44% of new businesses started as side hustles. Starting your business as a side hustle drastically reduces the consequences of your business failing. And if it does fail, it is much easier to start over with a new idea if you still have a stable full-time income.
Not everyone that starts a side hustle or business wants to eventually work for themselves. There can be some great benefits to maintaining a full-time job (health insurance and a retirement plan, to name a couple) while earning additional income from your side business.
3. Be willing to work long hours.
Being an entrepreneur isn’t all sunshine and roses. You’ll likely have to work long hours with little to no income to show for it, especially early in your journey. Most businesses take a couple years to become profitable. Not only does this mean you must have the cash reserves or full-time income to sustain yourself until your business becomes profitable, it means you won’t see any fruits of your labor for a long time. You need to be mentally prepared to work extremely hard for little payoff at the beginning.
4. Understand the complexity that comes with growth.
So you’ve successfully started a business that is profitable and provides enough income for you and your family to live on. Mission accomplished, right? Not so fast. Being an entrepreneur is not a linear journey straight from “idea” to “success.” Even once you reach what you consider success, there will be more roadblocks and complexity to overcome. If your business is successful, you will probably need to hire more employees, spend money on benefits like health insurance and a retirement plan to keep those employees happy, and pay for the services of other professionals to grow and expand your business.
With the growth of your business comes greater complexity, but you can decide, to a certain degree, just how much you want your business to grow. Maybe you don’t want the additional stress that comes with managing more employees and locations and are happy with keeping your business the size it is. There is nothing wrong with maintaining rather than growing your business if you are happy with the life it provides.
Owning your own business is more glamorous on paper than it is in the real world, but for some, the benefits outweigh the costs. If you truly value independence, making your own decisions in the workplace, having greater control over your earning potential, and have an appetite for risk, entrepreneurship may be for you. If you value the security of working for an established company, prefer to be part of a team rather than the one making decisions, and don’t have an appetite for the risks associated with entrepreneurship, working under an employer may be best. For many, the “best of both worlds” could mean working a traditional job, with the security and benefits that come along with it, and earning extra income through a side hustle.
