There are numerous reasons to form an LLC or other type of business but there are also reasons that starting a full time business may be a bad idea. We’ve compiled 5 of the wrong reasons to start a business and some alternatives to help you test the waters before going full time.
1.) “I really enjoy doing it so why not make it a business?”
It’s true that the best businesses are born out of somebody’s love of what they do but there’s a difference between a great business idea and a hobby. Just because you enjoy building furniture doesn’t mean that you have the capacity to do it in a way that translates in to profits. Here’s an alternative: If building something is your passion, build a few, take them to a flea market or post them for sale online. If you see strong demand, make a larger supply and repeat the process. If demand is larger than your part-time business can supply, you can probably make it full time. Remember to register your business as an LLC to separate your business from your personal finances.
2.) “I’m tired of working hard and being stressed”
If that’s your reason for forming a business startup, you’re best served not leaving your day job. Starting a business of your own is more time, harder work, and more stress than working for somebody else. Here’s an alternative: Set boundaries in your current job that will help you avoid burnout but most likely, entrepreneurship isn’t for you at this time. That’s not to say that it won’t be a good fit for you down the road.
3.) “I want to give back to society.”
You’re a great person and the world needs more people like you but that’s not a reason to start a business. In order for a business to survive, your goal should be to make money by providing ethical, top-notch service but #1 or #2 on your list must be making a profit. Here’s an alternative: If you have a business idea that you love, start it with the idea of building it in a way that makes it a strong business. Later on, when your business is booming, concentrate on giving back to society. Also remember that giving back doesn’t always require money. Donate your time until the business is big.
4.) “I want to be rich.”
The average salary of most business owners doesn’t make your chances of being rich very high. You’ll be comfortable if you work hard but owning your own business probably won’t make you rich. Here’s an alternative: If being rich is your goal, climb the corporate ladder in an existing company. If you want the freedom and satisfaction of owning your own business with a comfortable income, form an LLC.
5.) “I’m unemployed and need to do something.”
Depending on the business you were in, this may work. If you’re an unemployed writer or electrician, you may already have the tools and contacts necessary to start your own business. Not all businesses lend themselves to this and it’s important to have realistic forecasts of success. Here’s an alternative: Take a job that you wouldn’t be your first choice and use your off time to gain knowledge and formulate a plan for starting your business. Patience truly is a virtue sometimes.
Forming an LLC is the right path for many but the timing and the motivation has to be right. Remember that many businesses can be part time endeavors. Wade in the pool before jumping in to the deep end.