Do you currently own or rent your home? A big part of the great American dream is purchasing a home of your own. If you are considering buying a business, chances are you already own your home. Whether you buy a house or a business, you are growing an asset that works for you.
The advantages of owning your own home are similar to the benefits of owning your own company.
According to The Educated Franchisee by Rick Bisio, the mentality that applies to the divide between people who decide to rent versus those who choose to buy their own home is similar to the decision to either be an employee or a business owner. In the short term, when buying a home, you are not better off. Purchasing a home requires a down payment, insurance, taking on debt, and forgoing instant gratification to create value in the long term. As a homeowner, you become responsible for monthly utilities, maintenance, and upkeep.
When you are considering investing in a business, you will need to invest a certain amount of money, incur some risk, and possibly take on debt to create wealth down the road. You will forgo the employee benefits of health insurance, bonuses, and a dependable salary as an employee.
Aside from the increase in income that business owners strive for, they also receive additional financial benefits from building a business.
Being an employee is far less risky than being a business owner. An employee just needs to keep their job to make future income. The employee also doesn't risk their savings, but they also limit their future upside potential. When its time for an employee to leave, they get to take their remaining wages and any 401(k) type benefit they have accrued. However, as an employee, no matter what perks your employer provides you with, you have an asset value of zero.
Most people who take the leap from employee to business owner do so in hopes of making more money for themselves.
As a business owner, at the end of your time owning your business, you will have an asset. Private companies on average sell for a multiple of between 3 and 6 times their earnings. You will have more robust retirement savings and can take advantage of multiple write-offs. If you continue in your "renter" status as an employee, you hopefully with walk away with some retirement savings, like a 401(k).
Your future is a choice. Are You Ready to Make the Shift?
Do you want the immediacy of the benefits you currently have working for someone else? Or are you willing to sacrifice some of the instant gratifications of your job so that you, in the end, can build a valuable asset and achieve greater financial security in the long run? Yes, by starting a business you are going to walk away from a steady salary and use a chunk of your savings, but your life could become more than you imagine, with an opportunity to build wealth and a legacy that employment would never provide.
If this article has you thinking you might be ready to make the leap from employee to business owner, then reach out to our Franchise Sales Team!