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  • Writer's pictureAbir Mohammed

Enterprise: The Fast Road to Millions

In economics, enterprise refers to when an entrepreneur, that is a person with a business idea, bears the risk of putting together other factors of production (land, labour and capital) to begin producing the good or service in mind. It is simply the creation of a business, regardless of the market or size, where products are made, and products are sold.

The Statistics

Most millionaires today do in fact have a diverse portfolio- they may invest in real estate, stocks, have a high salary- however, one thing that is for certain is that enterprise can really make someone breakthrough.

Take the story of Steve Jobs. He was raised as an adopted child in a middle-class family. From a young age, Jobs wanted to do engineering, however found that education was not for him. Instead, Jobs dropped out of college and began saving money. Jobs met a former high school student who was working on designing computers and decided to become business partners with him. They began working on personal computers and devices for years and over time invented the first iPhone. After 46 years, Apple is now dominating the corporate world as the richest business, with a net worth of over $2 trillion.

Okay, fine. This may be a ‘one-off’ story, but there are countless others that have made millions. In fact, if you look at the top 10 richest people in the world right now, each one of them are CEOs, some owning even multiple businesses. So what’s so good about enterprise, and how is it making people so rich?

The thing is business is a slow process. You start off small and potentially even operate at a loss. Over time, however, you should begin to see profits. These profits are typically reinvested in a business to increase its size and in doing so increases profits. Once a business is making enough profits, it becomes attractive enough for investments. Investments add to the expenditure you can make on the business, allowing a company to grow and gain more economies of scale. Once a company becomes a corporation (sells shares in the stock market) it can gain a lot of money. The reason for this is simply that the value of the stock is derived from the demand of it, thus if the company is doing well enough, investors will pay more and more for your stocks. Boom. You’ve made millions and you’re now a millionaire. But, it’s not as easy as it sounds.

The Risks

The biggest risk that cannot be stressed enough is financing your business. 80% of businesses in the UK fail. Why? Because people are not willing/do not have enough funds to keep the business running. The costs of running an enterprise are undoubtedly massive- costs in paying employees, buying resources, renting offices/factories and transport. Put this on top of the fact that if your business does not have enough demand, then profits won’t be made. So, you may invest in marketing and at this point, you realise that you can no longer keep financing this business, so you stop.

The general rule is that the smallest businesses should start at about £2500 - £5000 from your savings only. You should not compromise other aspects of your life just to start a business. Keep in mind that this isn’t just an investment of your money. It’s an investment of time, effort and energy. It will be mentally daunting, having to manage an entire business whilst managing your own finances.

This doesn’t even take into account the risks of the economy. The level of competition at a micro-business scale is unparalleled. Certain markets are riskier than others, however other markets may have high barriers to entry which prevent small businesses from starting there. Thus, it is essential to do your market research. If you have an idea, do your research. If you’ve done your research, do some more. Only then should you consider if you would be able to finance the business and possibly begin.

Should You Start a Business?

This is a question that you need to answer yourself. I think everyone should try starting a business some time in their life, however right now may not be the best time. Although enterprise is a fast road to millions, just keep in mind the risks of business. There are in fact other ways to make millions, for instance investing, so consider what is best for you, and do remember that in order to succeed, your desire for success should be greater than your fear of failure.

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