For many Americans, being a small business owner is a major part of what they consider to be the “American dream” — a recent GoDaddy survey found that 39% of small business owners believe running their own business is achieving the American dream. Many also view entrepreneurship as an ideal way to create generational wealth, with the majority of American small business owners (78%) believing that being a successful entrepreneur is a key way to create wealth for future generations.
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Here’s a closer look at how owning your own business can help you create wealth for generations to come.
The Link Between Entrepreneurship and Generational Wealth
Another finding of the GoDaddy survey is that one-third (34%) of entrepreneurs aspire to leave money or assets to their children.
“Starting a small business and growing it over time is an excellent way to create generational wealth, because from a financial perspective, the barrier to entry for starting one has never been lower,” said Fara Howard, chief marketing officer at GoDaddy. “It costs entrepreneurs an average of just $3,000 to launch a venture, according to the U.S. Small Business Administration, and GoDaddy’s research indicates that some founders start their businesses for as little as $500.”
For those who don’t have access to large amounts of capital, a small business can be an accessible path to creating wealth.
“Thanks to the proliferation of online tools and sales channels, the sky is the limit in terms of how quickly a business can achieve scale and start generating wealth for its owner,” Howard said. “This means that anyone with a lot of passion and only a little tech savvy can grow a valuable business asset from a modest investment.”
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Starting Small Can Lead to Big Gains
The survey also found that “many have modest business aspirations, wanting to either stay a ‘solo entrepreneur’ (28%) or maintain being a small business with some employees and maybe a physical location (35%). Only 12% aspire to one day become a corporate business with a large employee base and headquarters.” Fortunately, you don’t need to oversee a huge corporation to achieve high levels of financial success.
“From tools to market and sell goods and services online to being able to accept payments from customers anywhere, small businesses can grow rapidly without transforming into a much larger enterprise,” Howard said. “These digital tools, including AI-powered resources like the ones GoDaddy has been rolling out to its customers, can help keep overheads low and save them time by automating a growing number of business tasks.”
By utilizing the tools now at the disposal of many small business owners, entrepreneurs can keep their companies small while still continuing to scale up.
“Our latest research indicates that about half or more of small business owners prize living comfortably, being content and having the freedom to pursue success on their terms,” Howard said. “Their business doesn’t have to get significantly bigger in size to achieve those goals.”
Howard notes that in some cases, smaller businesses might be better suited for creating generation wealth than large enterprises.
“A successful small business is a lot easier to put in the capable hands of the next generation when they’re ready, compared to a mid- or large-sized venture,” she said. “Future generations can then build on what was started before them and keep growing it, especially as technology continues to boost small businesses’ ability to compete and thrive.”
How To Create Generational Wealth as a Small Business Owner
If you want to create generational wealth as a small business owner, there are a few things to keep in mind. The first is to look for a gap in the market that you can fill.
“You’re already well-positioned for success if you can marry a passion of yours with an unmet or underserved need that exists, either in your community or virtually anywhere, thanks to the internet,” Howard said.
It’s also important to focus on providing a product or service that will remain in demand over time.
“It’s not just about growing sales and profits,” Howard said. “It’s also about creating a resilient, sustainable business that future generations can take over when it’s their time.”
You should also get future generations involved with your business ASAP so that they feel prepared to take over when the time comes.
“I recently spoke with a GoDaddy customer in California who is an artist and designer of festive home décor and gifts. She put her high school-aged daughter in charge of her business’s digital presence as an entry point to learning how to run the venture,” Howard said. “They’re both benefitting and one day, perhaps not too long from now, the daughter may take over the business, giving her a big head start as a small business entrepreneur.”
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This article originally appeared on GOBankingRates.com: Is Starting Your Own Business the Best Way To Build Generational Wealth?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
