Starting Your First Venture? Here’s What You Need to Become a Business Owner

My dad is a business owner.

In 1990, he opened his own auto shop. He took a risk, went through the motions of uncertainty and stress, worked a second job to support his family and his business, grew his customer base, hired other mechanics, sold services (auto repair) as well as products (auto parts), and was ultimately accountable for his own success.

Ask him what he does for a living, however, and he won’t tell you he’s a business owner. He’ll say he fixes cars. Ask him about being his own boss and he’ll say, “When you have your own business, you’re not the boss. You’re an employee.”

But in my eyes he is most definitely a business owner, at least according to the definition you get from a quick search:

A business owner is a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

Like my dad, many people who run businesses don’t embrace their identity as “business owners.” On the other hand, you probably know someone who wears the title with pride.

Some people exclude those who own side businesses as “real business owners.” Others refer to the title broadly, including anyone who starts a new business in any capacity. And let’s not forget the “entrepreneurial tendencies” people can have without owning a business that many companies today look for in the people they hire.

But is an independent freelancer a business owner? What about a full-time Uber driver? Someone who runs a stall at a fish market? Where do we draw the line, if there is one to draw?

This wide range of interpretations, coupled with all the new ways for people to make money on their own terms, begs the question: What exactly is a “business owner” today?

What is a business owner?

A business owner is one person who is in control of the operational and monetary aspects of a business. Any entity that produces and sells goods and services for profit, such as an ecommerce store or freelance writer, is considered a business.

Businesses can be run alone or with a group of people. Regardless, its owners have complete control over the company and are responsible for defining a strategy, training staff, and managing day-to-day business operations.

According to data from Zippia, the average business owner salary is between $67,000 and $135,000 per year.

Despite the COVID-19 pandemic and a big economic turndown, new business activity grew in the United States in 2020. Q3 2020 saw quarterly new business applications hit an all-time high, with more than 1.46 million new applications filed, a 60.9% quarterly increase, and a 69.9% year-over-year jump.

New data shows that applications dipped slightly in Q4, with over 1.1 million applications filed, before rising to 1.37 million in Q1 of 2021, and then to 1.44 million in the second quarter. In July 2021, more than 454,000 business applications were filed alone.

In fact, the 2021 Global Entrepreneurship Monitor report revealed that over 60% of adults surveyed in the US know someone who started a business during the pandemic. In Central and East Asia, those personally knowing an entrepreneur ranged from 30% to over 80%. The Latin American and Caribbean region showed less variation, ranging between 50% and 75% of people knowing someone who started a business during 2020 and 2021.

This is likely due to our evolving interpretation of what a business owner is, one that’s born from new variations and forms of “business ownership,” from the sidepreneur to the infopreneur—emphasizing, above all, the self-starter attitude toward creating value that, in turn, creates revenue.

Business owners also taken on many other titles, including:

• Owner
• Proprietor
• Founder
• Chief Executive Officer (CEO)
• Managing Director
• President
• Director
• Principal
• Managing Partner

I spoke to over 25 business owners from all walks of life—solopreneurs, tech founders, store owners, and creators—to get a range of perspectives on what exactly a business owner is.

Aside from the recurring themes of risk, value creation, and rebellion, the answers I got varied from person to person, from business to business. The definition of business ownership seems to have evolved, and it’s likely the result of two trends:

1. Thanks to technology, the barriers to entry have never been lower to start as a business owner.
2. There are more paths now to starting a business than ever before.

There are still many reasons people don’t become a business owner. Mark Zweig, Entrepreneur in Residence at the University of Arkansas, identified the perceived barriers in his 16 years of teaching new venture development:

1. “I have to invent something or do something new that has never been done before.”
2. “I have to create a technology business because nothing else has real growth potential.”
3. “I have to sell my idea to VCs or angel investors.”
4. “Starting my own business is riskier than taking a job somewhere.”
5. “I don’t know where to start to create my own business.”
6. “I am not good at (fill in the blank), and that is a necessary skill to start and run a business.”
7. “I am not old enough.”/“I am too old.”

But a lot of these are what I’d call legacy fears surrounding business ownership—outdated misgivings that have yet to catch up with the technology and platforms that enable us to start things and put plans into motion in ways that weren’t possible before.

Business owners versus entrepreneurs

Chances are you’ve heard the term “entrepreneur.” It’s associated with owning a business, and today, the two are often used interchangeably. However, there are small differences in the mindset and approach to business which differentiates the two. One role isn’t better than the other. They are just different.

Business owners often build companies around a business idea that already works, such as starting a restaurant or jewelry brand. Entrepreneurs, on the other hand, tend to take on more risk and pursue innovative ideas that solve everyday problems, like Airbnb providing a way to book rooms with locals versus hotels.

The subtle differences between business owners and entrepreneurs are:

1. Motivation. Business owners often start a company because they want to work for themselves. It’s more a natural progression of turning something they love into a business. Entrepreneurs may see a new vision for the future or a new way of doing things.
2. Innovation. Business owners aren’t always concerned with groundbreaking concepts. They apply proven principles to success. They know their target market intimately and are focused on growing their business and serving customers. Entrepreneurs tend to work on ideas that haven’t been tested yet. They challenge the status quo and can change industries or niches as the business gains traction.
3. Growth. Business owners are keen to grow their company, but often at a slower and more controlled pace. Entrepreneurs aim for explosive growth, going nationwide to international as fast as possible. They don’t use the same tactics as business owners and often carve out a new market to dominate competitors.

The common thread is that they both made the decision to start a business. This decision is often influenced by many different personal factors:

• Ability to spot opportunities
• Attitude toward taking risks
• Personal ambitions
• Level of self-confidence
• Resources
• Social and family support

Whether you identify as an entrepreneur or as a business owner, you still work with the same stakeholders: suppliers, manufacturers, banks, customers, employees, contractors, etc. Both groups see a business opportunity and act on it. They adapt and assume skills to create more valuable businesses that turn a profit.

Business ownership types

Starting a business is both challenging and rewarding. Creating a business name, building a website, finding products to sell, and finding customers are the fun parts of having your own business. But you can’t forget about business ownership types and incorporation.

Your business structure decides how you’re taxed, your liabilities, and how you can secure capital, if needed.

There are four main types of business structures to choose from:

• Sole proprietorship. A sole proprietorship is an unincorporated business without legal distinction between the business and the person who owns and runs it. It’s easy to set up and manage, and you’ll likely pay less in taxes.
• Partnership. A partnership is a business with two or more owners. General partnerships assume the business is evenly divided or split into percentages that are agreed upon before filing.
• Corporation. A corporation is a legal entity separate from a person, so you are free from personal liability, unless it’s a rare and extenuating circumstance. What you pay in taxes differs by state, so you may or may not pay more than a sole proprietorship. But your personal property is protected.
• Limited Liability Company (LLC). An LLC is a newer, hybrid business type that combines partnerships with the liability protections found in corporations.

The best type of ownership depends on your business model’s needs. Read Types of Businesses: Which Legal Structure Is Right for Your New Venture? to choose the best one for you.

Business owner roles and responsibilities

Business owners do whatever it takes to make their venture a success. This means doing the little things you may not be a fan of, like administrative work or driving orders to the post office or creating a marketing strategy.

Your day-to-day tasks depend on your business and how you choose to spend your time. But they typically boil down to the following roles and responsibilities:

Planning and strategy

Small business owners are responsible for the direction of their own company. They are in charge of creating and managing their business plan, developing their marketing campaigns, and coming up with ways to keep the company competitive and profitable. Research and planning are essential skills for a business owner.

Finance and accounting

Business owners need to manage finances properly to give the business a fighting chance. You’ll be responsible for getting start-up capital to establish the business, whether it’s through a small business loan or crowdfunding, plus funding expenses for product development, marketing assets, and hiring employees. Don’t forget about maintaining business bank accounts, payments processing, taxes, and general accounting.

Compliance and legal

Business owners are also responsible for complying with federal and state licensing laws. As mentioned above, you must incorporate your business and understand the legal requirements for operating one.

You’ll also need to know the basics of labor laws and should have a lawyer available if you run into any problems with employees or customers. Everything from legal contracts and sales agreements are written, reviewed, and signed by you.

Marketing and sales

No matter how unique or amazing your products are, you need marketing and sales to make money as a business. Depending on your business type, you’ll be responsible for joining sales calls and closing deals in the early stages.

You’ll also be the go-to person for creating campaigns, approving ads, running social media marketing and email marketings, and conducting other marketing activities for the business.

Customer service

It’s also common in the early stages for business owners to be the main customer support agent. Tasks include answering phones and emails, jumping in a live chat conversation on the website, and managing the customer relationship management (CRM) software. It’s up to you to build a positive reputation for your business and delight customers so they leave positive reviews and make repeat purchases. As the business grows, you can hire an employee to help with customer service duties.

Hiring and human resources

Business owners are also in charge of building a great team to operate the business. This includes finding and hiring new employees, and training and developing existing ones. You’ll create the job descriptions, do performance reviews, and control employees’ pay, benefits, and advancements in your company.

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How to become a business owner

Becoming a business owner is all about uncovering profitable business opportunities.

Unless you’ve been hit with a brilliant idea right from the beginning and that’s your motivation to start your business, finding great products to sell online profitably can be a daunting task. There are thousands of possible choices, yet everything seems like it’s been done a thousand times before.

So with all these product choices, where do you even begin digging to find the gold? The first step to finding products to sell online is being able to recognize the various opportunities that exist for uncovering great products.

Understanding the following eight product opportunity types is key to helping you identify great products to sell and niches to explore online. Each one involves a different mindset and approach. Let’s explore them in more detail:

1. Build an interesting and captivating brand
2. Uncover opportunities in keywords
3. Identify and solve a customer pain point
4. Identify and cater to consumer passions
5. Follow your own passion
6. Look for an opportunity gap
7. Utilize your own experience and expertise

1. Build an interesting and captivating brand

Differing from the previous method, building a brand means also building an audience. A brand-building approach involves developing a superior understanding of your potential customers, crafting a unique brand, and carving out a unique place in your customers’ minds.

This approach to building an online business can be particularly effective at differentiating yourself from competitors in the market if there is heavy competition.

Example: DODOcase, an Apple products case manufacturer has done a noteworthy job at crafting a unique brand. Despite operating in the extremely crowded and competitive space of iPad cases, DODOcase broke through by telling a different and unique story, one where its cases are handcrafted using traditional artisan bookbinding techniques in the city of San Francisco.

It's this unique story and brand that has made DODOcase one of the top iPad case manufacturers in the world in a short amount of time.

2. Uncover opportunities in keywords

Organic search traffic can be the holy grail of ecommerce. If done correctly, Google and other search engines will reward you with consistent and targeted traffic. In a world of slim margins, where paid advertising channels are consistently getting more expensive, this is precisely what makes products with keyword opportunities so lucrative.

Looking for keyword opportunities involves strategically looking for a product or niche online based on the keywords people are searching for in search engines like Google and Bing, then identifying high volume but low competition search terms.

Keyword research can be a bit technical, so this opportunity involves a solid base understanding of keyword research and search engine optimization (SEO).

This opportunity can be particularly lucrative if you plan to dropship products, as margins on dropshipped goods are thin, often making it difficult to use paid advertising channels effectively.

Example: Gymshark invested time and energy into SEO and found an opportunity to rank for keywords in the fitness clothing niche.

You can see in the image above that Gymshark has been able to rank in both the second and third organic position on Google for the organic search term “gym clothes,” which 74,000 people search for each month. It’s been SEO opportunities like this that have helped Gymshark become so successful—that and having amazing products.

3. Identify and solve a customer pain point

One of the best ways to build a strong business is by solving a customer pain point. Products that solve pain points can be lucrative because customers are actively seeking out solutions to these problems.

Keep in mind that pain points don’t always mean physical pain. They can also include frustrating, time consuming, or poor experiences.

Example: Jing, an ecommerce entrepreneur, knew that people that grind their teeth can suffer from excruciating pain. More than just the physical pain, constant grinding can lead to expensive dental bills.

Knowing this was a pain point that many people would seek out a solution for and happily pay money to solve, Jing launched Pro Teeth Guard, a custom moulded teeth guard at a great price.

4. Identify and cater to consumer passions

Consumers tend to spend significantly more money to support their passions and habits. Just consider golfers. Golfers are notorious for spending thousands of dollars on gear and gadgets with the hopes and dreams of lowering their score, even by the slightest.

Catering to passions has additional benefits, including deeper interaction with your brand, brand loyalty, and increased word-of-mouth marketing.

Example: BlackMilk Clothing began in 2009 after the founder's blog, TooManyTights, exploded in popularity.

Recognizing the passion consumers had for tights with unique designs and understanding the opportunity, the founder created BlackMilk Clothing. Today, BlackMilk is a multimillion-dollar company that's grown to over 150 employees and distributes its products globally.

Furthermore, by piggybacking on pop culture trends with its designs, BlackMilk taps into passionate audiences and customers from a range of different niches beyond just tights.

5. Follow your own passion

Some people consider choosing a product or niche based on your own personal passion to be a recipe for disaster. However, that’s not always the case, and can actually prove to be extremely profitable.

One of the biggest benefits to building a business around your passion is having the tenacity to keep going when you run into difficult times. This one point shouldn’t be underestimated, as staying motivated is a major key to building a successful online business.

Example: Eric Bandholz began Beardbrand as a personal blog discussing business and sales strategy. Over time though, Eric’s passion for the bearded lifestyle kept creeping into his blog. Eventually, he went all in on that passion and launched Beardbrand, a brand that sells beard grooming supplies to men that are equally passionate about their beards.

6. Look for an opportunity gap

Capitalizing on an opportunity or feature gap can be lucrative. This opportunity type involves uncovering problems or deficiencies in a product or the marketing for a product that can be capitalized on. An opportunity gap may exist in the form of an improved or additional product feature, an unrealized market by the current competitors, or it may even come in the form of your own marketing capability.

Example: Chaim Pikarski continually seeks out and capitalizes on opportunity gaps. He and his team scour product listings all over the web and thoroughly read the reviews section.

They are continually on the lookout for deficiencies and feature gaps that buyers post. With this information in hand, Chaim sources a manufacturer and makes his own, better version of the original product.

Hipe shower radio is one such product (of hundreds) Chaim has manufactured by finding an opportunity gap in the original market. By looking at other shower radios and reading consumer reviews, he found an opportunity gap for a shower radio that was rechargeable.

7. Lean on your own experience and expertise

Leaning into your own experience and expertise is a strong competitive advantage. Turning your expertise into an online business is a great way to enter the market with a leg up and a barrier to entry for others.

Example: Rhiannon Taylor, an avid urban gardner and Japanese gardening enthusiast, turned her passion for plants into the online boutique, RT1home. Rhiannon also shares her insights with people on the RT1home blog and YouTube channel, which teaches them how to use RT1 products and take better care of their house plants.

Creating a successful small business

Considering that “part-time business ownership” is now more common than it once was, it’s no longer necessary for you to quit your job to start a business online.

Many Shopify store owners run successful businesses part time, during evenings or on the weekend, eventually going full time if they choose to. Some have a physical location for their store and others operate entirely online.

Businesses can now exist in a variety of forms that just weren’t possible before. So naturally, people are starting them for a variety of reasons. You can too.

Illustration by Francesco Ciccolella