When asked why their businesses fail the majority of small business owners cite their floating and fixed overhead charges as a key reason. Renting premises, staff, insurance, marketing, advertising, utilities costs, etc, it all mounts up and it's always more expensive than the original business plan forecast. Overheads in trading are negligible.
There are recessions in most economies every ten years (minimum). So not only do you have to get your business profitable inside the first three - five years, you've also got to hit a sweet spot (by accident or design), to avoid a contraction or recession in your economy. Recessions do not effect our business in such a way, we can profit from falling and rising markets, recessions can in fact work in our favour as volatility increases. (A good market knowledge and financial discipline are essential in trading business, especially in volatile markets, as one wrong assumption or a mistake, can send you broke quickly.)
3. It was a mistake
"It was a mistake, I wish I'd never done it". Incredible as it may sound, many supposed entrepreneurs actually set up, or buy their business out of desperation not inspiration, it can often be a knee jerk response to their current situation. Indeed, in the UK the figures bear this out. Many folk have taken self employment as their only route, as quite simply the full time jobs just aren't there in an economy that's seen: part time, zero hours contracts and self employment grow by over 50% inside seven years.
Many of the self employed will confess that enthusiasm for their self employment faded very quickly, but they then felt trapped and had no option but to carry on. Statistics also suggest they then borrow more money, put in further savings, not because they feel they'll turn the corner into profitability, but because they become paralysed with doubt, fearing that they have no other options. This situation is particularly prevalent with older entrepreneurs, exposing themselves to more financial risks. This situation is the polar opposite to trading in which we'll discover our enjoyment escalates, as we become more experienced and successful.
Should we fail then we may be able to limit our losses to a bear minimum, we may also recede from full time trading to part time trading, if we can't derive the level of earnings we need. But we can take every precaution to ensure that trading remains enjoyable and harmless to our long term welfare. (Once again, as a caution, according to stats, the level of success in forex trading can be as low as 3%.)
4. Poor judgement
Lastly; there's nothing new. It really has all been done before. Sure, there's many of us who might find a niche, spot a huge gap in the market and through a combination of: luck, skill and perseverance, will plough through all the obstacles and make a huge success of our venture. But the sad reality is that to most spotting a gap involves there being no dog grooming parlour on their local high street, and their level of research amounts to; "because they like pets".
Or they'll buy a Subway franchise and put their life savings and personal overdraft into the sandwich making business. There's perhaps only one in ten thousand businesses created that will be truly ground breaking. Whereas with trading your stock is your capital, you're operating in an extremely young business (Internet trading is only circa 15-20 years old), with no direct competitors, the more who enter our retail trading business, the better the liquidity, the tighter the spreads.
Any new business venture should include a good amount of research and be combined with your own skills or genuine likeness in creating certain products or offering needed services. This will get you through tough times, which you will certainly experience in your new business.
Forex trading business advantages
I'm sure readers can already gauge how setting up your own forex trading small business makes business sense versus the examples we've already listed. You have very little in the way of overheads; an Internet connection, perhaps invest in an iMac 27" for €2,000 and your account capital lodged with a reputable STP/ECN broker and you're in business.
You could be in business and trading for less than €10,000. But that includes your working (initial) capital. That might be all you need to risk until you're profitable. The worst case scenario that might be your loss for a year, if you place disciplined limits on it, but in direct comparison to what other small business owners lose inside a year, it's a relative drop in the ocean.
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Updated on 22. May 2018
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