Authored by Ryan McMaken via The Mises Institute,
As long as I've known him, my father has always been the entrepreneurial type. Even now, in his seventies, he picks up side jobs both to keep busy and to have a little extra spending money.
Throughout my childhood and youth, he had always been an independent insurance broker and salesman. He often employed one or two people to help with the phones and the paperwork. But also often just worked alone.
Growing up, the idea of going to work for a big company for 30 or 40 years, and then retiring to a golf course or rocking chair somewhere, was something completely alien to me. People my age nowadays mostly expect to work full time until age 75 or more. We can forget about pensions and Social Security. But even when a multi-decade retirement seemed like a viable option in the old days, that wasn't something to aspire to in my house.
In short, Dad has always been part of a small minority group in America: people who make their living from running their own business. It is estimated that only about ten percent of Americans actually make their living from businesses they own. The numbers are higher if we look at people who have some small-business income on the side. But when we're talking about people whose main source of income is their own business, the numbers are smaller.
Not surprisingly, people who are in this minority group have a different way of looking at the world.
For them, there's no boss or manager to complain about when your income isn't as high as you like. If there's not enough money to make payroll at the end of the month, business owners stare failure in the face, and they know they may even be taking some other families down with them. Ultimately, the most important question is always this: How can I get more customers to voluntarily give me their money? A failure to answer this question leads to the failure of one's business.
This may seem like a very simple observation, but for those who are daily forced to ask the question, it leads to world view that can be quite distinct from millions of other workers who work for wages.
Thinking back on things dad taught me about business — whether explicitly or by accident — there are three main lessons I was able to learn:
One: Increasing Income Requires More than Just Raising Prices
Business owners hate to raise prices. After all, raising prices alienates customers and annoys them. Higher prices mean fewer sales. Sticker shock may be unpleasant for the customer, but it's often even worse for the business owner — who wants to make the sale just as much as the customer wants the product or service.
So how to avoid raising prices? The answer lies in lowering costs of doing business. A business owner...