Learning to trade vs starting a small business, which is the best option? Well, it depends on you, but we believe there are some real benefits of learning to trade.
Let’s look at some of these benefits.
Day Trading is 100% Online
There are SOME businesses that can be run completely online, or mostly online. Day Trading is 100% online and can be done from absolutely anywhere with just a computer/laptop. internet connection, and a trading platform.
Less Administration, Less Paperwork
Trading as a business takes almost no paperwork or admin. All that is required is opening a trading account and tracking progress in a trading journal.
Running a traditional business involves LOADS of paperwork and administration. from accounting to employee files, inventory, insurance… The list goes on and on and on…
Start Up Costs – Trading vs Small Business
The startup costs for day trading futures is considerably lower than the startup capital needed to open a small business. Let’s compare the startup costs of each.
Startup Costs for Day Trading
Trading full time as a business requires the costs of education and equipment. The equipment required include a trading computer, and a trading platform. You will also need some capital to put into an account and trade with.
Startup Costs for a Small Business
While some small businesses can be run from home, most small businesses need a brick and mortar location. You will need bond upfront if you intend on renting a space for your office/store.
Not only do you need money set aside to pay your employees, but you also need the funds to acquire them. This includes advertising costs for positions available.
Most small businesses will require equipment in order to provide a good or service. Tradies need tools, restaurants need food preparation equipment, cafes need coffee machines. Other equipment or tools include computers and software.
If your small business builds something and sells the end product you will need to have the upfront funds for the materials. This could range from making household items to building houses, making food, or just selling an inventory of items.
Small businesses need a store front, while some businesses are from home, most need an office/shop. A location is either purchased or in most cases, rented out.
Running a business in a designated location brings costs like electrical, water, council rates, internet.
Staff Wages and Super For most businesses the biggest expense is staff wages. Staff need to be paid a living wage as well as Super. Even a small number of employees is a large expense.
Equipment breaks, sometimes at the most inopportune times. Repairing or replacing equipment is a normal part of business.
Most businesses run at least some software. This can include operating system, office suites, accounting, CRM, sales, marketing software etc.
Inventory Any business that has some form of stock inventory will have a ‘carrying cost’. This is the cost of buying stock that needed on hand at all times. This is a continued expense for the life of the business.
Marketing and SEO Marketing and Search Engine Optimisation are often needed to grow a business. Both of these are significant expenses.
Comparing Risk – Trading vs Small Business
Risks for Day Trading as a Business
When trading you run the risk of losing some, or all your invested funds. Trading risk management in an important part of trading strategy, to reduce these losses.
Risks for a Traditional Business
Low demand for product
Damage to store/location
Loss or damage to inventory
Comparing Benefits – Trading vs Small Business
Benefits of Day Trading as a Business
Be your own boss
No sales or marketing
No set location
No commute time
Benefits Starting a Small Business
Be your own boss
Control how your business is run
Set your own hours (to a degree)
Day trading provides what running a small business can’t. With the potential to provide a lifestyle, and financial freedom.