Levels of Starting a Business
by Ron Kurtus (revised 8 October 2015)
There are three levels in starting a business. Typically, you start by occasionally selling an item or providing a service—perhaps on a part-time basis. Then, you may go into business for yourself. Finally, the highest level is when you start a full-scale business venture.
Each level requires funding, marketing, and the ability to obtain products to sell.
Questions you may have include:
- What sort of occasional business is there?
- How can you go in business for yourself?
- What is a full-scale business venture?
This lesson will answer those questions.
Occasional or part-time business
If you start an occasional or even one-time business, you can be considered a basic-level entrepreneur.
Typically, this type of business involves selling some product that you already own. Funding is usually a moot point. However advertising and having a place to sell your products is necessary.
Judy and Dave got an idea of a way to make extra money by holding a garage sale to get rid of things they no longer needed. They set things up, put up signs in the neighborhood and sold most of their old items.
This looked like a one-time venture for them.
In some cases, you may occasionally provide a service. You have to advertise or let people know about the service you are offering.
After the big snowstorm, 15-year-old Peter got the idea of offering to shovel the neighbors' walks. He took his father's shovel and went door-to-door, asking people if they wanted their walks shoveled for $5. He made $35 that day in his entrepreneurial effort.
This was an occasional venture.
Martha Stewart started a part-time business with a friend by catering parties to wealthy people in her community. This led to getting important connections expanding her business ventures.
You are an entrepreneur
Any time you become involved in a way to independently make money—as opposed to getting a job—you are acting as an entrepreneur.
This type of occasional business can lead into going in business for yourself.
In business for yourself
Being in business for yourself means that you are going beyond a one-shot activity. You are selling goods or providing a service on a regular basis. You can be in such a business by yourself or in a partnership with another person.
Going from job to becoming an entrepreneur
You may go into business for yourself by spinning off an existing job. You need initial funding to support yourself, to have an office or store, and needed equipment.
Phil had a been working at the Marquette Co. for several years as a technical writer. He wanted to go in business for himself and had saved up enough money to tide him over until he was making a steady income.
He quit his job and started contracting as a free-lance writer to various companies in the area. Although he had added responsibilities in having to market his business and keep financial records, he found his entrepreneurial efforts satisfying.
If such a business took off, you might consider getting more funding and establishing a full-scale venture.
Expanding an occasional business
There is also the situation where you had started an occasional business and there is enough demand for what you have to sell that you can expand the activity into being in business for yourself.
After having a successful garage sale, Judy and Dave started a small business buying items from other garage sales and selling them on eBay. They did this on a regular basis to supplement her family's income.
They went from a one-time venture to starting up an ongoing part-time business.
You need to know there is a demand for what you have to offer before going into business for yourself. Initial expenses can usually be paid for from your own money.
Full-scale business venture
A full-scale business venture usually requires that you obtain outside funding to ramp up your business.
Expanding your own business
You may be in business for yourself and realize that it has so much potential that you had better get funding and create a true business with room for growth.
Michael Dell was building and selling computers to fellow students when he realized his one-man business had great potential. He invested his own money and received a loan from his grandparents to start up a full-scale business, which later became Dell Computers.
Planning out a new business
If you get a great idea for a business to start from scratch, you usually must write out a business plan and seek money from venture capitalists to fulfill your dream or idea. Numerous entrepreneurs start their businesses this way.
The three levels of entrepreneurial business activities include running a one-time or occasional business, going into business for yourself and starting a full-scale business venture.
Work your way up to the top
Resources and references
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Levels of Starting a Business