In today’s scenario trading is the best business but nobody will agree on that. Why?. Because there is huge negative publicity against the stock market, like
- Trading is risky if you invest money in trading you will lose that money.
- Common people can’t invest and earn money from the share market.
Likewise, much negative publicity is there because of this most people hesitate to invest in the stock market. Nobody believes trading is considered a good business in this blog we are going to compare the business or stock trading which is better.
Most investors or traders do not consider trading as a business. They are not approaching this as a profession. They will come and do some trading or apply some strategies and go. So this blog will help existing traders or aspiring traders to make a better trading journey.
We are going to cover 3 topics
- How can we compare a conventional business with stock trading (advantages of trading over a business)
- Disadvantages of trading with normal business
- How can we make trading a business
Advantages of trading
We can talk about the advantages of trading by comparing it with any normal business.
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Return in trading compare to Ordinary business
The person who wants to start a business needs at least 5 lakh to 30 lakh to start a good business. It may be a retail outlet, a store, a small-scale business, or a franchise.
The first advantage of trading is good returns compared to normal business. Suppose a normal businessman earns 50 thousand to 1 lakh, he needs to pay other expenses like rent for the building, employee salary, etc.
Compare to a normal business if you invest that money in the share market you will get a good return after deducting the trading charges.
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Trading can do only by knowledgeable people
Many people think in the above way like trading requires much knowledge, of course, it needed some knowledge but do u think for running a business you don’t need any knowledge?
If you go out and check how many businesses are running successfully. You can see many shops are closing because of a lack of customers or no demand for products or services etc. why I am telling these for running a successful business you need to have good knowledge and skills as well. You need more dedication, passion, knowledge about the industry, etc. Trading is not at all rocket science. If you spend some time learning you can easily achieve profitable trades.
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Less Fixed cost
In business, you have many fixed and variable expenses. Whether you are running a business in a profitable manner or a non-profitable manner you need to pay for your expenses like employee salary rent for the building etc.
In trading, you have less cost compared to normal business. Only brokerage charges you need o pay that too if you are performing any trade else you don’t need to pay any charges and tax deductions are the expenses in trading, apart from these you don’t have any other expenses.
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Less variable towards to-wards failure
If you are running a business you need to consider many factors including employment, stock maintenance, dealing with customers, product and service marketing environment situation, etc.
Coming into trading failure variables are less in nature, you need to follow economic news it may help you to understand what’s going to happen in the market, and even if the market is failing the trader can make a profit by doing a short sell.
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Anybody can do trading but business?
If a person has some amount to invest the money he can start to invest in money. He just requires a Demat account to start trading. Irrespective of the place trader can invest.
When it comes to business there are many factors involved in starting a business like resource availability, labor availability, transportation availability, electricity availability political issues, labor laws, and many papers works to start business these all need to consider when you going to start a business.
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Liquidity of money
In a business, there will be a lot of investment that needs to be done which cannot be taken when you stop the business like interior designing and other first-time investments like name board, etc.
When it comes to trading you can withdraw the complete money at any time.
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Flexibility in time
There will be a lot of responsibilities that come when you start a business. You need to make sure employees are coming on time, there will be sufficient stocks available, etc. similar way you need to consider many factors to run your business successfully.
Coming to trading you need to be more active during the trading time period. If you have any function you can spend time in that and avoid trading at the same time. If you don’t trade nothing is going to happen to your money in the Demat account.
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It’s all-weather business
Trading won’t be much affected by outside scenarios in the recent corona time most businesses went into worst conditions but trading will not be affected by that much. Of course, there will be a bearish downfall will happen in most of the stocks but you can make a profit out of that using many strategies.
In business when it comes to corona times most businesses across the world closed down for weeks, many employees lost jobs many businesses closed due to lockdown, etc. these are the most unpredictable challenges which affect business.
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Expanse using money
In business, you can add more money but it’s not necessary to bring profit out of that.
In trading, if you add more money you can increase your return
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A part-time business?
You can do trading as a part-time business if you are working in any company.
In business, you need complete attention you can’t run the business part-time.
Disadvantages of trading compared with business
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Quick failure
In business, it will take time to go into failure. There won’t be a sudden failure.
In trading, failure will happen very quickly, if your strategies go wrong within a day or week you can see your money is loosing
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Trading more self-employment
In business you can with a help of an expert person if you want to start a restaurant it’s not necessarily the businessman who should know cooking. If the businessman appointed a good cook it’s enough to run a hotel business.
In trading, you need to have knowledge about the share market else the chances of losing money will be high
Traders don’t have much social stigma. Society is not agreed that this is a good way to earn money and build wealth.
Compare to trading businesses have some social status.
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Limited human interaction
In trading, traders don’t have much human interaction. It’s not necessary to meet people to do a trade
In business, you need to meet many people like customers, stakeholders, etc. and this will help to improve your personal growth
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Constant learning habits
In trading, you need to be up-to-date to know the market condition you need to be aware of what’s going to happen in the economy, etc.
In business, it’s not necessary to follow the economic condition and news.
Conclusion
Businesses have many variables to determine their success and a lot of investment require to get more profit. You need to be more attentive in business and personal time will be less compared to trading. There will not be a sudden failure in business and overnight tension will be less.
When it comes to trading, existing traders and aspiring traders should consider this as a business. Invest more money to make more returns. Adopt technologies and tools which help you to succeed in trading. To be aware more of the economic situation and make strategies according to that. Traders can earn more returns compared to businesses.