Have you ever wondered what makes the risky business of entrepreneurship so enticing for immigrants? As an immigrant entrepreneur who also happens to be the child of two immigrant entrepreneurs, I've noticed that the mindsets, habits and values practiced by immigrants largely contribute to their overall success as entrepreneurs.
After all, 25% of entrepreneurs and business owners in the United States are immigrants, and that number is steadily increasing.
As I reflect back on the lessons I've learned from my parents while growing up, watching them run their businesses in a new country and now also running a successful business of my own, I pinpointed a few of those "immigrant lessons" that were most crucial to my success and have delved deeper into them here.
Hard work is non-negotiable
From a young age, I learned that hard work is non-negotiable. When I was four, I would watch my parents load up our old Toyota pickup truck with knick knacks to sell at the flea market. This was our Saturday family activity. Wake up at 4 am, load the truck, drive to the market, set up and sell until the hot sun left sun spots on our tanned cheeks.
Hard work is non-negotiable because there is no back-up plan for first generation immigrants like my parents and myself. Moving back home for us was not an option. And besides, who would pay for the plane ticket?
I, along with my parents immigrated from China to Guam (a U.S. territory) when I was 2 years old. One month after I turned 22 years old, I moved to New York City. I freelanced as a digital marketer while working 12 hour days at a startup. This meant my days began at 7 a.m. with client meetings and ended past midnight. Weekends were for freelance work.
Rise above circumstances
My parents worked hard so we could rise above our circumstances. We were first generation Chinese immigrants living in Guam with no savings and no backup plan. My mom's engineering degree was not valid in the U.S. They worked three jobs to make ends meet, which meant that I hardly saw them together at the same time. My mom would take me to her house cleaning jobs and I would admire the vanity tables of the wealthy women.
Growing up, my mother said, "Summers are when you play catch-up so when school starts you are not behind." Thus, my summer days were packed with English and SAT tutoring sessions, vocabulary memorization, calculus worksheets, piano practice and more. Until around sixth grade, when I became more fluent in English, school work was like chicken scratch. I didn't understand it. I don't remember getting extra assistance from my teachers and I certainly don't remember how I graduated grades one through five. My parents had to work to cover the additional cost of tutoring and I had to forego play time with my peers to play catch-up with academics. That additional hard work got me into a summer advanced program at Princeton University, the Aspen Music Festival and then a triple major at Williams College.
No one is truly risk-averse. It's just a mindset. Being an immigrant, I had nothing to lose and everything to lose at the same time. Nothing to lose because I was starting from the bottom. The best of life was in front of me. Everything to lose because if I failed, I was the only person who could pick myself back up. With no financial back-up plan, I had to "make it." Immigrants rise above circumstances each and every day. We see a possibility or opportunity and think to ourselves, "we can get there."
Harness a quiet strength
From a young age, immigrant children assume adult responsibilities. I remember explaining what a field trip release form was to my mother and eventually signing all of them for her. Any school related activity that required a parent's signature ended with up being poorly signed by me. This continued into high school when I had to fill out financial aid forms for college, peruse tax documents, and make sure my parents weren't being scammed in their real estate paperwork.
Heading into college, my sense of self-sufficiency felt more evolved than those around me. When holidays came and roommates went home, I burrowed myself in my dorm room to prevent getting into trouble for staying on campus. I propped first floor windows open with books to let myself into my dorm building because campus security shut off swipe card access. I remember thinking how resourceful I had become.
Through these setbacks, I learned to harness a quiet strength within me to propel me forward. Not a strength that came from whispering self-affirmations, but one that was required for the survival of my American dream. Today, I use it to negotiate client contracts, command board rooms and champion other female entrepreneurs.
Resilient Optimism & Courage
We all experience small changes in our environment on a daily basis. Some go through big moves in their lives and career pivots. But immigrants experience the unfamiliar in every part of their daily existence.
They are uprooted from a place of familiarity and plopped down in an unknown, and at times unwelcoming, environment. Young children experience this going to school for the first time. As adults, we experience this with job changes, moving to a new city and even trying a new hobby or club. The unfamiliar can be stressful no matter the scale of the event. Often times, we have a say in the daily changes in our lives, but as an immigrant, everything becomes unfamiliar overnight.
Immigrants with a language and cultural barrier have to do what they are afraid of every day in order to survive. Communicating with the cashier could make going to the grocery store a dreaded experience. They combat difficulties with courage and optimism. Having already developed this increased sense of courage and optimism benefits me as an entrepreneur throughout the many decisions and risks that need to be taken when growing a business.
Coming from a low-income Chinese immigrant family, I was grateful for the little things like fresh fruit in the school cafeteria to bigger things like studying at the top liberal arts college in America. I was grateful to be among the brilliant minds of my professors. I was grateful for computer labs with rows and rows of computers any student could access. The hard work my parents and I put into our choices paid off and we get to reap the benefits.
I truly believe gratitude is one of the most important traits to develop for success in entrepreneurship. While there is always another goal or target that needs to be hit, and even though the perceived danger of failing is everywhere, the key to keeping a clear, centered mind that can make intelligent decisions is keeping yourself present by being grateful for everything you already have, no matter how large or small.
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Business entities can be defined as the corporate, tax and legal structures which an organization chooses to officially follow at the time of its official registration with the state authorities. In total, there are fifteen different types of business entities, which would be the following.
- Sole Proprietorship
- General Partnership
- Limited Partnership or LP
- Limited Liability Partnership or LLP
- Limited Liability Limited Partnership or LLLP
- Limited Liability Company or LLC
- Professional LLC
- Professional Corporation
- Nonprofit Organization
- Cooperative Organization
As estates, municipalities and nonprofits do not concern the main topic here, the following discussions will exclude the three.
Importance of the State: The Same Corporate Structure Will Vary from State to State
All organizations must register themselves as entities at the state level in United States, so the rules and regulations governing them differ quite a bit, based on the state in question.
What this means is that a Texas LLC for example will not operate under the same rules and regulations as an LLC registered in New York. Also, an LLC in Texas can have the same name as another company that is registered in a different state, but it's not advisable given how difficult it could become in the future while filing for patents.
To know more about such quirks and step-by-step instructions on how to start an LLC in Texas, visit howtostartanllc.com, and you could get started with the online process immediately. The information and services on the website are not just limited to Texas LLC organizations either, but they have a dedicated page for guiding fresh entrepreneurs through the corporate tax structures in every state.
Sole Proprietorship: Default for Freelancers and Consultants
There is only one owner or head in a sole proprietorship, and that's what makes it ideal for one-man businesses that deal with freelance work and consulting services. Single man sole proprietorships are automatic in nature, therefore, registration with the state is unnecessary.
Sole proprietorships are also suited to a degree for singular teams such as a small construction crew, a group of handymen, or even miniature establishments in retail. Also, this puts the owner's personal financial status at jeopardy.
Due to the fact that a sole proprietorship entity puts all responsibilities for paying taxes and returning loans, it directly jeopardizes the sole proprietor's personal belongings in case of a lawsuit, or even after a failed loan repayment.
This is the main reason why even the most miniature establishments find LLCs to be a better option, but this is not the only reason either. Sole proprietors also find it hard to start their business credit or even get significant business loans.
General Partnership: Equal Responsibilities
The only significant difference between a General Partnership and a Sole Proprietorship is the fact that two or more owners share responsibilities and liabilities equally in a General Partnership, as opposed to there being only one responsible and liable party in the latter. Other than that, they more or less share the same pros and cons.
Registration with the state is not necessary in most cases, and although it still puts the finances of the business owners at risk here, the partnership divides the liability, making it a slightly better option than sole proprietorship for small teams of skilled workers or even small restaurants and such.
Limited Partnership: Active and Investing Partners
A Limited Partnership (LP) has to be registered with a state and whether it has just two or more partners, there are two different types of partners in all LP establishments.
The active partner or the general partner is the one who is responsible and liable for operating the business in its entirety. The silent or investing partner, on the other hand, is the one who invests funds or other resources into the organization. The latter has very limited liability or control over the company's operations.
It's a perfect way for investors to put their money into a sector that they are personally not experienced with, but have access to people who do. From the perspective of the general partners, they have similar responsibilities and liabilities to those in a general partnership.
It's the default strategy for startups to find funding and as long as the idea is sound, it has made way for multiple successful entrepreneurial ventures in the recent past. However, personal liability still looms as a dangerous prospect for the active partners to consider.
Limited Liability Company and Professional LLC
Small businesses have no better entity structure to follow than the LLC, given that it takes multiple good ideas from various corporate structures, virtually eliminating most cons that are inherent to them. Any and all small businesses that are in a position to or are in requirement of signing up with their respective state, usually choose an LLC entity because of the following reasons:
- It removes the dangerous aspect of personal liability if the business falls in debt or is sued for reparations
- The state offers the choice of choosing between corporation and partnership tax slabs
- The limited legalities and paperwork make it suited for small businesses
While more expensive than a general partnership or a sole proprietorship, a professional LLC is going to be a much safer choice for freelancers and consultants, especially if it involves risk of any kind. This makes it ideal for even single man businesses such a physician's practice or the consultancy services of an accountant.
B, C and S-Corporation
By definition, all corporation entities share most of the same attributes and as the term suggests, they're more suited for larger or at least medium sized businesses in any sector. The differences between the three are vast once you delve into the tax structures which govern each entity.
However, the basic differences can be observed by simply taking a look at each of their definitive descriptions, as stated below.
C-Corporation – This is the default corporate entity for large or medium-large businesses, complete with a board of directors, a CEO/CEOs, other executive officers and shareholders.
The shareholders or owners are not liable for debts or legal dispute settlements in a C-Corporation, and they may qualify for lower tax slabs than is possible in any other corporate structure. On becoming big enough, they also have the option to become a publicly traded company, which is ideal for generating growth investments.
B- Corporation – the same rules apply as a C-Corporation, but due to their registered and certified commitment to social and environmental standards maintenance, B-Corporations will have a more lenient tax structure to deal with.
S-Corporation – Almost identical to a C-Corporation, the difference is in scale, as S-Corporations are only meant for small businesses, general partnerships and even sole proprietors. The main difference here is that due to the creation of a pass-through entity, aka a S-Corporation, the owner/owners do not have liability for business debt and legal disputes. They also are not taxed on the corporate slab.
Cooperative: Limited Application
A cooperation structure in most cases is a voluntary partnership of limited responsibilities that binds people in mutual interest - it is an inefficient structure due to the voluntary nature of its legal bindings, which often makes it unsuitable for traditional business operations. Nevertheless, the limited liability clause exempts all members of a cooperative from having personal liability for paying debts and settling claims.
This should clear up most of the confusion surrounding the core concepts and their suitability. In case you are wondering why the Professional Corporation structure wasn't mentioned, then that's because it has very limited applications. Meant for self-employed, skilled professionals or small organizations founded by them, they have less appeal now in comparison to an LLC or an S-Corporation.