The Benefits and Drawbacks of Running a Small Business
Most of us have considered starting and/or owning a business at some point. We savor the concept of being our own boss, earning far more money than if we worked for someone else, and having a secure career (Ex. No one can fire us). All of those seem like excellent motivations to start your own business.
Around the world, there are more than 400,000,000 business owners, or one out of every 18 people . What then is the draw that would allow for such figures?
Beginning with money According to entrepreneur.com, an entrepreneur makes an average compensation of $55,000(
N23.4million) while working an average of 66 hours per week. In some low-cost places, that is a respectable wage, but in the majority of the United States, it would be difficult to make ends meet. Therefore, even while money is a factor, it could not be the main motivation for starting your own firm.
Benefits of Owning a Small Business
You have complete control over everything as a business owner, including your revenue, expenses, and debt. All important choices are made by you. You don’t worry about how office politics will play out.
You can choose your own schedule, as well as the time and place you wish to work. If spending time with your family is vital to you, working from home and cutting out the commute can be the best option. You may fully express who you are through your business. Owning your own business can provide the lifestyle flexibility needed to balance having a family with a successful profession, especially for women. More than 11.6 million companies run by women have annual sales of nearly $1.7 trillion. Because there are few work options for millennials who grew up with computers and because they are more interested in lifestyle than money, they have turned to entrepreneurship. Millennials are still quite successful in this pursuit, though, with 80% reporting earnings, which is 3% greater than the national average.
There is no cap to the amount of revenue and income your firm can generate, provided you have a strong tolerance for financial risk; additionally, having your own business allows you to reap the rewards of your own labor. You may decide to use investor funds rather than your own to raise and leverage capital for your new company.
You’ll work in a profession that, hopefully, you genuinely appreciate as a business owner. You can create something that might end up as a part of your lasting legacy, and you can make money by using your talents, hobbies, and passions. Ultimately, putting your ideas into reality, interacting with clients, and seeing your business grow will provide you personal joy (along with a healthy dose of hard work and a little luck).
Nearly all business expenses are normally deductible, which lowers a company’s taxable income. Most tax regulations are designed to reduce the taxes paid by business owners. Gains frequently fall under the more favorable long-term capital gains rates.
The best part is that when you run your own business, you can get up on Mondays smiling and ready to work rather than dragging yourself into someone else’s.
Small Business Ownership Drawbacks
So why would we ever work for someone other than ourselves with all of these alleged advantages? Let’s examine a few drawbacks of beginning and running a small business.
Risk-takers by nature are entrepreneurs. To establish or expand your firm, would you be willing to take on debt or invest a lifetime’s worth of savings? And if something goes wrong and you suffer a significant financial loss, do you have a backup plan (or another source of income) in place? Will you quit your job to start your own business, and if so, will you be able to support your lifestyle and pay your bills? Unfortunately, four out of every five enterprises fail during the first five years. Positively, two-partner startups are often the most successful.
You “wear many hats” as a business owner since you are the public face of the company. There is a never-ending list of issues to handle, including too many to mention: competition, staff, invoices, equipment malfunctions, customer issues, supplier shortages, and late deliveries. Since you are the business’s owner, you are also liable for the health of your workers, and you may even need to fire some of them. Finding quality candidates to work for your firm will be challenging even in a healthy economy with low unemployment. Are you in good enough health to overcome difficulties and do you have your family’s support to do so? Can you continue through these hardships so that you can succeed?
People frequently launch enterprises in an effort to free up more time for family time. Although you are free to take time off in theory, you might not actually be able to do so. In actuality, you’ll likely spend less time at leisure than you would if you were working for someone else. A forty-hour workweek is a misconception for many entrepreneurs and small business owners; we already mentioned the normal 55-hour workweek of a business owner. You could have to work on the weekends, holidays, and at odd hours. And while we’re all used to instantaneous communication, cell phones, iPhones, Internet-connected laptops, and iPads have made life more difficult, leading many small company owners to regret being accessible around-the-clock. It might not be possible to have a typical “day off,” at least initially.
Even with the greatest of intentions and thorough preparation before starting your firm, numerous unforeseeable factors may have a detrimental effect on it. A sudden geopolitical incident might cause the economy to contract quickly, which would lead to consumers cutting back on discretionary spending. A potent rival can invade your market and steal your customers from you. If a significant contributor or company partner becomes ill, you might find yourself with new obligations. Unknowns can change at any time. The unknown aspects of such scenarios might keep you up at night, but working and planning with your local Small Business Development Center will help you mitigate such circumstances.
According to the SBA, around 250,000 new businesses are launched each month in the US, despite the difficulties and higher than even possibilities of failure. You might experience a great deal of personal joy from knowing that small businesses benefit society by generating jobs in their neighborhoods and acting responsibly as corporations.
Some businesses and industry leaders got their start with a straightforward homegrown concept that revolutionized the industry. Consider companies like Facebook or Microsoft, as well as innovators like Disney, Zuckerberg, Bezos, and Gates.
Entrepreneurship is a calling for certain people. You have the power to create the life of your dreams.