Five Pros And Cons Of Business Ownership
Do you want to be a business owner someday? Before deciding, you might want to consider the following pros and cons of business ownership.
Being a business owner can be extremely rewarding.
ImportantHaving the courage to take a risk and start a venture is part of the American dream. Starting your own business is one of the most rewarding and challenging things you can do.
Sometimes it’s fun, and other times it is emotionally draining.
WarningTaking the leap into business ownership leads you through the gamut of emotions, from exciting to terrifying, all at once.
During a sluggish economy when unemployment increases, more people decide to start their own businesses.
If you are one of the thousands of people considering this important step, make sure you are fully informed of the pros and cons of business ownership.
Each entrepreneur must weigh the pros and the cons carefully and decide whether or not the risk is worth the reward.
Business ownership is a roller coaster, never a straight line. Do you have what it takes to go out on your own? Here are some of the most important pros and cons of owning a business to think about before jumping into the fray.
Pros Of Business Ownership
Cons Of Business Ownership
As a business owner, you have ultimate control over success or failure. If you work harder, keep pushing and figure it out, you have the potential to have incredible success and feel on top of the world.
There is nobody stopping you except yourself. This can be an incredibly liberating feeling.
WarningNo one can hold you back unless you allow them to do so. You get to be in charge of whatever success you manage to achieve because you have complete oversight over the process.
As a business owner, you’re your own boss. You can’t get fired.
ImportantMore importantly, you have the freedom to make the decisions that are crucial to your own business success. You have full control, including over your income, expenses and debt.
You answer to no one and you make all the decisions.
You set your own work hours and work independently. Depending on the type of business, you may be able to work anywhere.
You choose whom to do business with and what work you will do.
You decide what to pay and whether to take vacations. For many entrepreneurs the freedom to control their destiny is enough to outweigh the potential risks.
It enables one to be involved in the total operation of the business, from sales to business operations to customer response.
ImportantThis ability to be totally immersed in the business is very satisfying to entrepreneurs who are driven by creativity and possess a “vision” of what they aim to achieve.
This level of involvement allows the business owner to truly create something of their own.
When you are able to make your own decisions about how best to operate day-to-day, this leads to creating a culture, a brand and an organization.
Much of the greatest wealth in the world was created by people who started a business from nothing. They didn’t get the money immediately, but if they hung on, kept pushing and perhaps had some luck, they became wealthier than their wildest dreams.
There is no limit to how much revenue you and your company can make.
ImportantIn spite of high financial risk, running your own business gives you a chance to make more money than if you were employed by someone else. You benefit from your own hard work.
One big enticement for business ownership is reaping the bigger financial rewards.
A tax preparer who makes $15 per hour knows the firm charges several hundred dollars for the service he provides. When an employee feels his value is worth more than the pay scale, opening his own business begins to make a lot of sense.
Owning your own business removes the income restraint that exists in being someone else’s employee.
Many entrepreneurs are inspired by the mega-millionaire entrepreneurs we see today, such as Steve Jobs, Elon Musk, Jeff Bezos, and Mark Zuckerberg.
ImportantPlaying the game of business is like combining high stakes poker with the greatest strategy game ever. Like every other great game, the more you play, the better you get.
It offers the status of being the person in charge. Some entrepreneurs are attracted to the idea of being the boss. In addition, there is the prestige and pride of ownership.
When someone asks, “Who did this?” the entrepreneur can answer, “I did.”
ImportantMany entrepreneurs love the idea that they can give back to the communities they operate by donating to charities and especially the ability to create jobs, which is particularly important these days.
You feel the bliss of someone using your product.
It is such a cool feeling when someone uses or pays for a product you created. That feels great as an entrepreneur.
It provides roots. Owning a business means settling down into a neighborhood or community.
It means getting to know people. This creates a sense of belonging. You are in a position to help others. That is a rewarding experience on its own.
Entrepreneurship creates an opportunity for a person to make a contribution.
Most new entrepreneurs help the local economy. A few—through their innovations—contribute to society as a whole.
It gives an individual the opportunity to build equity, which can be kept, sold, or passed on to the next generation.
WarningIf you’re not interested in selling your business, the goal may be to build something that can be passed down to your children to help ensure their financial future.
Follow Your Passion
By owning your own business, you have the freedom to express yourself. You can fully express who you are and what you stand for through your business, instead of dampening your spirit to toe the company line.
As a business owner, you’ll be able to work in a field that you really enjoy.
ImportantYou’ll be able to put your skills and knowledge to use, and you’ll gain personal satisfaction from implementing your ideas, working directly with customers, and watching your business succeed.
When you own a business, you get to pursue what you are passionate about.
How many people do you know hold down a job because it provides them with a paycheck? Going to work and being miserable every day is no way to live.
WarningIf you are in a position to hire others, then you can find like-minded people who share your passion. There are no boring days waiting for you here.
It should be a very conscious choice to make a living doing what you love.
Many entrepreneurs say the long hours they invest in growing their business doesn’t feel like work because they’re actually having fun in what they’re doing.
Owning a small business gives you certain lifestyle advantages. Business owners enjoy lifestyle flexibility, because they’re creating their own schedule.
Because you’re in charge, you decide when and where you want to work.
ImportantYou set your own hours, so you can prioritize other things as needed. If you want to spend more time on nonwork activities, you don’t have to ask for the time off.
If you choose to set up your business in a home office, that is your call since you are the person in charge.
Today, people can even start and run a worldwide business from the comfort of home…or the beach. This has led to the rise of the lifestyle entrepreneur.
Lifestyle entrepreneurship doesn’t necessarily have to involve travel.
It can allow you to raise your children, care for ailing loved ones, or spend time on a hobby or volunteer work. But it all starts with deciding what life you want to lead and then building a career around it.
A lifestyle entrepreneur focuses both on meaningful rewards and financial gains.
Richard Branson could even be considered a lifestyle entrepreneur, and he obviously does exceptionally well for himself.
Lifestyle entrepreneurs create businesses for the sake of working on those businesses, not in them.
ImportantThese entrepreneurs strive to create a specific lifestyle, and they build businesses that reward them with that lifestyle, while simultaneously offering valuable products and services to customers all over the world.
At work, you have a boss that is ultimately responsible for your performance and output. When you start your own business, there is no playbook.
Nobody can tell you if you are doing things right or not.
ImportantYou have to figure it all out for yourself every day. Much of the early days are trial and error, throwing lots of tactics at the wall to see what sticks.
Keep in mind that owning a business is tough.
There are difficult decisions waiting for you and you’ve got to make them. You might need to fire someone with the full understanding that you’re putting their family into a financially risky situation.
You may have to cover unexpected shortfalls.
WarningOnce your business is established, its income may be sporadic, highly variable or seasonal. Many entrepreneurs may not get a salary for years.
As a business owner, you will need to embrace uncertainty as a closed friend.
Every action you take is essentially a best guess. This can become very frustrating as you may spend time and money on an initiative, only to find out it was a total waste.
There is no guarantee of a steady paycheck.
WarningSome months you might hit your goals, some months you might even surpass them. But there will be months you don’t, so you’ll need to plan accordingly.
One of the most frustrating things about owning a business is the number of blind spots.
We can’t see into the future. We can’t see into the hearts of our employees or our customers. And we can’t see disasters coming or know how long we should hang on before we fold.
The financial resources needed to start and grow a business can be extensive. You may need to commit most of your savings or even go into debt to get started.
If things don’t go well, you may face substantial financial loss.
ImportantAccording to information published by Forbes, 80% of small business owners will see their venture fail within 18 months. Just 5% of new businesses started today, no matter what the size, will be operating 5 years from now.
Losing money is one of the biggest risks of owning a business.
WarningThere are start-up costs for materials and business establishment, as well as monthly obligations. Many business owners take out a loan when starting a business, which means they are in debt from day one.
Be prepared for an extensive need for financial resources to start, and propel your business to success.
This may include tapping into your life’s savings, mortgaging your home, or getting a loan with no guarantee of an income.
There might be times, especially in the first few years, when the business isn’t generating enough cash for you to live on.
Even if the business has been structured to minimize the risk and liability to the owner, risk can’t be completely eliminated.
ImportantFor instance, if an individual leaves a secure job to follow an entrepreneurial dream and the business fails, this financial setback can be hard to overcome.
External factors such as downturns in the economy, new competitors, or shifts in consumer demand may stall the businesses growth.
Beyond financial risk, entrepreneurs need also to consider the risk from product liability, employee disagreements, and regulatory requirements.
Don’t do your own business to work less. There is a constant feeling of guilt when you are not working.
You’ll work far more than any 9–5 job.
ImportantThe business is always on your mind, and there is always something you can do to make it better. This can be emotionally and physically tiring.
Running a business is extremely time-consuming.
WarningIn theory, you have the freedom to take time off, but in reality, you may not be able to get away. In fact, you’ll probably have less free time than you’d have working for someone else.
You will likely work nights, weekends and holidays. It’s your baby to raise by whatever means necessary.
30% of business owners work 50-59 hours per week. Another 33% work 40-49 hours per week. Just 5% of business owners work shorter hours compared to traditional employment.
The idea that you’ll have more time as a business owner is not necessarily true.
ImportantWhen someone opens a business, it’s likely, at least in the beginning, that they will have few employees. This leaves all of the duties and responsibilities to the owner.
The thought that you can take off whenever you want is not realistic.
Vacations may or may not happen, and there’s the potential they’ll be interrupted by business issues.
Dealing With The Mundane
When you start up, you’ll undoubtedly be responsible for either doing or overseeing just about everything that needs to be done, which includes all the paperwork, detail work, ordering, managing, hiring, and firing employees.
You can rapidly get stuck dealing with the mundane.
If the computer goes down, you get to deal with fixing it. If you need taxes done, you do them or hire an accountant to do it for you.
Not only do these time-consuming tasks mean longer work hours and more stress for you.
ImportantBut you also might not feel comfortable in all areas of business or dislike certain duties. You’ll likely find that you’ll eventually have to hire staff and pay their wages to operate efficiently.
You can get bogged down in detail work that you don’t enjoy.
WarningYou must deal with and manage people — employees, clients, consultants, etc. — along with their various personalities and moods. This can be quite stressful if you don’t enjoy this type of work.
Especially when you might not yet have any staff, you’ll find that you have to wear many hats.
This means your duties can include handling all the marketing, accounting, distribution, customer service, project management and supply management all on your own.
Successful entrepreneurs do the right stuff at the right time.
ImportantAn entrepreneur knows what’s important and what’s not. That’s why he or she can say yes to all the right things.
Being productive is more about energy management than it is about time management.
Failure Next Door
As a business owner, you never quite know if you are doing things right. Every action you take is essentially a best guess.
One of the biggest disadvantages of business ownership is the risk of failure.
WarningThis can become very frustrating as you may spend time and money on an initiative, only to find out it was a total waste.
Reasons your business might fail can range from lack of market need or capital to poor pricing strategies and heavy competition.
According to the Small Business Administration, only about half of all businesses will survive five years or longer. Only about one-third will be around a decade after launching.
Even entrepreneurs who go through a comprehensive planning process will never be able to anticipate all of the potential changes in the business environment.
ImportantTo increase your chances of success, you’ll need to know your market well, and stay flexible so you can adjust your business strategies to outsmart your competitors and offer what customers really want.
Increasing competition combined with an unwillingness to change may result in a loss of customers.
Risk management means a business must continually reassess its performance, refine its strategy, and maintain strong, interactive relationships with its audience and customers.
These owning a business pros and cons show that it can be a pleasurable, rewarding experience. There are also some difficult steps waiting for you on the road ahead if you start a business.
There are benefits to starting your own business, but there is also the possibility it may not succeed.
ImportantThat is why it is always a good idea to make a fully informed decision when thinking about becoming a business owner.
Before jumping “all in” with a new business venture, you can test the water with a side hustle.
WarningA side hustle is when you start a business in your spare time – usually, in the evening and weekend hours. A side hustle is a good way to gauge the work involved in running your desired business on a smaller scale.
While business ownership has its risks, there are also several strengths of owning a business.
Having full responsibility means you’re the boss. You have freedom in how you run the business and the ability to choose the hours that work for you.
If you do things well, you can also reap all the financial benefits from your business since there’s no limit to how much you can profit.
As you get more established, gain steady customers and hire help, you’ll likely be less stressed and get to enjoy the major benefits of business ownership.
Hundreds of thousands of people just like you have succeeded in starting their own businesses. Are you ready to rise up and do what it really takes for the reward of financial freedom? Please let me know in the comments below.