Becoming a small business owner can be one of the most rewarding and challenging endeavors you can undertake.
It can lead to a huge financial benefit, but it is also not without serious risks.
You’ll have complete control over every aspect of your business but that also means that the weight of the world is on your shoulders.
You’ll be able to build equity as your business grows that you can cash in on if you decide to sell. It can also be passed on to your children. However, that also means putting yourself at financial risk.
Here’s a look at 10 pros and cons of being a business owner.
Pros of being a small business owner
Independence and control
One of the biggest advantages of being a small business owner is that you have complete control over your life.
It’s up to you when you work and how hard. You can put in your hours and then take a vacation when it makes sense for you and your family.
It’s your business so you can shape it however you like. You can decide which products to sell, who to hire and where to focus your energies for the maximum amount of growth.
This can be an incredibly liberating feeling that you aren’t likely to find anywhere else if you’re working for someone else.
Financial gain
No doubt there is some risk in starting your own business. But if you stick with it and have an viable idea, there is a significant opportunity for you to achieve your financial dreams because you and you alone will be reaping the benefit of all your hard work.
You can potentially make a lot more money than anyone who is working for someone else.
Don’t forget that you own everything you build so when you decide to sell the business – whether to pursue another opportunity or to retire – you also reap all the benefit of the sale.
Equity
You’re building equity as you grow your business. It’s all yours.
This equity can be used to finance new business ventures or can be cashed out when you want to sell the business.
It’s something you children can inherit.
Owning a business lets you build equity in a way that working for someone else doesn’t allow.
Prestige
Owning your own business gives you the prestige of knowing that many people out there love your product and derive significant enjoyment from your operation.
Many entrepreneurs get addicted to the feeling of seeing the satisfaction customers get from using their products.
You also get to enjoy the growth of your employees as they grow as your business grows.
Passion and Creativity
One of the benefits of owning a small business is that you can pursue your dreams, something that the average person who works for someone else never gets a chance to experience.
You can pour your own passion and creativity into the business you create – its products, employees and overarching goals.
It’s hard to put a price on that.
Cons of being a small business owner
Possible Income Instability
One of the main cons of owning your own business is that you could face some income instability.
Starting a business can be expensive. You need to cover loan payments, rent, employee wages, etc before paying yourself.
Some entrepreneurs don’t see a serious paycheque for years. That is a lot of missed wages until your idea is successful.
Potential Financial Risk
There is no doubt that starting your own business can be a risky endeavour.
According to Forbes, about 80 percent of small business are still operational after one year but that number drops to around half for those still going at the five-year mark.
Only about one in three businesses make it ten years.
You’re the one who will have to put up the equity to launch your idea and you’re the one who will suffer the financial consequences if it fails.
Time commitment
Although you have flexibility in your schedule, you’re probably going to work far more hours than the average 9-to-5er.
Many entrepreneurs feel a sense of guilt if they aren’t always working on their business. There are always things you can do to improve the operation.
This can be very emotionally and physically draining.
Failure feels very bad
Putting all your energy into a venture and watching it fail can be incredibly devastating for you and your family. It can mess with you physically and mentally.
You’ll have to put up your family’s money to launch the business so that’s a lot of pressure for success.
It’s not unheard of to find yourself in a depression if it doesn’t work out.
Lack of guidance
You’re free to pursue your business as you see fit but that also means that you can sometimes feel like you have a lack of guidance.
There is no boss to turn to for advice. You’re the boss.
Every business is different so there is no playbook and you’re going to have to figure things out as you go. It will be a lot of trial and error.
It’s up to you to make sure everything works.
You can lessen this downside by reaching out to trusted business contacts or mentors who can provide some insight into how to move forward.
Conclusion
Starting your own business can be an incredibly rewarding experience, both financially and personally as you watch your venture grow and succeed.
A successful business idea can let you reap financial benefits unheard of to the average person working a 9 to 5 job.
You will have complete freedom to put your passion into your business – hiring the people you want and selling the products you like. You’re your own boss.
However, you’ll have to put in long hours and there is certainly a potential financial risk. It will be a huge time commitment.
Owning a business can be a challenge but it’s an incredibly rewarding venture for anyone who has the drive to try it.
