Owning a small business comes with the opportunity for freedom, satisfaction, and success. However, there’s a flip side to that in the form of hard work, difficult sacrifices, and high levels of financial risk. But let me tell you…it’s absolutely worth it!
The Pros and Cons of Owning a Small Business
Let’s take a closer look at the pros and cons of owning a small business:
When you own a small business, you’re your own boss. You make your own decisions as to:
- how your business grows,
- what services or products you provide, and
- what you should earn.
You can decide when to take a vacation or not. A small business owner doesn’t have to worry about an employer looking over their shoulder and saying that something’s not being done right.
Con: Increased Risk
As many as 80% of small business owners see their ventures fail within the first 18 months of operation.
- One common cause is that compliance with regulatory requirements is more expensive than most people think.
- Another unfortunate reason for this high rate of failure comes down to bad business practices.
- But sometimes, the threats to business success are not the fault of the owner.
One way to protect against these risks is to examine the different types of commercial insurance policies that are available. You could find one that fits your company’s needs in order to have a safety net in the event your business is temporarily disrupted.
Pro: Financial Advancement
If your business does survive and make a small profit in its first year, you could be on track to make a lot of money once it’s established. However, if you work for someone else, you’ll be stuck with limits as to how much you can earn.
If you’re an entrepreneur, you have more chances to succeed and to build wealth. Some of the richest people in the world started out as small business owners.
Con: Time Requirements
You may have the right to set your schedule, but it will mostly be for single requirements like family responsibilities or medical appointments. You’ll often need to spend long hours making sure your business succeeds.
Most small business owners work between 40-60 hours each week, with only a small number working less than they used to. This can put a lot of strain and stress on yourself and your relationships with family and friends.
Pro: Building Equity and Roots
It’s not unusual for small business owners to set up a business, lead it to success and sell it later on.
- The equity that you’ve built up over the years can be used in setting up a new venture.
- You can also pass on your equity to your children and grandchildren if they’re interested in taking over.
- In addition, you’ll be planting roots into your local community and helping others out. This feeling of doing the right thing can make all the struggle feel worth it!
Con: Hard Decisions and Distractions
Once you become a business owner, you may need to turn down family or friends who want a job with your business. If an employee isn’t doing their job well, you may need to make the decision to fire them even though you know it puts them in a hard place.
On top of the decisions, you have to overcome distractions that eat into your time. This is especially true if you plan to work from home and need to manage your family life.
Ultimately, the decision is yours. If you’re willing to overcome the potential risks and setbacks that can come from owning a small business, there’s certainly a chance that you’ll succeed.
Are you interested in owning a small business? Why? Why not?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.