The Costs and Benefits of Being a Small Business Owner
If establishing your own business occupies your thoughts lately, you have surely started reading through many articles on that. Like with everything in life, this decision has both positive and negative sides.
Okay, perhaps those are not the best words to use, but what we are trying to say is that some things will be smoother, while the others will have more obstacles.
However, the fact that you are considering being your own boss is surely a great and brave decision. Not everybody is capable of that, nor every person is willing to fight with the windmills.
Therefore, do your best to start the whole thing with high aspiration and a thorough, smart plan.
Here in our article, we shall try to give an overall insight into all the costs and benefits of being a small business owner. After learning all the aspects involved in this project, so to name it, you will be able to see whether this is the right option for you.
BEFORE YOU GET DOWN TO (YOUR OWN) BUSINESS
It is very important to ask yourself a few questions which will significantly help you get a better understanding of what being on your own in terms of business means. Like we said, not everybody is capable of running their own venture. There are many reasons for that.
Some people haven’t got a clear idea of all the things that go along with this decision, the others lack the strength to be persistent.
For that reason, you should make a small questionnaire for yourself, with the idea to help you test yourself prior to making any actual steps.
Here are the questions to answer:
- Are you ready to operate independently?
- Do you think you are the person who can make all the decisions and shoulder all the huge responsibility?
Even though people will instantly and unconsciously answer “Yes!” because they want to start the whole idea in a positive manner, this question is actually a difficult one. There are so many layers beneath the first one that meets the eyes.
When you work in a company, you have certain responsibilities which are limited to a few aspects. The final word and important management decisions are up to big bosses. However, being on your own makes you the employer and the employee ate the same time.
You become the one in charge of all the approvals and refusals. No one tells you what to do, you are the person responsible for all the failures and successes.
This is where you need to be honest with yourself and give the most genuine answer you can. It’s not a shame admitting that you are not ready for such a thing. But if you believe you are, then do your best to show that at its best.
- There are many sacrifices which go along with starting a small enterprise- are you willing to make them?
- Are you ready to work really hard?
Eight to five, Monday to Friday is something you will have to forget. Without the intention to sound rough, if you want to start your own venture, the start-up phase requires you to be omnipresent. No more vacations and days off, at least until the business is stable and big enough you can put someone in charge while you are away.
This means you will have to be the manager, worker, bookkeeper and all the other roles required. For one who is serious about establishing his/her own venture, limiting to certain working hours could be considered immature in terms of business. But not only immature, but you will actually see that it is impossible.
This is the point particularly important to those with family. If you think you can make a good balance between this, then you are indeed a step closer to becoming your own boss.
The best way to make the family life suffer less is to involve the members in the business. That will bring you closer together. Moreover, splitting the duties is certainly of great help.
- The path to success of a new enterprise requires self-discipline and self-confidence- have you got them?
No matter how good and thorough a plan is, still very few new ventures manage to become successful overnight. It’s a complex procedure, which sometimes requires a few months, but it can take up to a year or maybe two.
So, what you need to have is lots of patience, be disciplined and trust in yourself. Expect failures and setbacks, they are an integral and expected part of every new enterprise. Let them motivate you to be better, to work harder and think positive thoughts.
This sounds so idealistic and simple, but in reality, people get easily discouraged. Everybody is happy when they feel the success, but dealing with less positive sides of being a newbie is the harder part.
ARE YOU READY?
These are the most common but questions of vital importance for all those who are interested in starting their own business. When answering them, be honest, because it’s all about you after all.
Think of establishing a venture as a marriage. It’s a full-time commitment which requires a strong desire and constant work to keep in in a good shape. Expect lots of ups and downs, be prepared for numerous surprises, but keep on fighting. That’s how the procedure looks like.
If the answer to the questions above is positive, then congrats! You have the necessary characteristic of an entrepreneur and you are ready to make your business idea come true. Let the burning desire and strong will be your motivators, and your dreams will be transformed into reality.
Overnight success is not a rule, it’s an exception, and with that, on your kind, the whole time, strive to be better and better as the days go by.
Without further ado, we shall now list all the costs and benefits of being a small business owner.
THE PERKS OF ESTABLISHING A SMALL BUSINESS
Believe it or not, this one is at the top of the list of reason why people get motivated to start running their own business. As the years go by, people get tired of other people bossing over them. During a longer period of time, and if the bosses are some too unfair, this really turns into a nasty headache, and becomes a motivation killer.
Making independent decisions gives great freedom. You control the destiny on your own, and that’s what becomes the main inspiration and a thing that pushes you forward from day to day.
For the majority of people who are serious about establishing their own business, this freedom and independence outweigh all the potential risks, making one stronger and more eager to strive for better and bigger things.
Going hand in hand with the previous perk, it makes you the one involved in all aspects of a business. You are the one who is in the beginning, middle and at the end of every process. When you have a vision, and you go step by step fulfilling all the phases from the initial to the final one, you are allowed to feel powerful.
This provides a great amount of satisfaction as you are the one who controls everything. It is very important to note the difference between this type of control and the one that bossy bosses like to have over their employees. Here you control your own idea, not other people, which makes the whole thing fair.
You get to decide when is the right moment to push harder and when you can allow yourself a bit slower tempo. Be driven by passion and creativity, and that will have a positive reflection on the overall project.
The third positive side that logically follows these two above-mentioned is the prestige. That feeling of satisfaction when you can say “I did it!” is indeed incomparably fantastic. It gives you lots of pride, which is also a strong motivating factor for those who are in the initial phase of starting up a business on their own.
Of course, don’t let this stray your way in some daydreaming. The feeling of being successful is an easy one to deal with, but knowing what to do when a failure (or more of them) occur is a bigger virtue. That’s where the prestige shows its true face.
Being able to say “I did it!” even if a decision turns to be the wrong one is what makes you a truly mature businessman. The faults are there to make us become better, after all.
This is a factor which has multiple layers. To start with some benefits you as an individual have, you are the one who creates chances and opens the door for new ideas and people. The first phase is a self-contribution, to you as a person and your fresh business.
If it turns to be a successful one, it expands and becomes an opportunity to boost the local economy. What comes after is an idea powerful and innovative enough to contribute to society.
So, be brave to try things out. A trial results in two outcomes- success and failure. You cannot be sure which of these two will happen until you try. That’s what opportunities are for.
5. Financial Gain
Just to make one thing clear, it’s not like you will become a billionaire overnight. As a matter of fact, in the initial phase, you should be happy if no major financial losses occur. Maintaining the balance is what matters a lot when you are establishing your own business.
However, being your own boss, certainly offers a bigger possibility to be significantly awarded in terms of financial achievements. There are no income restraints such as those which exist when you work for someone. All that money that comes as a result of your decisions and investments is entirely yours.
Once you discover what is the best way to boost the business and make more profit, invest all the strength into turning that into reality.
6. Close Relationship
This benefit is the one that stands out compared to a large business.
Some people enjoy the close and friendly relationships which their business partners. That way they feel more relaxed to express the ideas and thoughts and cooperate with other people.
Digital communication makes this even easier and available. Moreover, it makes easier for a newbie to reach a greater number of customers and consumers.
However, be careful as this can act as a double-edged sword. Some people are simply unable to make the difference between professional and private relationship and establish the safe limits. Don’t let the closeness work against you.
Try to find the balance where you will be able to maintain a friendly approach with associates, but don’t become overly familiar and unnecessary unofficial.
Running a small business gives an individual a chance to build equity. It’s a multi-beneficial thing because it can serve for several purposes. You can keep it, sell or pass it on to the next generation.
Once a person manages to run a successful business on his/her own, it’s not so uncommon that after a while one decides to sell it and give a chance to the next venture. Having a business on your own opens multiple possibilities, and whichever you decide to try out, all the financial benefits remain exclusively yours.
8. Vision Becomes Reality
Entrepreneurship is a great chance for a person to turn their dreams and visions into reality, make them visible. It’s a sort of daily reminder that one is living his/her dreams.
Of course, this has no intention to sound like a fairy-tale, far from that. But the fact is that when one manages to establish a business on his/her own, one is actually living the ideas.
You should use this as a strong motivation and encouragement. There’s no better way to push the limits and explore than with prosperous and creative ideas. This brings personal growth, and if the idea is big enough, it expands to a wider field.
9. Gaining New Experience and Expanding Knowledge
Once you become a boss on your own, you are the one who is in charge of every aspect of the business, at least in the beginning.
This means that you will have to learn a lot because there will be many new things that follow the development of your new enterprise.
Moreover, it will boost your communicational and decision-making skills.
The new experience gives you better insight into things you didn’t have to worry about when you were just an employee. This is the moment when you begin to understand time-costs of money, and therefore you learn to appreciate and manage them better.
The previous experience as an employee gave you the chance to see one side of the medal, whereas being a self-employed brings new insights.
10. The Identity of Higher Value
No matter how fantastic a job title may be, still people will somehow look you with a bigger dose of respect when you say that you are an entrepreneur. People get interested in your project and are willing to share various stories from their own “battle”, particularly if they are also business owners.
When one is identified as an entrepreneur, many doors open and professional horizons significantly expand. The more your business develops, the more chances appear, and that certainly provides your identity with a constant upgrade.
Like we mentioned earlier in our small questionnaire when one decides to become an entrepreneur, it affects private and family life a lot.
On the other hand, it’s not always necessarily in a negative way. Having the freedom to arrange tasks on your own gives you numerous chances to adjust things consciously.
This means you get to choose the moment to scale down or scale back your business if the occasion requires you to do so. Sometimes you will have to make some important personal decisions which are not related to business.
That’s the moment to put the business “on hold” until you finish what you have to, and then carry on where you paused.
The ideal level of functionality would be the one where a person gets to grow with his/her business, and business gets to grow with one’s personal life.
THE LESS POSITIVE SIDE OF BEING A SMALL BUSINESS OWNER
This seems to be among the greatest fears for a person establishing a business. No matter how thorough and devoted you manage to plan something, still, you cannot eliminate risk totally. There’s no button to turn the option off. And the risk can come from multiple sources.
Sometimes a person leaves a secure job to give the chance to the independent entrepreneurship, and he/she fails. This can be really hard to overcome, but it’s not the end of the world.
The best way to minimize them is to try to list all the potential risky situations you can think of. That way at least you be prepared to react fast and on time, knowing what to expect. There’s always a way to fight the monster called risk, but it requires lots of strength.
What goes hand in hand with the above-described monster is this shadowy and gloomy place called uncertainty. In some ideal world, the best would be if we could predict everything, particularly when establishing a new business. Unfortunately, we cannot.
On the other hand, comprehensive planning may be of help, as you will at least make a list of things that are hard to calculate in advance. Like with the previous one, you cannot make it disappear, but you can learn how to react.
The fact that one is a boss, manager, worker, bookkeeper, and whatnot at the same time is really a time-consuming occasion. This means working 24/7 with no day off, no vacation. People with families can have lots of doubts about whether a business on their own is the right choice since it affects a private life a lot.
However, do know that it doesn’t last forever. It’s only a phase, the initial one, and it is so expected that it’s the most demanding one. Every second you invest in the beginning pays off a lot later, so let that positive aspect be your motivation to push forward.
No matter how small a business is, still you need to have an initial capital to make it run. People usually use retirement funds or personal savings for this purpose, which directly impacts family finances. This is a tough decision to make, not everybody has the guts to do so.
The best would be to make a financial balance. Leave some money aside, for family purposes, and let it remain untouched. The other half of it you can use for business purposes. If it fails, you won’t end up with no money in your savings. In case of success, the money you earn will be the one to invest further.
WHY DO SOME PEOPLE FAIL TO START THEIR OWN BUSINESS?
As you can see, the benefits definitely outnumber the disadvantages. We really did our best to list as many aspects as possible, so that you could make the decision easier. Knowing all the good and bad aspects certainly help in the planning phase.
However, even though people are aware of all these aspects, some of them succeed, while the others fail. How’s that? What is it that some people manage to deal with and make success, and the others cannot?
It gets better and easier with the time, but the initial phase is without any doubts the most difficult one. Whoever manages to survive this level with no major losses will turn the odds in his/her own favor.
On the other hand, mistakes help us learn some valuable lessons what not to do in the future and how not to behave. Here are some of the most common reasons some projects deemed to be a failure:
Not Enough Planning
We mentioned making plans several times as a factor of vital importance. Not just any plan, but a thorough one, as fulfilled with details as possible. Without it, you cannot expect to make a success. How can you be sure where would you like to get, if you haven’t set a clear goal?
Lack of Outsourcing and Delegation
In the beginning, one has to be on his/her own, but as time goes by, it’s quite normal to assign some tasks and duties to some other people. Don’t be afraid of that, otherwise, you will be eaten by your own business.
A Fear to Adjust, Change and Develop
Even though you have all the aspects well-planned, still the objective situation is not something you can always predict. Therefore, you will have to find a way to make your plan work, even if the conditions are completely different from the ones you expected. You need to learn to adapt. People who don’t are left behind, with no success. Think forward, don’t be afraid to be innovative.
Disbalance Between the Functional Campaign and Invested Money
In order to bring ideas to life quickly, people invest in various online campaigns and advertisements.
By this, we mean both time and money. But, sometimes a simple word of mouth brings more new consumers than a fancy, expensive campaign. If you can evaluate this, and find an adequate measure, you will be a step away from failing and a step closer to success.
Unaware of Cash Flow
You must literally track every single coin if you want to have a clear picture of your incomes and outgoings.
No one says that this will bring you a fortune overnight, but losing track of the cash flow certainly makes your small business vulnerable. In the beginning, it’s all your duty, but as the business grows, you will be able to afford a professional to monitor the finances.
Wrong Questions, Wrong People
You must, at the same time, know what you know, and know what you don’t know.
Sounds like a brain wrench, but as soon as you make these two aspects clear, you will be able to define a very important thing. You will know what are the questions you have to ask, and who are the people who can give you the answers.
Don’t waste time on the wrong people and wrong answer, because that leads to failure.
Even though starting a business has several disadvantages, positive sides are the ones that motivate people to try their luck. No one says that it’s an easy journey, but it’s definitely worth a shot.
We have listed all the costs and benefits of being a small business owner, yours is to go through them patiently. Be honest to yourself, because only that way you increase the chances to succeed.
We wish you lots of luck and courage in your new personal (ad)venture!