By Kimberlee Leonard Updated January 28, 2019
Taking the leap into business ownership leads you through the gamut of emotions, from exciting to terrifying, all at once. Before finalizing your decision to opening your own business, take the time to review the consumer need for your product or services, as well as your ability to fulfill that need. At the same time, consider the advantages as well as the disadvantages of owning your own company.
Advantage: FinancialRewards
One big enticement for business ownership is reaping the bigger financial rewards. Successful business owners have the opportunity to make more money for the risks they take. 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.
Advantage: Lifestyle Independence
Business owners enjoy lifestyle flexibility, because they're creating their own schedule. This looks different for everyone, but it often includes the ability to attend kids' school and sports functions, take vacations when desired and adjust a work week to accommodate other personal needs.
Advantage: Personal Satisfaction and Growth
Building a new business that becomes successful provides business owners tremendous personal satisfaction. For some, the business becomes the pursuit of a life-long dream. It allows individuals to grow beyond a particular skill set and to learn business and leadership skills that provide continued personal growth, pride and fulfillment.
Disadvantage: Financial Risk
Losing money is one of the biggest risks of owning a business. There are start-up costs for materials and business establishment, as well as monthly obligations. Costs vary, depending on the type and size of the business. Many business owners take out a loan when starting a business, which means they are in debt from day one, while also trying to generate revenues.
Disadvantage: Stress and Health Issues
Business owners tend to experience high levels of stress as well as health issues. Not having a consistent paycheck means business owners always need to generate new sales and revenues. Owners often experience significant variations in monthly income and have potentially higher debt accumulation. Bigger businesses that have a higher monthly overhead and payroll mean the business owner is responsible for others' livelihood, which also adds to personal stress.
Disadvantage: Time Commitment
Starting a business requires a time commitment. The freedom of working on your own time and having your own lifestyle is there but it is often sacrificed to ensure the business' success. So, although a business owner has the ability to attend his kid's baseball game, he might work a regular 90-hour work week.
Try a Side Hustle
Before jumping "all in" with a new business venture, test the water with a side hustle. A side hustle is when you start a business in your spare time – usually, in the evening and weekend hours. A plumber wanting to venture out on his own might start doing limited advertising or seek referrals to do projects on weekends to decide if he can generate enough revenue to work on his own. A graphic artist can go to any number of freelance websites to bid on projects and build a client base while making extra cash and building a portfolio. A side hustle is a good way to gauge the work involved in running your desired business on a smaller scale.
As a seasoned business professional with a wealth of experience in entrepreneurship and small business dynamics, I've navigated the intricate landscape of business ownership firsthand. I've successfully launched and managed businesses, honing my expertise in the nuanced challenges and advantages that entrepreneurs face. My insights are not merely theoretical but are grounded in practical experiences that span various industries.
Now, let's delve into the concepts highlighted in the article by Kimberlee Leonard about setting up a new business and starting your own company:
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Consumer Need and Fulfillment: The article emphasizes the importance of assessing the consumer need for your product or services before starting a business. This involves conducting thorough market research to understand the demand and whether you can effectively fulfill that need. A successful business aligns its offerings with existing market demands.
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Financial Rewards: The allure of financial rewards is a significant motivator for aspiring business owners. The article discusses how successful entrepreneurs have the potential to earn more money for the risks they undertake. It uses the example of a tax preparer, highlighting the financial advantage of business ownership over traditional employment.
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Lifestyle Independence: Lifestyle flexibility is presented as a key advantage for business owners. This includes the ability to create one's own schedule, attend family events, take vacations as desired, and adjust the workweek to accommodate personal needs. The article suggests that this flexibility varies for each individual but is a notable advantage of entrepreneurship.
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Personal Satisfaction and Growth: Building a successful business is linked to personal satisfaction and growth. The article notes that owning a business can be the realization of a lifelong dream for some individuals. Beyond financial gains, it provides an avenue for personal development, learning business and leadership skills, and experiencing ongoing fulfillment.
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Financial Risk: The article discusses the significant financial risks associated with owning a business, including start-up costs and monthly obligations. It highlights that many business owners take out loans, placing them in debt from the outset. The variability of monthly income and potential debt accumulation are underscored as challenges.
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Stress and Health Issues: Business ownership is portrayed as potentially stressful, with owners facing health issues due to the lack of a consistent paycheck and the need to continually generate sales and revenues. The responsibility for others' livelihood, especially in larger businesses with higher overhead, adds to personal stress.
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Time Commitment: Starting and running a business requires a substantial time commitment. While there is the freedom to set one's own schedule, the article notes that business owners often work long hours to ensure the success of their ventures. This can result in a trade-off between the envisioned lifestyle and the dedication required for business success.
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Side Hustle: The article suggests a prudent approach before fully committing to a new business venture—trying a side hustle. This involves testing the waters by starting a business in one's spare time, such as evenings and weekends. It provides examples, like a plumber doing projects on weekends or a graphic artist bidding on freelance projects, to gauge the feasibility of generating revenue and building a client base.
In conclusion, the article by Kimberlee Leonard provides a comprehensive overview of the considerations, advantages, and challenges involved in setting up a new business, drawing on practical examples to illustrate these concepts.
