Staring your own business is an exciting adventure. It has all the possibilities you dreamed of; you can be your own boss, set your own schedule, and your income potential is limitless! Yes, this is all true… but with all the pros there are certainly cons to starting your own business; anyone can do it”, it is meant to give you some things to think about before your start on your journey.
There is a common assumption that you have to raise money from outside sources to start a viable business. In fact, the vast majorify of small businesses are launched solely on the owner’s dime and time. Some businesses seem to simply require outside investment, particularly if they call for expensive equipment, a substantial inventory, significant labor, or the like. However, most business ideas can be modified into smaller startups without high capital needs and built up to the ultimate company over time. There are excellent reasons to start a business and, of course, there are other excellent reasons not to. This is why it’s important to weigh the pros and cons for yourself, as your situation is unique, and advice that worked for one entrepreneur’s business may not be applicable to your own.
Here are some of the pros and cons that you need to think about before you start your own business:
1. Being your own boss
• Pro: Being your own boss means that you have the freedom to direct the company in the direction you want it to go. You can experiment with your ideas. You do not have to check with someone above you to get something done quickly. This can be very rewarding and refreshing especially if you have spent time in a bureaucratic business environment.
• Con: Being your own boss can be a con. The buck stops here becomes a reality, not just a saying. When problems cannot be solved by your employees, they get escalated to you. Escalated problems are typically the hardest and very time consuming, such as dealing with the most difficult clients. Secondly, being the top leader can be lonely. It is important to have a mentor and a peer group. They can provide you some social comfort as will not give a reliable forum to check your ideas. Often your employees will not give you the full scoop because you are their boss. You need to solicit and hear honest feedback on a regular basis.
2. Flexibility with your time
• Pro: For obvious reasons having flexibility can be really great. You can pick your kids up from school when they are sick, you can sleep in on occasion, or for skipping work at all hours during the day or for working during odd hours. The freedom to control your own time is great.
• Con: Freedom means you need to be more disciplined with your schedule and very self motivated. No one else but you will keep you on task. Working towards your goals needs to be a priority every day. While this may not seem like a con, it can be if you need format structure to keep you going.
3. You can set up the business the way you want
• Pro: your dreams can be pursued just like you want. You can set up unique employee structures and create new and different ways of conducting business. You are not stuck implementing someone else’s ideas. Essentially you have freedom to do it the way you think is best
• Con: Being responsible for setting up the business also means that you are responsible for determining how operations, finance, marketing, sales, and human resources will all be run. If any part of your business is not working, you need to figure out how to fix it. This can be exhausting and very time consuming. An entrepreneur’s job, especially in the beginning, can translate into very long hours for very little money, and as your business grows, you may be revising/refining the business processes on an ongoing basis.
4. Financials are your sole responsibility
• Pro: you get to decide how and when you spend money. Which new product lines or markets you invest in is ultimately your decision. You also get to decide who benefits from the corporate profits. Will you share it with important staff members, invest it all in the business or keep it all for yourself? If your business is enormously successful you can retire early or pay for your children’s college and leave them a great inheritance.
• Con: All financial resources you need to procure. Whether it’s investing your own nest egg, talking out an SBA loan, borrowing money, or engaging an investor (which means you lose part ownership). The risk that this requires is yours to bear. To procure funding you will very likely be required to sign a personal guarantee. If the company does not succeed, you will need to pay them back or file bankruptcy (which is painful but not as bad as it sounds). This is the risk you take. It’s also why many entrepreneurs find investors. But, of course you lose part of your business with each new outside investment. Also, managing cash flow is your responsibility. You need to figure out how to pay your bills, including payroll. If the money is not there, you must personally figure out how to get those funds. Will you increase your loans, borrow more money, work extra hard to sign a new client, or spend over time collecting on bills? Whatever you do, you will need to figure it out.
Mr. Yitz Grossman is President and Chairman of Target Capital Corporation, a financial consulting company since 1983. Base in Washington Street, Braintree, Massachusetts 02184, USA
Obviously there are many more pros and cons and every entrepreneur will have unique experience. Regardless, if you have the perseverance and desire to build a business, you can succeed. The beginning phases can be the most difficult, but over time, your resources can grow and your circumstances usually become much easier and more rewarding.
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