Let’s face it, being a business owner requires a specific type of personality and an unmatched level of passion and drive. Not many people have what it takes to start their own business and be successful. That said, it’s doubtful anyone who owns their own business would trade it for anything. Nothing beats being your own boss and working to make your idea into a reality. Even so, owning a business isn’t as glamorous as many imagine it to be. It can be really tough.
1. You take a large financial risk.
When you start a business, you fund the project yourself. There’s no telling if you could lose everything six months later or grow it into a wildly successful company.
Remember: Running a business is always more expensive than you think it will be.
2. There’s no guarantee your business will be successful.
Money is not a key to success, however. It’s a fact that about half of all entrepreneurial ventures fail and less than 40 percent of all start-ups are still in business after five years.
3. Income isn’t always steady.
There’s no reliable, bi-weekly paycheck to cash. Your income is dependent on the success of your business. Every business goes through ups and downs in revenue, which means your income will as well. Kiplinger.com recommends in Six Steps to Starting Your Own Business that when you plan to start a business, also plan to live off of at least six months’ worth of savings because you will likely have no income at all.
4. You have to work longer and harder.
You have to be 100 percent committed to the success of your business. That means putting in more work than anyone. According to the 2008 Staples Small Business Survey, “98 percent of U.S. small business owners and managers are working during their time off, including nights, weekends and vacations.”
5. No overtime pay.
All those extra hours and hard work you put in won’t be for a salary increase, either. You do it because you believe in the future of your venture and are passionate about its success. You simply have to hope it will pay-off in the long run.
6. Your relationships become strained.
Owning a business requires more than your total commitment. You need the devotion of your spouse, children and maybe even your friends, too. Since it’s a 24/7 job, you may find that you sometimes have to put the needs of your business above those of other people.
7. A heavy burden of responsibility on your shoulders.
Running your own business means you’re responsible for every aspect of its operation. When a problem arises, it’s on you to fix it. There’s also payroll, taxes, administration and more to take care of. You have to handle much of it yourself (for a while, anyway) or hire and manage someone else to do it for you.
8. There are numerous rules and regulations to be aware of.
You will have to be aware of all your state’s required permits, licenses and regulations regarding owning and running a business. This includes the statutes and regulations that often require tests and proof of financial responsibility in order to obtain a particular business license. You have to know them all and stay up-to-date on any changes.
9. You must learn many new skills.
You are forced to become an expert in every area of your business in a short amount of time. Not great at math? That will have to change fast. Never really used a computer? Better learn how if you want to stay ahead of competitors.
10. It’s a thankless job.
You will sacrifice your time, energy, money and maybe even your health, all so your concept becomes actuality. Don’t expect a lot of people to thank you for all the extra effort. As Forbes.com explains in 11 Myths of Owning a Business, “entrepreneurs need internal motivation and reassurance because it rarely comes from outside.” One way to know you’re doing a good job? Your revenue increases.
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these things are only a tip of the ice berg. There are so many other downsides to being self employed. But have you ever noticed that most people that go down this road never ever want to go back to gainful employment? This is because the thrill of success in even one venture makes all the things that you went through seem all worthwhile. Like for instance i have had very many false starts and downright failures in this internet business thing but God still gives me the grace to do it again and again each day. I like this… Read more »
i think it really comes down to a question of reward. does entrepreneurial independence and self-achievement drive and motivate you? or are you more concerned with security and steady cash flow? figuring out what is the most rewarding outcome can also help you decide if owning your own business is even a road you want to start going down.
Yeah, it’s tough. There is also no medical insurance or paid vacation. Not sure how much less thankless regular job is – I think it’s case by case.
Another one to consider is that, once you have invested a lot of time and money, it’s awfully hard to change your mind. It’s much easier to change jobs when you are an employee – stepping away from your own company can mean taking a substantial loss. You need to be sure you want to do it for the long haul.
Not that it really matters what others think of you, but when you’re starting your own business you’re going to get lots of criticism, and especially be judged. Most people don’t ever simply say “Hey, XYZ is starting his own business! I’m so proud of his initiative.”, they either say “He’s an idiot and is going to lose everything/He was an idiot and lost everything” or “He’s a genius who is going straight to the top/He’s a genius and that’s why he went straight to the top”. If you’re not doing well, the added stress of knowing everyone is criticizing… Read more »
One way to reduce risk is to keep your 8 to 5:00 job and operate your new business in your spare time. You don’t have to have all your eggs in one basket.
For me it is better to have several businesses that produce passive income, rather than one all-consuming hands-on job.
But if your successful the outcome can be AMAZING! I have a couple of family members and friends who own their own various businesses and love it. Would love to see a counter piece on the benefits to owning your own business.
I really enjoy doing something on the side, while having my full time job as something steady and dependable.
I’m glad it’s hard because if it was easy everyone would do it. The most difficult and risky things are usually the ones that pay off the most. It’s good to be aware of why owning your own business is difficult but if you are passionate about what you are doing these problems won’t phase you.
This is a trueeee list! Especially the “no over time pay” part, and it being a thankless job (except to yourself, of course). I have been side-line blogging since late last year and have put HOURS of work into this apart from my full time job, but it’s really fun! I think having your own business (be it a restaurant, real estate investment, or whatever your passion is) has to be your passion, or else it isn’t fun for anyone, really! =) It’s a good idea to do it part time (and keep your full time job) and if it’s… Read more »
Hey, every coin has two sides similarly owning a business also has its own drawbacks. However, I still feel it is better as then you can be your own boss. Anyways, nice post!
Thanks for these reality bites. I’m really experiencing point #6 which I find the hardest part. I barely have time to play with my son because I’m trying to beat deadlines. I’m new at this job so it really entails extra responsibility on my part, like your point #9. I don’t have a writing background (I do Math) but my current job says I have to be good at it. So I, research and research a lot of new stuff that at this point I can barely comprehend. But with hard work, invariably I will have my own place under… Read more »
Yeah… there are some negative sides in owning your own business. But it’s worth it when you think about positive sides. You are your own boss. You make your plans, you manage your time, and, hopefully, you do what you really enjoy to do.
Great article, but I have some rebuttals to these: 1. I learned the hard way that you take financial risk working for someone else too. Lay offs are everywhere, but working for myself, I can easily change direction to suit the economic climate. 2. There’s no guarantee the company you work for will be successful, plus you have little control over the company’s strategies. Your a passenger on a ship that can sink any moment. 3. Employment hours aren’t always steady either. The truth is, if you need steady income, then you arrange your business to ensure you get it.… Read more »
Owning your own business can be a real roller coaster ride. Yes, it takes a lot of time, energy, efforts, and income is unstable in the beginning, but there are many advantages in having a business and being your own boss. In overall, I thin it’s a very rewarding experience.