Owning a small business is a dream of many, an anticipated state of bliss where you no longer have anyone to answer to anyone but yourself. Being the boss in enticing for those who want to earn their own money, make their own hours, and set the rules for operation. Most entrepreneurs also harbor a passion that they want to pursue in a business context. Despite these benefits, the reality of small business ownership is a complex blend of highs and lows and it isn’t an environment that suits everyone. To help potential business owners navigate this challenging path, it’s essential to understand the good, the bad, and the unavoidable aspects of running a small business.
The Good of Small Business Ownership
The good is why we go into business for ourselves. Many small business owners see positive takeaways in their future. These are some of the benefits.
1. Independence and Creative Control
If you’ve ever had a boss you didn’t like, you know the value of being your own. Being your own boss means you have the autonomy to make decisions, set goals, and steer your company in the direction you envision. This level of control can be incredibly empowering and rewarding for those who are passionate and dedicated.
2. Happiness and Satisfaction
Most people take pride in building something from the ground up. Watching your business grow and succeed can be a rewarding experience and can lead to greater personal happiness. Forbes reports that entrepreneurs are happier than employees, experience better mental health, and have higher self-confidence. If you’re doing in right, you’ll be a happier person.
3. Financial Rewards
While it may take time, owning a small business can bring financial independence, with the potential to earn more than you might in a traditional job. Additionally, you can build equity in your business, which can be a valuable asset for your future.
4. Flexibility
Wouldn’t it be nice to work when you want? Owning a small business often allows for a more flexible schedule, giving you the freedom to tailor your work hours to suit your personal life. In fact, many people choose small business ownership because it provides more options for balancing work with family commitments.
5. Equity and Culture
Being an employee sometimes means navigating a company culture that isn’t always a welcoming atmosphere. Many people leave jobs if they feel a sense of inequity or disagreement with company policy. Starting your own business means you have the benefit of setting the tone for your business and establishing the culture for your working life.
The Bad of Small Business Ownership
If you’re headed into small business ownership, you probably already know you’ll be facing your fair share of risk. With any luck, you can anticipate and navigate those in a way that limits hardship.
1. Financial Risk
Starting a small business often means you’re putting up your own money to achieve certain ends. In addition, there is always the risk that your business venture may not succeed, which can have a huge impact on your personal finances. Many small business owners face challenges such as securing funding, managing cash flow, and dealing with unexpected expenses, especially when they’re operating as single owner and operator—which according to Forbes, accounts for 80% of small businesses. (Check out our article for tips on cutting costs.)
2. Long Hours and Hard Work
Running a small business is sometimes no picnic. In certain situations, it can be demanding and often requires long hours and hard work, especially when you’re just starting out. Business owners often shoulder a mountain of workload to help build a customer base and build a brand in the early stages. It’s not uncommon for business owners to work well beyond the typical 40-hour workweek, sacrificing personal time, vacations, and family events to ensure their business succeeds.
3. Uncertainty
If you are easily overwhelmed or feel incapacitated by uncertainty, small business ownership may not be for you. The uncertainty of running a small business can be stressful and cause strain on personal relationships. Market conditions, economic fluctuations, and competitive pressures can create unpredictable situations and cause mental and emotional upheaval.
4. Pressure
As the owner, you are responsible for every aspect of your business. This includes managing employees, handling customer complaints, delivering on time, ensuring compliance with regulations, marketing to your customers, and taking stock of inventory. The pressure to perform and meet expectations can be overwhelming, especially when the success of the business depends solely on your decisions and actions.
The Unavoidable of Small Business Ownership
Regardless of what type of business model you have or whether you’re a solopreneur, there are certain things that all small business owners will have to face.
1. Continuous Learning
Owning a small business requires continuous learning and adaptation. Markets are constantly evolving and staying competitive means keeping up with industry trends, new technologies, and changing consumer preferences. Although it can feel comfortable to lean into what you know, being open to learning and willing to adapt is crucial for long-term success. (Check out our Small Business Owner Checklist for free learning resources. [Insert link to blog when published])
2. Keeping Customers Happy and Building Relationships
Successful small business ownership relies heavily on building and maintaining relationships. This may include relationships with customers, suppliers, employees, and others in your market. Developing positive relationships with those around you will encourage positive word-of-mouth referrals, build a loyal following, and create a more positive working environment.
3. Regulatory Compliance
Regulatory landscape is an unavoidable, but necessary, aspect of small business ownership. Compliance with local, state, and federal regulations is mandatory, and failure to do so can result in fines, legal issues, and damage to your reputation. Make sure you stay up to date on what regulations apply to your industry and you take the necessary steps to remain compliant. Check out this resource from the EPA to learn more about small business compliance.
4. Risk Management
Managing risks is an inherent part of running any business. You may face financial risks, market risks, operational risks, personal risk, and much more during your journey, but this doesn’t have to be scary or a cause to abandon your dream. You can take a few easy steps to mitigate risk, including insurance coverage, contingency planning, and smart financial management.
Owning a small business can be both rewarding and challenging. Understanding the good, the bad, and the unavoidable aspects can help you identify if the realities are worth shouldering or you prefer a work life that offers less potential for stress and risk.