Pros & Cons for Going Into Business for Yourself
Some people leave good jobs to start their own businesses, but most entrepreneurs are created by getting laid off during a corporate downsizing. It is as good a time as any to start your own business, in fact, if you have severance pay and unemployment benefits, you might as well take some time to try to start a business. A recession is a good time to start because your competition will be going out of business, leaving unserved customers behind, as well as a lot of used office furniture, copiers and computers. Office rents are generally lower during a recession, as well. But business ownership is not always an easy path.
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Reasons
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Working for yourself means you have a chance to make more money, perhaps lots of money. If you have a special skill or talent, it also means you can do the work the way you think it should be done, because you have the know-how to make a business successful. Every entrepreneur dreams of wealth, independence and the personal satisfaction of creating a successful business. The economy is also a factor in converting employees into business owners. Data from the U.S. Department of Labor clearly shows that self-employment declines as economic conditions improve, and increases during recessions.
Pros
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You can inherit wealth, win the lottery, strike it rich through investments or build a successful business. If you put in the time and effort, you are likely to be rewarded financially. Also, much of your travel and entertainment, and some of your purchases, can be legitimate business expense and deductible from your income taxes - beneficial to home-based businesses. Over half of the 29.6 million small businesses in 2009 were home-based, according to the U.S. Small Business Administration. You make your own decisions and leave work whenever you want because nobody can fire you. As a business owner, you have prestige in the community and you will be invited to join civic groups and country clubs.
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Cons
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Half of all new businesses fail within the first 5 years, according to the SBA, and about a third fail within the first 2 years. During 2008, 627,200 new businesses opened, 595,600 business closed and 43,546 declared bankruptcy. As owner, it is up to you to make the business successful and that means long hard hours with little or no pay at first. In fact, as the owner, you pay yourself last or you lose your employees if you don't pay them regularly and on time as they expect. If your business fails, you are responsible for paying off all the bills that are left and possibly fighting lawsuits from angry customers, employees and suppliers. There is no safety net for a business owner even though it normally takes at least three years of hard work and investing every penny earned back into the business, in order to get it to a point where it is producing dependable revenues. On the other hand, a deep recession can wipe you out even after years of successful operations.
Reality
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Entrepreneurs who work with professional advisers have a better chance of making a success. There are many organizations tasked with assisting new and small business, such as the Service Corps of Retired Executives, the Small Business Administration and local Economic Development Councils in addition to local Chambers of Commerce. Starting and running your own business is extremely difficult and you must first consider whether you have the temperament for such an undertaking. In many ways, you will have less freedom than you did when employed by someone else.
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References
- iSeek.org: Self-Employment
- NationalDriller.com: The Pros & Cons of Going Into Business Yourself - Part 1
- NationalDriller.com: The Pros & Cons of Going Into Business Yourself - Part 2
- NationalDriller.com: The Pros & Cons of Going Into Business Yourself - Part 3
- SCORE.org: Small Business Stats & Trends
Resources
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