The Pros and Cons of Running a Small Business
Everyone knows that when it comes to business there pros and cons. Such as each business and industry ultimately having their own language of sorts. The term “small business” is no different. It holds different meanings in different countries depending upon each country’s criteria for classifying a business as small. Convenience stores, accountants, hair salons, restaurants, lawyers, small scale manufacturing, etc, fall under the category of small businesses. In general, small businesses can in general terms be defined as private enterprises with limited number of employees and relatively low turnover.
Advantages of running a small business
Small businesses have certain advantages to capitalize on such as low investment which also means low risks. As a small business owner, you are the boss and are accountable for the decisions you make and are not answerable to anybody. This sounds wonderful doesn’t it? It can also be daunting and overwhelming at the best of times.
The profits made in the business are yours alone which also gives you the flexibility of reinvesting in the business to help you grow. Keeping the profits works as a great motivational tool to perform better and maximize your returns.
During most economic circumstances governments like to provide financial aid, subsidies and/or grants to encourage people to venture out and start their own small business. Certain people exhibit a great need to be independent and are not comfortable in a controlled work environment with bosses to report to and certain job boundaries to function within. The notion or idea of running your own small business is one of the great initiators for such individuals.
A small business also gives the owner the work timing flexibility and encourages that an improved work-life balance. Building something on your own and sustaining the business can be a very fulfilling and satisfying experience.
Challenges of running a small business
As attractive and rosy as the small business idea may look, it has its own set of shortcomings. One of the major reasons for the drawback is their size. Small businesses owners often have a hard time in raising funds when they want to expand. If borrowing from a bank is not an option and your savings account is somewhat limited then the final option is being open to investors. Taking this step is a big one and needs to be reviewed with experienced consultants and legal personal; but the payoffs for bringing in investors can huge so taking the time to seriously consider this step and seeking the right advice and education is critical prior to jumping in.
Unlike conventional jobs that guarantee a fixed salary every month irrespective of the company’s performance, the returns of a small business can follow a rather erratic pattern (more so during the initial years).
A small business really is a “one man show” and the entire decision making and day to day functioning falls on the owner’s shoulders.
If the profits you generate from the business are all yours, so are the losses. You run the risk of making losses and losing the money invested in the business. This is one of the main reasons why people hold back when it comes to venturing into a small business.
So, before you decide to venture out into entrepreneurial waters, you must make sure you are aware of the advantages as well as the risks involved. Educating yourself with the knowledge of the industry you would like to jump into is only the beginning steps to running your own business.
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