Monday, December 6

What you should know before starting a small business


Although owning a business has many benefits and provides many opportunities, anyone planning to enter the world of entrepreneurship should be aware of its potential drawbacks.

Individuals who prefer the security of a steady paycheck, a comprehensive benefits package, a two-week paid vacation, and the support of a corporate staff should probably not go into business for themselves.

Here are some of the challenges entrepreneurs are bound to face are:

Uncertainty of income

Opening and running a business provides no guarantee that an entrepreneur will earn enough money to survive. Some small businesses barely earn enough to provide the owner/manager with an adequate income.

In the early days of a startup, a business often cannot provide an attractive salary for its owners and meet all of its financial obligations, which means that the entrepreneur may have to rely on savings. The steady income that comes with working for someone else is absent.

Risk of losing your entire investment

Business failure can lead to financial ruin for an entrepreneur, and the small business failure rate is relatively high. Before “reaching for the golden ring,” entrepreneurs should ask themselves if they can cope psychologically with the consequences of failure:

  • What is the worst that could happen if I open my business and it fails?
  • How likely is the worst to happen? (Am I truly prepared to launch my business?)
  • What can I do to lower the risk of my business failing?
  • What is my contingency plan for coping if my business were to fail?

Lower quality of life until the business gets established

The long hours and hard work needed to launch a company can take a toll on the other aspects of an entrepreneur’s life. Business owners often find that their roles as husbands or wives, and fathers or mothers take a back seat to their roles as company founders.

Part of the problem is that half of all entrepreneurs launch their businesses between the ages of 25 and 39, just when they start their families. As a result, marriages, families, and friendships are too often casualties of small business ownership.

High level of stress

Starting and managing a business can be an incredibly rewarding experience, but it also can be a highly stressful one. Entrepreneurs often have made significant investments in their companies, have left behind the safety and security of a steady paycheck, and have managed everything they own in order to get into business.

Failure may mean total financial ruin, and that creates intense level of stress and anxiety. Sometimes, entrepreneurs unnecessarily bear the burden of managing alone because they cannot bring themselves to delegate authority and responsibility to others in the company, even though their employees are capable.

Complete responsibility

It is great to be the boss, but many entrepreneurs find that they may make decisions on issues about which they are not really knowledgeable. Many business owners have difficulty finding advisors. When there is no one to ask, the pressure can build up quickly. The realization that the decisions they make are the cause of their company’s success or failure has a devastating effect on some business owners.

Discouragement

Launching a business is a substantial undertaking that requires a great deal of discipline, dedication, and tenacity. Along the way to building a successful business, entrepreneurs will run headlong into many different obstacles, some of which appear to be insurmountable. In the face of such difficulties, discouragement and disillusionment are common emotions.

Successful entrepreneurs know that every business encounters rough spots along the way, and they wade through difficult times with lots of hard work and an abundant reserve of optimism.

Despite the challenges that starting as well as running a business poses, entrepreneurs are very satisfied with their career. Most entrepreneurs are so happy with their work that they want to continue it, indefinitely.



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