Pros and Cons of Starting a New Small Business - Are the Potential Rewards Worth the Risks?

What to Consider When Starting a New Business

Starting a new small business can be exciting and rewarding but is also a huge financial risk for most people and requires hard work, discipline, and a major time commitment. Most of the overnight successes hyped by the media often fail to mention the years of hard work that it took to become successful. Lottery winners happen over night, not successful businesses so with that in mind let's take a look at the pros and cons of starting your own business.

The Cons (Risks and Sacrifices) of Starting Your Own Business

1. Too much paperwork, business filings, book keeping, taxes, etc... If you're not an organized person, make sure you hire someone who is and remember it is much easier to start and stay organized than it is to procrastinate and try to get organized 6 months down the road.

2. Long working hours. Many start up business owners work 60 to 100 hours per week. If you do start a new business make sure it is something you are passionate about or you will burn out quickly.

3. Financial risk and uncertainty. If you are starting without investment capital then it's likely you won't have a guaranteed salary each week so make sure you develop money saving habits and before starting your business make sure you have enough savings to cover your living expenses for 6 months or preferably a year as it may take a while before you generate enough revenue to pay yourself a salary.

The Pros (Opportunities and Benefits) of Starting Your Own Business

1. Be your own  boss. You make the decisions and will fail or succeed based on your decisions so remember if things go wrong you have no one to blame but yourself. Don't be afraid to make decisions though. Analysis Paralysis has been the cause of death to many businesses. You'll likely make plenty of bad decisions along the way but hard work and persistence can pull you through. Don't leap without looking though. Wise business owners learn from the mistakes of others so it's a great idea to surround yourself with successful business people and ask lots of questions about the mistakes they made and the actions that had the most positive impact on their businesses.

2. Flexible schedule - it's true that owning your own business requires burning the midnight oil and working way more hours than you'd work at a job, but you also have the luxury of creating your own schedule. If you work a 9-5 job you have to wait until the evening or on the weekend for leisure activities. If you own your business then why not work extra hours on the weekend so you can avoid the crowds and enjoy a movie, museum, or other leisure activity during the week when everyone else is at work.

3. Higher income potential. Someone people are not cut out to be business owners and prefer a job within a stable organization and there's certainly nothing wrong with that but you do limit your income potential when working for an employer. Starting a business is a financial risk but if you're successful and in a lucrative market you can enjoy a much higher income than possible with a job. (Unless you're the CEO of a large corporation with a multi-million dollar salary)

4. Working on your passion doesn't feel like work. Many new business owners are doomed for failure because they start a business with only profits in mind but soon find out money is not enough motivation to pull them through early struggles. People that start businesses involving things they are passionate about have a much higher chance of success as working on their business doesn't really feel like work. If you enjoy what you do then it's much easier to put in the extra time and effort to make it a success.