There are plenty of challenges that come with operating your own business. For many people, though, the rewards of running a business far outweigh the difficulties. In fact, 76% of those who decide to run their own small business are "somewhat happy" or "very happy" with their decision, according to a 2020 survey conducted by Guidant Financial's Small Business Trends Alliance.
This line of work isn't just for the entrepreneurial spirit, either. Running a business can prove exciting for many people and for many different reasons. Whether you are looking for a flexible lifestyle, are eager to innovate, or simply want more control over your work and earning potential, there are many benefits to running your own business. Here are just a few of the biggest.
Independence and Control
Have you ever worked a job in which you felt you could do better if you had control over how the work was done? Let's face it, jobs can be constricting and sometimes don't allow you to maximize your knowledge and skill.
When you build your own business, you do what you want, how you want, when you want. You develop the product or service to the level you think is best. You have systems and routines that work best for you. And if you need a powernap in the late morning or afternoon to boost creativity and productivity, you can take one.
According to the Small Business Trends Alliance survey, 55% of small business owners started their own business because they were "ready to be their own boss."
Granted, statistics on business success can seem grim. After all, roughly 50% of businesses survive to five years. With that said, there is much you can do to improve your chances of success, and in fact, depending on your goals, opening a business might be a better financial option than working for an employer.
For one, with a business, you're more likely to earn what you're worth, especially if you're a woman. Instead of earning 82% of what a man earns, a woman can charge her value in a business. As the business owner, you can set prices and grow your salary with the business. When you throw in the business tax perks, you could end up making more than you would in a job.
Running a business can work well for many different lifestyles. For women, especially, owning your own business can give the lifestyle flexibility necessary to raise a family and still have a successful career. Women-owned businesses have been showing up at a faster rate than new businesses in general—at 21% per year vs. 9%, respectively, from 2014–2019. According to a series of case studies by the National Women's Business Council, flexibility was a major factor for many women who decided to pursue entrepreneurship.
Millennials and Generation Z workers are known to look for flexibility in their workplaces, and running a business can work well for many of them. Likewise, people who are close to retirement or already retired may find owning their own business gives them the chance to keep their hands busy while not demanding the same rigid schedule of a typical job. People who want to travel or live a particular lifestyle can benefit from entrepreneurship, plus you might be able to work from home—or anywhere else you like.
Directly Helping People
Many small business owners launch their own businesses to make a positive impact in their local communities. This can happen through the products or services they provide or through the local causes they support. Small businesses also account for nearly half of the private workforce in the U.S., so launching your own business is a great way to provide jobs for many in the local community.
Opportunity for Innovation
Established organizations can—and do—create great change and innovation. Often, though, the most powerful new ideas come from small business owners that venture out on their own when they can't get traction for their ideas in their current workplace.
Many business icons started with an idea that has changed the world. From Disney to Zuckerberg and Bezos to Gates, all of them had small ideas that turned into huge successes. Many of these entrepreneurs launched these companies from their garage.
If your current employer isn't interested in your ideas, it may be a sign that you should launch your own enterprise.
What to Watch Out For
Despite the many benefits of running your own business, it's not right for everyone. Being your own boss comes with some major risks, including:
- Financial risk: If half of businesses fail within five years, then you're taking a 50% chance of losing some money on your own business. That's why it's critical to write a thorough, clear business plan and make sure you have a reasonable chance at success.
- Personal liability: Beyond merely losing the money you put into the business, you could put more of your personal assets at risk—from your car to your house—if you don't structure your business to protect them.
- Time commitment: The feeling that you're always on the job can be a drain for many business owners, according to a 2016 Bank of the West Bank Small Business Growth Survey. Many business owners work much more than a 40-hour workweek.
- Stress: The West Bank survey also noted the fear of burnout as a major concern for many small business owners. This is particularly true in light of the COVID-19 pandemic, which saw daily stress rise significantly among small business owners.
The Bottom Line
- Owning your own business brings some great benefits, and many entrepreneurs are satisfied with their decision after they make the plunge.
- The most common reason people launch their own business is to be their own boss.
- Other benefits include flexibility, financial rewards, the opportunity to innovate, and a chance to impact your community.
- Still, there are serious risks to launching your own business, and you should carefully consider and plan before you take the leap.