You’ve Taken The Leap: The Downside of Having Your Own Business
Congratulations! Are you new to the business world? Perhaps you’re already established, or you’re looking for a way out to pursue other interests, or exiting into retirement?
Either way, you know the pros of starting your very own business, but have you sat down and took the time to fully understand the downside of it all? Although you don’t want to think about anything other than the upside of extending your own profession, fortunately by recognizing the negative aspects, it will definitely help you make the correct decisions regarding your position.
- 9:00-5:00 vs. When Was The Last Time I Slept: Prepare yourself for a time change in hours if you go from quitting your day job to opening up your very own business. Since your job title will drastically change, so will your shifts – you will more than likely be working 50+ hours a week!
- How Much Insurance Do I Need? While this may vary depending on your business, you will need to make sure to purchase insurance and various benefits to ensure that you’re safe and if you run into a problem, you’re able to be covered efficiently. If you aren’t covered in any way, shape or form, it will be costly both with money and the law.
- 2 Jobs, No Thank You: It is important to recognize that you may, in fact, need to continue keeping your day job if you’re just starting out so that you’ll still be able to keep up with your bills.
- Know More Than One Area: You need to be able to learn fast – this may be a challenge, especially starting out. Although you may have had one duty at your last job, you’ll need to know every function, understand and be able to perform all aspects, such as ordering stock, properly handling employee situations properly, and financial statements.
- Business vs. Private Life: You’ll need to balance these out because it will get very stressful and there is a risk of adverse impact on yourself, your family and other particular areas that surround your life. You may not have enough fuel in your engine to start your own business, which brings me to the most significant downside.
- High-Risk of Failure: You must fail to succeed. No one likes the thought of being ‘unsuccessful,’ but you must come to terms that you will have a high-risk at failing with your business. More than 50% of businesses fail in the first five years.
- Keep The Cash Coming: By this stage, you should fully understand that any income your business makes flows blissfully into your pockets if you want it too. You may be on cloud nine, and your business is the best in the town so of course there’s no need to worry about taking home all of that extra cash. What if a new business comes around and slows down yours – causing you to be taking more than you can allow for budgeting reasons. Do not budget more than you can chew, you will find it difficult to make accurate financial plans.
- Are You Okay, Partner? So you’ve decided to share ownership of your business with someone else? There are various disadvantages to co-owning, one being extremely important: liability. If, somewhere along the way, your partner takes legal action against you, this will hurt your business. If you and your partner disagree on a particular issue, this could cause leadership problems with your business. Always understand exactly what you’re getting into when deciding to be a part of a partnership.
- You’ve Been Exposed! Assume that at any given moment, you could be slammed with a lawsuit. It may be your business, but it is not your decision on whether or not you get sued by someone or another company – be prepared for anything.
- Failure: Still be keeping the chance of failure in mind and be sure that if your company does crumble, you won’t crumble with it.
- It’s Your Turn, Kid: While you may think it’s an enjoyable way to exit your business – passing the job down to your own child – this can actually cause a feud. Say you’ve been working your business a certain way for the past twenty years, and then your kid comes along and decides that they don’t like the way you’ve been doing it and what to change your business completely? This could be detrimental to relationships within your family – and if you haven’t adequately passed on the business, lawsuits could conspire.
- What Am I Giving Up? Do you know what you’re saying goodbye to in full detail? How much money you won’t be making, the relationships you’ve built, and everything else in between the lines that you have earned? If you are unsure, then it would be wise to write everything down, so you know you’re set when you leave.
- Liquidating: You’ve basically just flushed everything down the toilet, all that you’ve worked for. How does that make you feel? You’re going to flat-out get rid of your business.
- Money Run: You’ve become a gold-digger of sorts and have decided to take out a large sum of money that’ll help you throughout retirement. To your dissatisfaction, you may see that you lose more in tax than you thought.
- Sold! It’s great that you’ve found someone to buy your business, but how does it make you feel to know all that you’ve worked for has just been sold? Are you ready to let go?