The dream of owning a business is one that appeals to many people. Entrepreneurs are captivated by the possibility of being their own bosses, setting their own hours and making more money than under the employ of someone else. Whereas business ownership can certainly offer those benefits, certain disadvantages accompany it as well.
A large financial risk is involved when running your own business. You may have to commit personal finances or go into debt to start and run your business. As a business owner, you are responsible for any financial mistakes. Unlike with employment, your personal finances are tied to the success of your business. In addition, depending on the type of business, you can be held personally liable for the failure of your business.
You can face a lot of stress when you run your own business. As a business owner, you are required to manage the business needs. Each business requires some knowledge and experience with areas such as product sales, marketing, human resources, operating expenses, inventory, product manufacturing, customer service and profit expectation. You will probably need to acquire some new skills, like bookkeeping and filing quarterly taxes. The energy and attention required by a business is quite demanding.
A significant time commitment comes with running your own business. If you cannot afford to hire others right away, you will find yourself doing multiple jobs. Running your own business also requires a great deal of self-discipline with regard to time management. The ability to make your own schedule is an attractive option, but your business will fail if you don't put in the substantial time required to make it thrive.
Lack of Benefits
When running your own business you also have the disadvantage of no benefits being provided. When employed by established companies you often get such benefits as health insurance, 401(k) and short and long-term disability coverage. Those who seek self-employment either have to forgo these options or pay for them out of pocket. Further, a distinct disadvantage with regard to health insurance is not being able to get a cheaper group rate that large companies are able to secure from insurance providers.