Advantages & Disadvantages of Owning Your Own Company
Entrepreneurs are responsible for all financial aspects of their business.
- 1 [Tax Advantages] | Tax Advantages and Disadvantages When Owning Your Own Business
- 2 [Advantages] | Advantages Disadvantages of Starting a Business From Scratch
- 3 [Business Ownership] | Advantages Disadvantages of Business Ownership
- 4 [New Business] | The Pros Cons of Starting a New Business
Many people dream of owning a business and see it as a way to control their own destiny. Starting a business is an exciting venture that offers many benefits. However, you should also analyze what it takes to run a successful business. Although no special skills are required, running a successful company takes determination, patience and an understanding of business principles. Not fully understanding the advantages and disadvantages of owning your own company may hinder your path toward successful entrepreneurship.
When you work for an employer, you know your annual salary and little opportunity is available to earn more money on your job. Starting your own business gives you the potential to earn a high salary. Productivity, pricing and marketing plans are all under your control, and the income you earn relates to those activities. Although earning a high salary is not a guarantee, the potential to earn a lucrative income is available.
Do What You Enjoy
Owning a company gives you the opportunity to work in a field you enjoy. Working in an industry you re passionate about helps you better handle down times in your business. Owning your own business allows you to create and contribute, which gives you personal satisfaction. Most entrepreneurs working in a field they enjoy also bring their expertise, which allows them to offer innovative products and services to customers.
Entrepreneurship gives you the control over your business. If you operate a sole proprietorship, you make the final management decisions regarding your company. Some individuals thrive in situations where they experience independence. Owning a business gives you the power to control how active you are in the business. You can participate in every step of the decision-making process, or you can hire competent people to make decisions in the best interest of the company.
Demanding Work Schedule
Many business owners work long and erratic hours, and some people view this as a disadvantage. Work schedules are the most grueling for new business owners, because they usually handle time-consuming administrative tasks. The responsibility of running the business ultimately rests upon your shoulders, so you may experience days when you need to stay in the office until the task is complete.
A disadvantage of owning a business is that you must incur financial risk. Whether you used your own savings or borrowed money for startup costs, the money invested in your company is at risk. Some companies go out of business and cause business owners to lose their initial investment or default on business loans. Even with a solid business plan, economic volatility can cause your business to lose money and eventually close for good.
Depending on your business structure, creditors and customers may possess the ability to seek your personal assets if you default on your business obligations. If a customer or vendor believes you acted in error, he may file a lawsuit against you. To protect your company’s assets, you can seek liability insurance for your business, but some new business owners may find it difficult to afford insurance premiums.