Owning your business can feel like stepping off a cliff, especially if you’ve always worked for someone else. It can be both terrifying and exhilarating.
It can also be a good financial decision if you’ve taken steps to mitigate risk and enjoy the product or services you are offering. Although not all businesses survive — especially in the first year or two — those who are determined, dedicated, and properly prepared stand a much better chance of long-term success.
It’s also helpful to understand the benefits of owning a business. It takes time, though, to see all of the benefits of owning a business. As a former small business owner and employee at large and small companies for the last 25 years, I can attest that success doesn’t just involve great business and marketing plans.
There are other vital ingredients to ensure the financial sustainability of any venture, including company structure and a strong team of passionate associates. But it’s helpful if you focus on some of the most notable benefits of owning a business from the start.
With a thorough understanding of what’s driving your journey into entrepreneurship and a clear view of your vision and goals for the industry, you’ll have more incredible stamina when you’re forced to confront challenges and limitations that inherently come with the role of a business owner.
Common Benefits of Owning a Business
Regardless of the industry you’ve chosen to focus on, the biggest motivators for running your own business usually are to pursue a passion, create freedom in your daily work life, and potentially boost your income.
While you can still discover personal fulfillment and reap the rewards from working as a traditional employee — for instance, getting a salary raise after successfully leading an important company-wide project can certainly feel satisfying — having the courage to stake out a territory of your own as a small business owner or entrepreneur usually is about one of three things.
1. Pursuing Your Passions
Sometimes, working a full-time job with paid vacation and medical coverage may seem preferable to jumping into the sometimes turbulent landscape of owning a business.
But you’ll want to consider why so many Americans feel so much satisfaction in becoming an entrepreneur. It’s all about control: choosing what industry you want to work in and being able to make your schedule rather than conforming to whatever employer or client dictates.
Some of the world’s biggest billionaires have stated this as the main motivator to work for themselves, even after years of working for established companies.
For instance, Mark Cuban famously took jobs doing whatever was available to cover expenses. This included bouncing at clubs, teaching disco lessons, and selling stamps by mail.
Until eventually striking it rich as an early adopter of internet services like AudioNet (later Broadcast.com, which was sold to Yahoo for nearly $6 billion in 1999) and becoming the billionaire investor of Shark Tank fame.
2. Creating Freedom and Flexibility
There’s an allure to a work-from-anywhere situation, free from commutes, restrictive time commitments, and bureaucratic oversight. After all, why should you sacrifice a part of your day sitting in rush-hour traffic every day to show your face for eight hours at a desk?
In today’s workplace, most workers who have administrative positions with little need to show their faces physically can already carry out their jobs remotely.
Why not just cut the cord entirely? Becoming an independent business owner or entrepreneur not beholden to specific employment hours means creating greater freedom over their day rather than conforming to others’ restrictions.
After all, if your primary motive for opening your business is to free up some hours to enjoy what truly fulfills you, the opportunity to regain some time has substantial allure.
According to a 2018 SCORE study cited by a 2019 SBA report, most people do not start businesses to pursue freedom.
Nearly 72% of business owners are motivated primarily by the dream of becoming their boss, 69% state their business idea originated from something they enjoy doing, and 63% express they started their own companies because they want to learn new skills. Nearly 50% of them desire to make an income from doing something they are passionate about.
3. Boosting Your Potential Earnings
People go into business with their savings and hard-earned resources, hoping to come out with greater profits, though those rewards typically are a long way down the road. You may work long hours before you begin to see positive results, or you may not see much benefit beyond an average salary for years.
You’ll have to ask yourself honestly: What’s more appealing to me, getting paid a decent income for predictable work or venturing into a sea of chaos where failure could be financially catastrophic?
Depending on your mindset and priorities, you might prefer the comfort of receiving a steady salary, a set amount you can use to buy essentials for you and your family, pay your home mortgage, and save some for retirement.
This is especially true during major financial upheaval. When we face tough times, humans typically choose security over uncertainty.
4. Building a Legacy
Entrepreneurs have the unique opportunity to build a lasting legacy through their business. This can be particularly important for those who wish to create something enduring that can be passed down to future generations.
A successful business can provide stability and financial security for one’s family while contributing to the community and creating a lasting impact. Moreover, the entrepreneurial journey often inspires others, demonstrating the value of innovation, hard work, and perseverance.
5. Financial Independence
Owning a business can lead to financial independence, providing the opportunity to build personal wealth and achieve financial goals. Unlike a traditional job, where income is often capped by a salary, business ownership offers the potential for unlimited income based on the company’s success.
Entrepreneurs can reap the full benefits of their hard work, innovation, and smart decision-making, directly influencing their financial future. This independence allows for greater control over one’s economic situation and the ability to reinvest profits to foster further growth and stability.
Potential Drawbacks and Downsides
Most people prefer a consistent, dependable schedule. There’s an element of control, security, and certainty with the guarantee of a consistent paycheck every week, especially if your employer has great benefits or provides ample vacation time. People generally want security.
They don’t enjoy stress and disruption, as it goes against our instincts for seeking comfort, shelter, and predictability. A full-time job with great insurance is far more attractive in periods of economic stress because there are far fewer things to worry about, so a company facing hard times has little appeal.
In many instances, though, employees in a stressful environment could benefit themselves and their finances by becoming entrepreneurs.
Financial Risks
You can’t reap substantial financial benefits unless you’re willing to face potential financial setbacks — after all, no one wants to give money away without promising greater returns.
Despite how many entrepreneurs express dissatisfaction with how they’re managed or how poorly companies reward success and performance, one main advantage for anyone receiving a steady paycheck is having a safety net. They get paid no matter what.
With an independently operated business, you must put your resources out, often on little faith or assurance of a successful outcome. The stakes can be huge for those who invest thousands of dollars, borrow money, and drain their savings into a company that might not work out.
Data from the BLS showed that over the past 20 years, roughly 20 percent of businesses go under during the first year, 30 percent closed shop during the second year, almost 50 percent don’t survive the five-year mark, 65 percent end up failing by 10 years, and even the majority of those companies who made it 10 years typically ended up dissolving their businesses.
Ultimately, approximately 80% of U.S. companies shuttered within two decades, proving that time isn’t always your best ally for those companies seeking profits from running a successful business.
You may initially make a killing on sales, only to be followed by massive slowdowns when an exciting new product saturates the market, especially in sectors like technology or hospitality. So, diversification of the customer base and maintaining momentum are also pivotal aspects of a robust business model.
Suppose you choose not to legally shield your business’s funds with protections afforded by incorporation, including establishing yourself as a sole proprietorship, LLC, or other type of corporation. In that case, you risk putting all of your resources — your life savings and your home or personal investments — on the line.
This is also true of how much you depend on the income generated from your business ventures. Losing one income as an employed worker in a dual-income family still enables basic life needs to be covered by other income as long as spouses or cohabitors are mindful and diligent.
A supplemental plan—getting additional work to make ends meet during quiet periods, negotiating loan agreements, or making smart investments into business supplies that give more return than they take away—can go a long way toward supporting long-term stability when running your business.
Long Work Schedules
Anyone hoping for free time is usually headed for a major reality check because building a successful business requires hard work and dedication. When we asked small business owners about common entrepreneurial limitations, they all agreed that being responsible for everything can lead to extended working hours, particularly when building a company during its infancy.
For example, data provided to SCORE through a survey conducted by Freshbooks shows that almost a third of small business owners in New York are working more than fifty hours per week.
A separate poll on behalf of Bankrate concluded that [business owners routinely dedicate nights and weekends to their enterprises. The good news is that having an extended and somewhat taxing schedule often means getting much more work done than during a more restrained traditional employment schedule.
According to the American Institute of Stress, the average employed worker suffers stress from multiple sources, whether those causes are co-workers or clients who just won’t quit calling or over-extended commitments due to mismanaging time or procrastinating until the last minute on projects.
However, many of those causes may stem from poorly established work boundaries that might be solved by finding alternative careers that involve establishing a self-operated work plan.
Responsibility for Every Aspect of Operations
It’s also common for the occasional employee to call in sick during an urgent period when critical client projects require completion on a tight timeline, so anyone who takes on responsibility for multiple employees also accepts a level of dependency and uncertainty that goes against our desire to be in full control over our environments.
This lack of control is also why many entrepreneurial professionals feel they aren’t adequately prepared to handle [multiple jobs in a single workday, especially during the company’s opening phases. To grow and expand the company’s reach, they don’t just have to market and network, cultivate customers, provide services, ship and track orders, and generally stay connected to clients.
Many independent business owners act simultaneously as managers, marketers, designers, customer service software specialists, and human resources representatives without knowing all the skills involved.
When your livelihood and that of anyone else involved in operations entirely depend on your ingenuity and dedication — you don’t get to say, “Not my job” when confronted with problems or complications that arise, for instance — there are multiple inherent demands and risks to entrepreneurship and business ventures that cannot be avoided.
As you consider becoming an independent entrepreneur and small business owner, keep that reality in mind and have faith in your potential to succeed, even if your early attempts to expand may result in a learning curve and require taking risks.
As an employee manager, I’ve encountered all those limitations on a single workday when it’s crucial to meet my personal needs and my employees’ salary and benefit plans.
But the financial benefit of running my own business—even if the early work schedule doesn’t necessarily offer greater flexibility in when I take a vacation or what hours I operate—is both attractive and stimulating for someone who prefers working from a laptop and phone rather than being chained to a cubicle under someone else’s restrictions. This reward can make taking risks and staying connected a welcome change.
What’s the Right Career for You
Whether you’re someone who has a side hustle for supplemental income and is debating committing to it entirely or is employed with no history or experience with self-management but is frustrated at company policies, compensation levels, or even management styles.
One common cause for career stagnation — you feel creatively stifled, stuck, or otherwise dissatisfied with the career you are working, for instance — is that you aren’t in a place that allows you to grow.
This isn’t only true in environments like working at a job you don’t like and wanting out or experiencing constant setbacks on a path of self-managed pursuits, such as an individual or larger corporation facing repeated setbacks from product failures or challenges in making sales and acquiring customers, because the biggest driver for someone facing such difficulties or challenges is typically fear, or an overriding belief that their current experience is permanent.
For individuals, corporations, and even entire states, the most pervasive cause of this type of failure, or the assumption of its lasting impact, is a lack of preparation.
Prepare for Every Scenario
Before you plunge into self-employed work by forming a new limited liability company or dissolving your corporation to strike out on your own, you’ll want to have a solid business and marketing plan and understand your local business laws to navigate bureaucratic roadblocks and compliance rules best.
Regulations will likely differ somewhat for new businesses that work remotely in the home office rather than operating within an official storefront in larger retail centers.
Depending on your industry, or even if you’ve considered working in an EZ where certain incentives might be more attractive to entrepreneurs, like tax breaks or special considerations for companies that have women business owners.
You may want to research locally run mentoring services or SBA branch offices to explore possibilities like long-term contractual opportunities or obtain legal guidance that helps ensure your long-term security. However, most larger companies will typically want a more formal incorporated status.
Invest in Education or Training Programs
Another time-proven avenue is to supplement whatever gaps exist in your working knowledge of legal considerations for incorporation or of the business environment as a whole.
For example, there are multiple business and financial educational tools available through the U.S. government at the state level to educate entrepreneurs on administrative policies,
It typically includes state income taxes and licensing processes. It connects local business owners and entrepreneurs through local chambers to give fledgling enterprises guidance and support for challenges or uncertainties, such as difficulties obtaining or utilizing a business credit card or concerns navigating employer income tax compliance.
Many programs and government organizations may have greater flexibility working with ventures run solely through the private sector than via traditional storefront or online marketplace outlets.
For those who feel lost or confused about processes or applications for programs, having a one-on-one with an advocate or representative from organizations such as the SBDC can save time and stress by giving you access to a ready-made source of information.
If you’re facing dissatisfaction with your current professional circumstances or just have the time to explore opportunities that support a potential path toward greater autonomy, those same opportunities for expanding knowledge also offer the privilege of increasing job security or even opening an entire side hustle.
They may also provide ways to get ahead of other aspiring entrepreneurial ventures or corporate entities seeking an edge, which are often limited by lack of organization or preparedness.
Know Your Salary
It’s also common for aspiring entrepreneurs to experience anxiety, fear, or even stress related to potential inconsistencies of an independent work schedule and financial benefits, as any company or corporation in its initial phase faces an increased chance of instability compared to mature.
Longer-running ventures or those backed by established organizations like corporations or the American government because the rewards from that earlier hard work may not be immediately apparent.
You might feel frustrated when weeks, even months, go by, and profits don’t align with what is earned via regular paid employment or corporate distributions. With patience, however, that risk you’ve taken by setting aside some of your days to learn a new craft or skill will offer increased knowledge or even an entire second career path.
It may even allow you to obtain multiple positions to offset any limitations posed by fluctuating income. This will be more pronounced during quiet periods that may arise in work schedules where an initial product-oriented rush can lead to dips when customers get all the company offerings or shift focus to another type of business or product line.
Research from Payscale reported that new business owners or companies working within private or public marketplaces in America tend to make between $52,000 and $62,000 annually if they have worked within those industries for fewer than two decades.
These gains in financial stability will also depend on company longevity and experience because those who have persisted for five years may see their incomes shift upward or downward.
Plan Ahead to Avoid Burnout
There’s always a risk that a product-based business owner, especially those offering their services to the private sector as independent sellers via outlets like Amazon, will face slower periods during the annual year as excitement over new offerings gives way to fatigue.
Suppose there’s already too much stock being put out there by competitive companies, or buyers have met their buying demands or found an attractive substitute item to fulfill their desires elsewhere.
In that case, you will be more prone to profit, salary, and employee wage schedule fluctuations, even in long-term stock investments where growth tends to follow longer cyclical patterns, which may mean dips and lows for those who don’t think toward multiple potential outcomes.
Remember why you were originally compelled to strike out on your own to properly balance long-term work sustainability and home-life security for your business’s workers.
If needed, take advantage of financial instruments like lines of credit through business-targeted cards, and pat yourself on the back as you celebrate hard work and successes, no matter how small. Having a healthy respect for and faith in your capability as a business owner will go a long way in sustaining stamina when inevitable business challenges arise.
Understand Your Financial Risks and Challenges
Being in charge of operations as an entrepreneur typically means juggling different roles in a given workday, depending on size and whether business operations fall under the Small Business Administration rules for a corporation or a smaller, one-person home business working primarily via online, in-person, or other types of direct business, such as contracted projects.
Those may include handling all your customer services when a less satisfied client demands urgent support outside traditional work schedule hours or responding promptly to unforeseen errors with inventory.
You are responsible for finding a solution as long as the company structure isn’t geared towards managing teams, such as a more established, limited liability company working with corporate partners, multiple employees, and government contract-based entities.
Large and small independent ventures employ one method of researching their market, products, client needs, and competitors to foresee potential financial needs.
These may come in the form of higher startup costs than initially planned or unforeseen expenditures required to navigate legal complexities when bureaucratic rules and changes occur, such as a zoning or taxation modification made by states or city governments that demands prompt adjusting.
If that requires delaying gratification, temporarily opting out of paying an entire personal income draw until cash flow needs are stabilized, or negotiating repayment with private business partners.
Then, view those difficulties as temporary hurdles that are an unavoidable reality of operating your company independently rather than letting uncertainty motivate you to abandon your journey into entrepreneurial independence and growth.
It may take several years or more to realize your goal or to achieve financial gains, particularly for woman-owned or new businesses facing additional financial constraints due to lending or investment policies or for corporations that have yet to gain traction.
As long as your goals are aimed at long-term success, even those less desirable jobs can become exciting gains that make sticking to it worthwhile.
| Year | Business survival rate (All private sector establishments) |
|---|---|
| 2018 | 79.9% |
| 2017 | 80.9% |
| 2016 | 81.5% |
| 2015 | 81.9% |
| 2014 | 82.5% |
Create a Supportive Company Culture to Increase Your Profits
It’s prevalent for small ventures with less financial stability to avoid forming corporations. These are typically established as sole proprietorships to bypass a bureaucratic headache.
This is especially true for service-oriented industries like pet groomers or small bakeries, which deal directly with individuals rather than the general public or giant corporations like Amazon because they require fewer startup resources.
Choose this route without hiring managers or implementing a salary distribution or benefits system. Your hard-working habits, passion, and desire for change may create additional challenges that increase feelings of work stress and instability.
According to a recent study of women entrepreneurs by Guidant, this was also true of income differences between men and women business owners — nearly two-thirds of women surveyed felt dissatisfied with their salary level.
It also turned out that highly organized women entrepreneurs had far greater longevity and incredible income benefits, proving that early planning, attention to organizational needs, and strong time management play significant roles in navigating and potentially overcoming financial challenges while maximizing financial rewards.
Dario's Conclusion
Even with these benefits of owning a business, anyone seeking to operate and manage an independent company must acknowledge the uncertainties when the buck stops with you.
As long as there are no formal restrictions and protocols put in place with an employer or bureaucratic structure, financial autonomy is only as solid as your ability to adapt, adjust, and re-imagine yourself and your work schedule based on your passions, motivations, work/life and family demands and desires, and, of course, your ability to make the kind of financial decisions that build stability and success.
If you embrace change, thrive in less structured situations, and have enough discipline to manage working habits and expectations with all those considerations, then a more formal business ownership model may be what opens that new door into an exciting, lucrative and profoundly fulfilling career, regardless of which industry or type of venture you’ve opted to build or purchase.
Even if there’s more you’ll learn along the way and unexpected roadblocks inevitably come with being an independent business owner, that knowledge and personal experience gained — and potential salary gains and rewards that follow
Frequently Asked Questions
Owning a business can provide you with greater financial freedom and the potential for higher earnings. When you’re the boss, you have control over your income and the ability to grow your business, which can lead to increased profits. Additionally, you may be able to take advantage of tax benefits and deductions that are available to business owners.
One of the biggest advantages of owning a business is its flexibility. As a business owner, you can schedule and work on your terms. This can be especially beneficial if you have family obligations or other commitments that require a more flexible work arrangement.
Owning a business can be incredibly rewarding on a personal level. When you’re the boss, you can pursue your passions and create something you truly believe in. You also have the satisfaction of knowing that you’re building something entirely your own and have the power to shape its future.
Owning a business can provide numerous opportunities for professional growth and development. As a business owner, you’ll need to wear many hats and develop many skills, from marketing and sales to financial management and leadership. This can help you become a more well-rounded professional and open up new opportunities for your career.
