Striking out on your own and starting a new business is something many folks consider the “American dream.” Flexible work hours, freedom to work on your terms, and the opportunity to cultivate a career where you really feel like you’re making a difference in the world are some of the main reasons people decide to take the plunge into entrepreneurship.
While there’s certainly a lot to get excited about when it comes to small business ownership, it isn’t all rainbows and butterflies. You’ll need a hefty supply of grit, self-determination—and of course—time and energy. It’s also important to consider how owning a business comes with trade offs compared to working for a larger corporate entity. In this article, we’re going to share the advantages and disadvantages of a small business, so you can decide if this is a good career path for you.
8 advantages of a small business
Small business ownership is rarely considered the “easy” path, but it does tend to be the most rewarding. For many small business owners, the benefits far outweigh the negatives.
1. Being your own boss
As a small business owner, you call the shots. This provides the freedom to make decisions that work best for your business and to create your own success. All those deep-seated passions and convictions about how a business should be run? When you own the business, you get to do things the way you see fit, right down to choosing a brand name—without the red tape and bureaucracy that ties people down at larger companies.
2. Flexible working hours
Big businesses are notorious for having a “my way or the highway” approach to work. To keep the corporate machine running smoothly, there’s little room for flexibility in terms of when (and often, how) the work gets done. Small businesses can provide more space to go about day-to-day work in a way that best fits individual needs and preferences.
Not only can this lead to a more enjoyable and more productive environment for yourself and your employees—offering flexible working hours can be a great way to attract high-quality employees who value this human-first approach.
3. Direct customer service
Small companies have a competitive edge over big companies when it comes to taking care of their customers. A big reason for this: Everyone at smaller companies—from designated customer service representatives all the way up to the owner/CEO—tend to interact with customers on a regular basis.
Not only does this provide a unique opportunity to understand your customers on a deeper level, having this personal touch helps ensure your customers are being treated with the level of care and attention that aligns with your values from your very first interaction. This helps small businesses forge deep, lasting relationships that lead to loyal customers for life.
4. Growth opportunities and personal business goals
As an employee at a large business, there are often strict corporate guidelines limiting the amount of control you have over your goals and advancement opportunities within the company. At small companies, you’re less likely to get bogged down by the complexity of corporate structure.
Feel like business goals should include more than just revenue? Have creative ideas for how your team can support the local community? When you’re the boss, implementing new strategies and setting business goals that make sense to you is only limited by your imagination and ability to execute.
5. Self satisfaction
People who decide to start their own business are often folks who take pride in a job well done. So if you’re someone who enjoys seeing things through from start to end, knowing you were a driving force behind creating a product or service that truly enhances the lives of the customers you serve, small business ownership can deliver this in a way working for a larger company can’t match.
Plus, few things provide more self satisfaction than running a business “the right way” (whatever that means to you), knowing the time you spend working each day aligns authentically with your values.
6. Taking time off when you need it
You have to wear a lot of hats as a small business owner. So like any job (even those where you get to do what you love), showing up with the level of energy and focus needed for success requires taking some time off to recharge. You need space to explore new ideas, try new activities, and cultivate relationships outside of work.
As your own boss, there’s no corporate policy or manager telling you when you can and can’t take time off. So if you’re able to manage time efficiently and stay organized, you could have more freedom to escape the daily grind of running a business when needed so that you can stay motivated and productive, which will ultimately benefit your business.
7. Enjoy your job by loving what you do and following your passion
As Mark Cuban famously noted on Shark Tank, “I’d rather work 80 hours a week and make $50k working for myself than make $100k working for someone else.” The sentiment here is clear: Small business ownership allows you to do work you’re interested in on your terms. And without the office politics and corporate ladders many entrepreneurs eagerly hope to avoid. You get to decide the direction of the business and pour your energy into building something you’re truly proud of.
That’s something that can be very challenging to experience at a large corporation, where many people relent feeling like a “cog in the machine,” earning a decent paycheck but finding little fulfillment in what they do each day. For many entrepreneurs, being able to do work they love is one of the biggest advantages of small business ownership.
8. Improving skills
When you’re working with a smaller team, you (and your employees) often have to stretch your focus across many different facets of the company. Yes, this can be challenging at times. But it also presents the opportunity to grow your skillset and business know-how through diverse experiences. In the end, this can be a huge benefit for everyone at the organization.
4 disadvantages of a small business
Small business ownership can be a pretty sweet gig. But it doesn’t come without challenges. By understanding some of the common challenges you might face on your entrepreneurship journey, you can decide if this career path is truly a good fit for you—and be better prepared to overcome challenges when they arise.
1. Might face times of unstable business
Recent data suggests nearly 1 in 5 startups fail in the first year. One of the main reasons why is lacking the ability to endure dips in the business. Often, due to circumstances and factors outside of your control (like a global pandemic, for example), small business owners are faced with what feels like a rollercoaster of success and trials.
There can be weeks or even months where business slows down and you’re left scrambling to keep the doors open as you wait for things to pick back up again. It takes a lot of resilience—mentally, physically, and financially—to endure this.
2. Initial big personal investment
If you’re striking out on your own to build a new business, you likely won’t have the benefit of big corporate investors footing the bill for startup costs and employees. You’ll need to be willing to roll up your sleeves to get the business off the ground.
In terms of time, energy, and cash flow, you’ll likely be responsible for churning out the resources needed to get the business off the ground—requiring a lot of hard work and financial risk. All without any guarantee that the business will be successful.
3. Stress and time consuming
Entrepreneurship requires long hours and, at times, little rest. Many small business owners report challenging times where they start to question whether it’s really worth all the effort they’re putting out, and sometimes they may even want to give up altogether.
This can not only be tough on you personally, but can strain other responsibilities and relationships in your life. So it’s important to recognize this is often part of “paying your dues” as an entrepreneur, and make an intentional effort to balance the grind culture of starting a new business with maintaining a healthy work-life balance to avoid burnout.
4. Managing finances and legal duties
Checking all the boxes required to legally start and operate a new business can be a daunting task. And it doesn’t stop there. Federal, state, and local governments each have their own regulations to maintain compliance—and these change frequently.
There’s also small business tax obligations and HR rules and regulations you’ll need to familiarize yourself with when hiring employees. Put simply: You’ll be responsible for figuring out and managing many things that are often provided for you as an employee at a larger company.
Is owning a small business worth it?
Small business ownership comes with both advantages and disadvantages. On the one hand, owning a small business can be financially rewarding and can provide you with a sense of accomplishment. On the other hand, owning a small business can require a lot of hard work and can be quite risky. Ultimately, whether or not a small business is worth it will depend on your motivations and goals. While small business ownership can be a great way to be your own boss and realize your dreams, it can also be a risky endeavor with no guarantees.
At Practice, we understand the challenges of running a small business. That’s why we created a customer-relationship-management (CRM) platform to help coaches and small business owners streamline the day-to-day tasks of being a solopreneur. You can securely store client data, send messages and documents, schedule meetings, receive payment, and more. Start your free trial today.