By Rhonda Campbell
Believe it or not as of 2007 there were 27,757,676 businesses in the United States according to the Census Bureau, this during the hardest recessions the country has experienced. Approximately six million of these businesses have employees on the payroll, meaning that most American businesses are owned by solopreneurs or creative small business leaders who contract their jobs out to workers who are freelancers working from home, people looking for temp work or part-time jobs.
American Entrepreneurs Are Not Reluctant to Start Small Businesses
Clearly, Americans are not reluctant to start their own small businesses. However, the Small Business Administration reports that only about 34 percent of new firms stay open for 10 years or longer. Of course, some of these companies close shop for a variety of reasons, including the fact that the business owners retired, transitioned, chose to enter another business or decided to work for an employer.
It’s also obvious that some business owners close shop due to lack of sales, funding and market and industry changes. Furthermore, some entrepreneurs shut down their companies because they jumped into the business arena only knowing the pros of business ownership, not the cons.
Considering the fact that the pros of business ownership can yield long lasting rewards, it’s easy to see why. For example, by starting a company, entrepreneurs and creative small business leaders can:
- Set their own work hours, including take vacation at their own discretion
- Interview and hire candidates they feel and think will drive products and service creation and sales
- Incorporate innovative marketing strategies into their business growth efforts
- Determine what percentage of their companies they are going to receive as “take home” pay
- Partner directly with other creative business leaders to expand their market
- Lower their taxes by declaring business deductions
Cons of Small Business Ownership
Yet, there are cons to business ownership. Some of the cons tie into the pros of business ownership. They are often the last thing entrepreneurs and creative small business leaders think about before they file local, state and federal documents to launch their new companies. For example, after starting companies, entrepreneurs and creative small business leaders may deal with:
- Long work hours (whether creative small business leaders are solopreneurs or hire staff, they generally work long hours, especially during the start-up phase of their companies)
- Accountability for everything that goes on at the company (e.g. hiring, terminations, marketing, taxes, imports, exports)
- Cash flow (it’s not uncommon for creative small business leaders to use their personal savings, credit cards, etc. to fund their companies, especially during the early years)
- Mentoring (as the “boss” creative small business leaders may have to look outside their companies to find qualified mentors, people to help them continue to advance their companies)
- Isolation (Although this applies mainly to solopreneurs, entrepreneurs and creative business leaders who head up large companies can also feel as if they only have a handful of people to talk to who fully understand what it means to operate and manage a business)
Operating and managing a business is not always an easy task. It comes with challenges, including slow sales periods, employee turnover and market shifts. However, by understanding the pros and cons of business ownership, entrepreneurs and creative business leaders can avoid major surprises (and frustrations) as they continue to grow and expand their companies.
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