Scenario 1 – You just got out of a meeting with your boss and the HR representative. Surprise! Your job has been 'eliminated.'
Scenario 2 – You retired early from your first career and still feel like working.
Scenario 3 – You hate your job and want to work for yourself.
In all three scenarios you have a choice to make – do you start your own business or try to get hired by an employer?
As a business advisor, I work with people who want to start a business. Some of them do end up starting a business, but some don’t. Even those that have started their own business may be better off, financially, by getting a job.
There are certainly pros and cons to each choice. Also – if some “red flags” exist, the choice becomes much easier to make. For example, if you do not have any money to start your business, you will experience difficulty trying to borrow money from a bank or credit union. In that case, working for someone else and saving money to start your business later may be the best choice.
Let’s look at some other pros and cons (and some myths) of starting your own business.
Pro – You are the boss.
Con – You are the boss. No passing the buck now – you are responsible for every facet of your business, including securing financing, hiring and firing employees and paying the bills.
Pro – You will have the ability to work flexible hours.
Con – Working harder and longer than expected. Ask any small business owner and most will agree that there are not enough hours in the day!
Pro – You can make more of the profit as the owner.
Con – Not having enough profit to pay yourself, or worse, your employees or vendors. Cash flow is all on you now.
If you think you are going to work less and make more with your own business, you may be surprised to find out that it is exactly the opposite! There are many facets to running a business; it’s more than just starting a business. If you cannot do some of the everyday tasks, such as bookkeeping or accounting, you will have to pay someone to do it for you. Also, sustainability is crucial to a startup business. If you have just enough assets to get it started and not enough cash or inventory or help to sustain the business, you could be out of business quickly.
Hopefully – before you start a business and spend any money at all, you will seek advice from the one of the many business resource centers available within your area. The Small Business Development Center, the WISE Women's Business Center, and SCORE Mentors are all entities funded by the SBA that do not charge a fee for counseling. These centers exist to help entrepreneurs minimize risks by sharing best practices, providing business plan development, financial statement analysis, and market research.
Seeking a job from an employer is certainly a frustrating process that is often filled with anxiety. However, it is nice to know you will have a steady paycheck, benefits, and (for the most part) stable work hours. You can concentrate on performing the things that you are good at, and you will likely will have coworkers that handle other tasks unrelated to your specific job. If you are fortunate to get any vacation, you may want to take the job for that reason alone. There may be no vacation at all if you start a business!
I tell all my clients – if you start a business, I guarantee you will have expenses. Can you guarantee you will have income?
Article published in the BJNN in September 2017
Michael Cartini is a Former Certified Business Advisor at the Small Business Development Center located at Onondaga Community College.
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