There are advantages and disadvantages to owning your own business. It is not only a major financial decision, it is often a major life decision. This information sheet looks at the pro's and con's of business ownership so that you can make up your own mind on when and if it would be right for you.
Lifestyle
Pros
Being your own boss is often a significant motivator for many people going into business for the first time. For those who have owned a business, the thought of working for someone else is enough to make them work a little harder to ensure their business succeeds.
Cons
Forget sick leave, holiday pay, and long service leave, these are luxury items for the first few years for business owners. If you are going to own a business, make sure you love the business, because you are going to spend a lot of your time there.
Financial
Pros
Reward for effort and ingenuity are part and parcel of business ownership. The more profit you can generate for the business the bigger your personal bonus.
Cons
In simple terms if the business is not making money, then neither are you. On top of this, depending on your financial and legal structure if the business owes money through lack of profitability or legal action then you could be personally liable for any amounts outstanding.
Economic conditions
Pros
When economic conditions favour your business you should be able to capitalise on them through increased margins and/or volume.
Cons
When economic conditions are unfavourable your business may suffer in spite of your well applied talent and best efforts. This might be directly through changes in demand for your products and service, or indirectly through your customers ability to pay.
Feasibility/capability
Pros
If you have special talents and capabilities then you can create a business with a competitive advantage and unique appeal.
Cons
Every business is dependent on customers, if what you have to offer does not have a potential customer base at the price and manner in which you are providing it, then you may not have a business no matter how talented you are.
Flexibility
Pros
Owning a business does enable you to set the rules, at least internally, however you need to make sure that the flexibility you build into the way you run your business does not negatively impact on the customer experience.
Cons
It has often been said that a business owner has as many bosses as he has customers. If you want some flexibility in the way you run your business then choose your customers carefully.