So, you want to be an entrepreneur? Well, you’re in luck. You can join the other 582 million entrepreneurs in the world, and even benefit from what they’ve learned along the way.
However, it’s best to know what you’re getting into. It’s not all glamorous! Let’s talk about the pros and cons of being an entrepreneur in 2022!
Benefits Of Being An Entrepreneur
Nobody would start a business if it didn’t have its perks, right? Here are some of the biggest benefits of entrepreneurship.
1. Calling The Shots
In a sole proprietorship, which is the most common business structure, you call all the shots as an entrepreneur. Have you ever been in a position in a company where you didn’t like the decisions being made? Well, now you can do something about them.
This means you can choose your schedule, hours, employees, and all decisions related to company operations. Many people take pay cuts, uncertainty, and instability in exchange for this level of control over their lives and work.
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2. Constant Learning
Are you the type of person who loves to learn? If so, you’ll enjoy this part of being an entrepreneur. You’ll constantly have to overcome new challenges and learn about various business practices, laws, and more.
For some, this isn’t entirely a benefit, as not everybody enjoys big learning curves. However, there are undeniable benefits to it. Studies show that people who have jobs that require them to learn are less likely to develop Alzheimer’s and similar conditions!
3. Unlimited Salary Potential
As a sole proprietor, there’s no limit to how much you can earn. You set the policies and you can make decisions in your own best interest. Over time, as you begin to generate profits, this may translate to a much higher salary than you’d ever earn as an employee!
4. Leader Status
As a leader, you get to make your own decisions. This means that you can implement your own values and ideas into practice with the help of your team.
Disadvantages Of Being An Entrepreneur
Being your own boss comes with its perks, we all know that. However, no good thing comes without a price. Here are some of the biggest disadvantages of being an entrepreneur.
1. No Guarantees
While being an employee comes with few guarantees, the business world comes with no guarantees whatsoever. Countless entrepreneurs have poured their life savings and countless hours into their startups only to lose it all. Believe it or not, as many as 20% of startups fail within their first year.
In the early days, this is an even greater challenge. There is no guarantee that you’ll even generate revenue within the first few months. For this reason, it’s best to embrace the “no guarantees” mindset and plan ahead for it.
With the right planning, both financial and strategic, you can prepare yourself and your business for the worst. Never assume you’ll have the capital, resources, or time for challenges as they arise but plan for them nonetheless.
Also, for many entrepreneurs, this makes the job more exciting and fulfilling. If you eat uncertainty for breakfast and thrive under pressure, then entrepreneurship is perfect for you!
2. Building And Retaining Customers
At the start of your business operation, you’ll have an uphill battle of finding new customers and holding onto them. If you make any mistakes early on, they could cause a lot more problems.
Also, marketing is only half the battle. Word travels quickly about new startups, and you need those words to be positive. Fortunately, with the right direct sales fulfillment, you can make sure that new customers are satisfied with on-time service every time.
Anything can go wrong in business, and sole proprietors are liable for whatever happens in the business. Workplace injuries, bankruptcy, missed loan payments, and other common issues can affect you personally as a business owner. In other business structures, like LLCs, you won’t be as liable for business operations, but there will be other hurdles to overcome in exchange.
4. Income Variation
Especially in the early days of your business, your income could be quite irregular. If you plan ahead for this, you can alleviate a lot of the pressure. However, it could pose some personal financial challenges in the future.
For example, lenders may be wary of offering a mortgage or other large loan if they aren’t certain of your income stability. Even if you’ve earned a stable income for a full year or more, most mortgage lenders will look at multiple tax returns.
5. Accounting And Tax Planning
Planning for self-employment taxes can be an annoying learning curve for new entrepreneurs, as it’s quite different from filing a W2. However, once you get used to it, it really isn’t too bad. As long as you know the tax bill is coming and you plan ahead for it, you won’t have a problem.
You can also pay your estimated taxes quarterly or pay yourself a salary to avoid having to save up throughout the year. By paying yourself a fixed salary, you can file a W2 as a regular employee and only have to pay self-employment taxes on remaining profits.
Regardless of your tax strategy, develop a system for tracking revenue and expenses and use it regularly throughout the year. It could save you a lot of hassle, legal trouble, and money!
Build Your Business Today
Now that you know the pros and cons of being an entrepreneur, why wait? There is always a need for new businesses in every area, so get established before the competition comes in.
If you think entrepreneurship is right for you, then get started today and keep reading our blog for our latest tips for your business!