Many people have big dreams of becoming a business owner so that they don’t have to “work for someone else”. While owning a business can be an extremely rewarding journey, it’s important to realise that there are differences between being employed and owning a business that you may not have considered. Let’s have a look at the obvious and not so obvious aspects of business ownership that differ greatly from being an employee.
You’re In Charge of the Good and Bad
While this brings with it freedom, autonomy and control, it also comes with a never-ending list of responsibilities. Are you accustomed to logging a job with the IT department for your computer issues at work? Not anymore! Tasks you could once easily get free help with, or delegate to a colleague, are now your job. You don’t need to be an expert in all aspects of business, however you will be responsible for all aspects. And while you’re starting up, you may need to learn how to tackle all aspects from bookkeeping to purchasing to IT support, until such a time as you can afford to outsource to someone else. This multi-tasking takes time and can quickly derail you from your core focus of finding customers and growing your business if you’re not careful.
It’s easy to get caught up in the whimsy of thinking that when you own your own business, you can just be doing the things you love doing when deciding to turn your passion project into a business, and while that is partly true, you’ll also be required to do lots of things you don’t love. There are great benefits to being an employee in this regard. You may have less autonomy as an employee, but you have a different kind of freedom – the freedom of knowing that as long as you’ve performed your delegated tasks to a good standard, the other aspects of the business are not your problem.
You Foot the Bill
Often, people simply think, if I sell 10 widgets a week for $80 each, I’ll take home $800 a week less production materials – great! If only that’s how it worked.
Owning a business comes with many unforeseen costs and it can take a long time to become profitable. Business registration, insurance, wages, superannuation, taxes, overheads, production materials/supplies all add up and can be quite the financial burden. Not to mention the business services you may need to enlist (think: bookkeepers, accountants, marketing assistants, graphic designers, the list goes on).
It’s rare that business owners can successfully execute all tasks entirely on their own without the need to outsource. If you can, excellent! If not, be wary of the many costs you may not have considered – and how significantly they may impact your financial position. As an employee, costs are not your concern. You may be required to work within a budget, but you’re not funding projects. This is another freedom of being an employee that can be far less stressful than being a business owner.
The Isolation Factor
Humans are social creatures, and one of the best parts of pursuing your passion is being able to share your victories with others. As a business owner (particularly of a new business), you are often solitary. You often have nobody to bounce ideas off, or to celebrate that sale with, or to brainstorm solutions to your problems with. It can be very lonely and overwhelming.
If the type, size and budget of your business allows for staff, this can bring a whole raft of other issues. Finding the right staff can be difficult, and it’s rare that any staff member, no matter how great they are, will care as much about your business as you do. Once you have hired your team, the amount of time it takes to oversee and manage this team can be a huge drain on your business. Putting systems in place is critical to you not getting sucked into the “busy-work” vortex.
Ultimately, the decisions are up to you and the vision is yours and yours alone. Friends and family members may not share your same excitement for the small wins, and they often won’t understand the demands of your new venture. Owning a business can be very isolating and emotionally overwhelming at times, so it’s important to consider this when deciding what’s right for you.
If you’re thinking about owning a business it’s probably because you’re passionate and hungry for a challenge. Owning a business is an exciting journey that will teach you plenty and can lead to bountiful rewards. Seeing your brain child come to life and grow from infancy to maturity is extremely rewarding and fulfilling, making the hard work worthwhile. Conversely, being employed by somebody else can allow you the security to pursue your passions on the side, with the freedom from major responsibilities. Whichever you choose to be right for you, be realistic about the time and money you can invest, plan carefully, and dive in!