If you are thinking of opening your own business, then you need to carefully weigh up the risks and the rewards of doing so. You may find that the potential rewards outweigh the potential risks, reinforcing the idea that running your own business would be a positive. Alternatively, you may find that as good an idea as you think you have, the risks of going out on your own would ultimately prove too costly. Weighing up the risks and rewards will not help you predict the future for any business you might start, but at least it gives you an idea of the strengths and weaknesses of doing so before you embark.Rewards
- Financial: An obvious benefit from running your own business is that your idea takes off and you make sufficient income to live a comfortable life. The joys that come from knowing that the payoff from a successful business is in the lifestyle you can potentially enjoy are considerable. Furthermore, the financial success of your own business may provide a legacy that you can pass on to your children – a considerable reward in itself.
- Personal: Anybody who has acted on their wish to leave the job they are in to run their own business will tell you about the immense feeling of wellbeing that comes from being your own boss. If you are running a business from home, you will also experience the benefit that comes from not having to commute to work. This may feed into your ability to commit more time to family and friends, which can be another enormous positive in your own personal and psychological wellbeing.
- Financial: Opening your own business has obvious financial risks. For one thing, your idea may not succeed, and you could lose your investment. The business may be able to make a profit, but those profits might not be sufficient to cover expenses. Another potential risk is that you become ill or are injured, resulting in the business failing because no one else can take over from you while you recover.
- Personal: Running your own business requires considerable personal sacrifice, especially in the first number of months and years as you get it up and running. Time spent with family or friends may have to be sacrificed, and personal relationships may suffer as a result. If you have a partner or family, they need to be on board with the idea that you may not be able to commit as much time to them as you would like.
The issue of finances in running your own business is one of both risk and reward. To mitigate both the potential risks and maximize the potential rewards, have a good financial management plan in place. Taking professional advice and assistance on the day-to-day running of your business, such as from contractor accountants, gives you the space to run your business and leave the filing of accounts to someone else.
If you are a risk-averse person, then opening your own business is likely not for you, but if you are the kind of person willing to wait for the type of long-term rewards that running your own successful business can provide, then being your own boss may be for you.