For many people, starting their own business is a dream come true. In today’s digital world, it’s also much easier to start a business than it once was. However, before deciding whether or not to jump into the world of self-employment, it’s important to take into account the pros and cons.
Below, you’ll discover some of the main risks and rewards of starting a business to help you decide whether it’s the right option for you.
What are the risks?
You’ll find there’s quite a lot of risks associated with starting a business. The most obvious one is that you’ll be solely responsible for bringing in your own income and paying your own taxes. Self-employment isn’t stable and your profits will fluctuate from one month to the next. This kind of financial uncertainty can be extremely stressful.
Cash flow is potentially the biggest risk. Keeping the business afloat can become difficult during quieter times. This is actually one of the single biggest reasons the majority of start-ups fail within their first five years.
You’ll also face security and legal risks. In order to run a business, you need to make sure you’re keeping up with the latest legal requirements. These can be fairly complex to understand. The security risks are also worth paying attention to, particularly cyber-attacks.
These are just some of the most common risks you’ll face when setting up a business.
What are the rewards?
While the risks of becoming self-employed are scary, there are also a lot of rewards to look forward to.
As you’ll be working for yourself, you’ll control your hours, how much time off you have and what rates you charge. You’ll be able to choose the people you work with and do something that better reflects your passions. You’ll also feel a great sense of achievement knowing you’ve managed to build up your own business.
How to reduce the risks
When it comes to starting a business, the rewards definitely trump the risks. However, it’s still worth taking steps to reduce the risks to ensure your self-employed journey runs as smoothly as possible.
To manage cash flow, you have multiple options. You can take out small business loans to account for quieter periods, or to get the business off the ground. You can also invest in the latest security equipment, and make sure you have an HR team who can stay on top of the legal requirements for you.
Running your own business can be one of the most rewarding career paths you can take. However, it is important to be aware of both the risks and the rewards. The above are some of the most common pros and cons to familiarise yourself with before deciding whether to start your own business.