Gurus attempting to recruit people into their 'get rich quick' programs will try to sell them on the benefits of starting their own company by flashing imagery of carefree people working 2 hours a week while living a life of luxury and leisure.
Reality check: their sales pitch relies on anecdotes and pure fiction. Starting and running a business is time-consuming and challenging work.
How Hard is it To Start a Business?
Starting a business is one of the hardest things you'll ever do. Starting a business requires knowledge, data, education and strategy, much of which you may not yet possess. Expect to read and learn more in a year or so than you did during your K-12 schooling if you wish to succeed.
Beyond education, starting and running a business requires precision, focus, mental acuity, intellect, tenacity, willpower, emotional strength, and a surplus of time and energy.
Entrepreneurs and business owners are extremely busy people (trust me, I am one). A New York Enterprise Report revealed that business owners work twice as much as regular employees (only twice?). Many surveys have been conducted throughout the ages and routinely show that most small business owners work 50, 60, or 70 hours a week or more.
If you think starting a business will lead to a carefree life of daily jet-setting and partying like a rockstar, we're here to burst your bubble and bring you back to reality.
Many business leaders will tell you--and they are correct--that if your only objective is to make money, you will inevitably fail. Starting and running a successful business requires passion and vigor. It has to be something you love doing, or it will not blossom and endure through the hard times.
Following your passion and risking it all to see your vision come to fruition is priceless. It's the American dream. I would love for you to start a business and be successful, but entering the journey with realistic expectations is essential. Most companies will fail, mainly because nobody told them what I'm about to say to you.
This article will explore the complex reality of starting and running your own company.
Taxes, Licenses, Legalities, Lawyers and The Government
Before a person or group can start a reputable company, they must consider how they will form their business. Will you be a Sole Proprietor? S-Corp? Limited Liability Company (LLC)?
Dealing with bureaucracy and the state is a massive pain in the ass, especially for libertarians who already disdain the government. However, it must be done. You will be required to get a business license, file paperwork or hire a lawyer to form your LLC, have an EIN, file sales and use taxes, personal property taxes (if applicable in your state), pay state and federal income taxes, and more.
Beyond that, you must keep good accounting and business reports for your records and CPA and hope you don't get audited. Many more legalities exist, such as copyrights, trademarks and other potential legal complications. The list goes on and on. If you like doing paperwork (lots of paperwork), then you're golden.
Years ago, I worked with a man who grew so tired of red tape and government regulations that he closed his business and was happy to return to a regular job where he could have relaxing weekends and never think about work during his time off. Running a business isn't for everyone.
You Take All The Risks
If you're a regular employee and stroll into work one morning, and the forklift you use is on the fritz, you bring the issue to your boss's attention and wait for management to resolve the problem. It might suck having to use the crappy backup forklift for a little while, but at the end of the day, it isn't your problem. It didn't cost you anything.
When you own the business, it's your problem. You'll need to flip through your budgeting and financial reports to determine how you will afford to lease or buy new equipment. You might even need to take out another loan to cover the costs. You're enjoying the benefits of owning a company but taking all the risks.
Keep that in mind.
If you're an employee working for a company that goes under, you can apply for another similar job and likely be hired. Changing your life and starting a new career is difficult, but everything will be okay. If you're the company owner, you're the captain--and you're going down with the ship.
A business owner has the potential to win big, but they also have the propensity to lose big.
Your Family Misses You
If you have children and a spouse while trying to run a business, you might as well get a divorce and sell your children on the black market. I'm kidding, of course, but if you own a business and want to keep a good relationship with your family and friends, it will require strategic time management, especially in the early years.
As I mentioned in this article, business owners are not jet-setting and living the high life daily (we sometimes do, but it's appropriately scheduled). Being an entrepreneur or a small business owner requires much time and focus. It's essential to talk to your loved ones and devise a plan on how you will manage your time together. They need to understand your sacrifices, and you must understand their need for you in their life.
Blood, Sweat and Tears
Unless you're a seriously lucky son-of-a-bitch, your business will face hardships. Changes in the economy, sales dips, lost clients, customer complaints, fractured business relationships, lawsuits, legal trouble, countless issues, revenue loss and the climbing debt can bring the strongest entrepreneurs to their knees.
There will be times when you feel like giving up. You'll curse the business and wish you had never started it. It's a "waste of time." It's "killing me." Expect those words to leave your mouth at least twenty times during the life of your business.
If you think it ends there, you would be wrong. On the flip side of that coin, success can be just as difficult to manage. "How do we expand? How can we meet these deadlines? How are we going to get these orders filled? We need to hire more people quickly! Where will we find good employees? I thought this was supposed to be fun!"
There's a scene in the movie Jobs where Steve Jobs, portrayed by Ashton Kutcher, is in the garage where they started Apple. He's reflecting on everything, and it weighs heavy on his soul. When his father walks in, he breaks down and cries like a baby. The scene captured a realness that only a business owner knows.
The failures and successes of running your business have unforeseen costs beyond your fiscal budgeting. Running your own company is an emotional rollercoaster. One week you may be cheering and popping champagne bottles, reveling in your success. The following week, doomed by your failures, you'll fall face down on the floor begging God for mercy.
Managing your emotions during business highs and lows is a challenge. You will become strong enough to handle both with proper time and exposure to the elements. Hopefully.
Patience is a Virtue
According to the Bureau of Labor Statistics, 25% of companies fail in the first couple of years of being in business. 45% of new businesses fail within five years. And 65% within ten years. Only 25% of new businesses last 15 years or more.
New business owners often think they will open a shop and make it big within the first few years. It's good to have that belief in yourself; it shows tenacity and passion. However, it's essential to be realistic too.
Be hopeful and driven, but don't set yourself up for disappointment. Likely, you will not see good returns on investments (ROI) and long-term success for years. If you're serious about starting a business and following your dreams, buckle up and prepare for the long ride.
Don't Quit Your Day Job
You will likely need to maintain full-time employment for a while when starting your business. Unless you have adequate funding, it is not recommended to quit your day job until your business requires more attention and focus than you can give it while working for somebody else.
You must have good revenues to justify the expense of paying yourself with company funds. If you're smart, all of the money your business makes in the early years will be used for expanding and reinvesting in your company.
Unless a miracle happens, you won't get rich in the first few years of being in business. You must also accept the possibility that you'll never have financial abundance. Most small business owners make less than $100k a year in salary. It's essential for proper business growth to reinvest all of your earnings at first. That vacation you were planning? Unplan it.
The more you reinvest and expand your operation, the faster you can quit your day job and work full-time at your company. Not having to call anyone "boss" is a milestone in any business owner or entrepreneur's life. The more you focus on your company (and not yourself), the more likely you will reach this goal.
Time is of The Essence
When you become successful and your business runs efficiently, you will earn more flexibility in your schedule. However, expect to work many hours, weekends and long nights in your early years.
For the first few years of being in business, I didn't take any time off for vacation. Not one single day. I worked every day, including weekends. I was also working full-time at another company during the first three years. I'd get off work, go to the shop and work on our business 'til 4 am, sleep a few hours, then return to my job the next day.
Your business needs you.
Even if you're not feeling well, it's your show and the audience needs you. Sick? Get to work. Tired? Get to work. Hungover? Get to work. Injured? Get to work. Dead? Get to work.
Naturally, you will have other things to do in your life. Your family and loved ones need you, too, even if you can only initially give them a small amount of time. Proper scheduling and time management are imperative. Learn them well.
One of the perks of owning your own business is eventually having flexibility in your schedule. You're the boss. You make the rules. You set your hours. But if you're passionate and determined to run your business smoothly, you'll want to work more.
Invest your time wisely in your early years so that you'll have more free time in the future.
Don't Worry, It's Not All Gloom and Doom
I've been a self-employed business owner for over ten years, and, despite all the downsides, I wouldn't trade it for the world. Owning a business is rewarding and has many perks and benefits. Building something and seeing your dream come to fruition is worth all the stress.
We encourage everyone with an entrepreneurial spirit to take risks and start their own business.
If you enjoyed reading this, you may also like 7 Signs You May be an Entrepreneur.
