Do I really want to run a business?
People start to run businesses for many different reasons. Maybe they've lost their job and are struggling to find another one. Maybe they want a better work-life balance. Maybe they want greater flexibility with the hours that they work. Maybe it's all of the above. But what they don't realise is the actual running of the business can be very different from what they planned. So is it what you really want?
So what is the reality?
The reality is that it's hard to run a business and make sure you're running it in the right way in order to get what you want from it, whether that's money, time or a sense of achievement.
Some business start-ups don't realise that they have to invest money in order to make money; this can be a problem for the business and the owner. It may not be that you have to use the money to directly fund the business, but you may need to use it to guarantee any loans that you take out in the business' name. This can mean that you could be personally responsible for the money if the business was to fail. (Unless you set the business up with some form of limited liability (e.g. an LLP, or Limited Company). More on this in our FAQ.
There are other financial implications too. Such as, what if the business doesn't make a profit and you are unable to take a wage? Will you be able to borrow money from family and friends to cover the cost of your bills, or do you have enough money saved away that you wouldn't need to? You could have the best business idea in the world but it could take years to attract the number of customers needed in order to make a profit (for example, Twitter still doesn't make a profit).
It may be that for the first few years you will need to accept the fact that you can only take a lower wage from the business. It may not be what you want to do, but in order for the business to succeed, you may need to do it.
Along with the reduced wage you may also need to turn your back on other perks of the job too, such as holiday pay, sick pay and even a pension. Some business owners say they would better off if they were working for someone else, but they're still reluctant to give up their business.
It sounds like hard work but I'm still on board
Running a business can take it's toll on anyone. You need to be able to be harsh with yourself in order to make it work. You may have started it because you wanted to be able to work more flexible hours, but the reality can be very different. When first starting out you may have to be working more hours than you would have if employed by someone else. This can mean spending less time with the family or fewer nights out with friends. But these long hours can be worth it in the long run.But there are ways to try and maintain a work-life balance, read about them here.
You need to become your own boss. Anyone who has worked in a management position will know how hard it can be getting a team of people to gel and work together, as well as show up when and where they're meant to. But now you have to try to focus yourself in the same way. You may not feel like being in work some days and you may feel as though you don't want to do any work, but you know that isn't going to take the business anywhere. You need to be harsh on yourself and able to pull it together.
The buck stops with you
When you run your own business, you are the one responsible for everything that goes on there. You're the one making the difficult decisions, do you need to hire someone? Fire someone? Expand? Cut back? The only person who can answer the big questions is you, if you have a business advisor, an accountant, or an employee you can ask their opinion, but at the end of the day, the decision is ultimately yours to make.
This post may make running a business sound all doom and gloom but at the end of the day these are considerations that you have to take into account. Most posts about setting up are all happy and only focus on the good points of being an owner. But you need to know the nitty gritty and the bad points too.
So now you know some of the cons to go with the pros, maybe you can make a decision that suits your needs and not just your wants.
- 24 Nov 2020 - Are Directors and Shareholders Liable for Company Debt?
- 06 Nov 2020 - Can My Company Make Contributions Towards My Pension?
- 27 Oct 2020 - Retirement and Company Ownership
- 23 Oct 2020 - Reasons Why You Need an Accountant for your Limited Company
- 30 Sep 2020 - What is a Director's Loan and do you need to pay tax on it?