4 Pros and Cons Every Aspiring Entrepreneur Should Know before Starting a Business

Thanks to social media, many people have developed a skewed perception of what it’s like to be an entrepreneur. What’s often depicted as a globe-trotting lifestyle replete with fancy meals, luxury yachts, and opulent mansions is, in almost every case, far less glamorous.

The truth is that staring a company is hard work. It’s risky, too—according to Business News Daily, 20 percent of new businesses fail within the first year.

So how do you know whether becoming an entrepreneur is the right decision for you? Rather than falling for the hype online, anyone who’s considering launching a business should be aware of the reality of what their life will be like if they make the plunge.

Sure, there are great things about entrepreneurship, but there also drawbacks. To help you sort through all of these, let’s take a look at four pros and cons of being an entrepreneur.

It’s All on You

Pro

Starting your own business means you’re the one making all the decisions. You decide when and where you work and whom (if anyone) you hire.

For independently minded people, this can be a dream come true. No longer do you have to slave away for 40-plus hours a week working at the behest of a boss. You have full autonomy to operate your business in any way you please.

Con

The downside to making all the decisions is…you have to make all the decisions. Everything from choosing a logo to picking a new office chair is on you.

And while you get to choose your own hours, you’re never really off the clock. This can be a problem if your mind drifts back to your company even when you’re trying to relax.

Have any new sales come in since you last checked? What happens if your recently launched product line doesn’t take off during the holidays? What will you do if your pricey marketing campaign doesn’t yield a solid return on investment?

The worry and stress can be hard to turn off, and you may find yourself lying wide awake in bed at night running through all the potential outcomes. This stress can be even greater if you have a family and their livelihood is also at stake.

Money

Pro

At a corporate job, your success is not solely your own. Maybe if you make enough money for your employer, you’ll be lucky enough to be rewarded with a raise or a bonus, but the fact remains that most of the income you generate for a company will not find its way back to you.

Not so with your own business. As an entrepreneur, your success is your own. If your business succeeds, then so do you—and a successful business can be very profitable. Fortunately for you, as the head of the business, you’re in a position to profit more than anyone.

Con

Many businesses fail, and while there’s an opportunity for great financial gain, the flip side is true as well. You can lose a lot of money, particularly if you’ve invested a significant sum of your own savings.

Sometime a failed business may have little to do with you. Perhaps your business strategy was perfect, but then something as fluky as an ill-timed market downturn comes along.

This is why managing cash flow, especially early on, is vital. Having multiple sources of income is a good idea, but if you suddenly lose one or more, your company might not have enough cash to operate.

Pursuing a Vision

Pro

Many entrepreneurs go out on their own because they’re passionate about a business idea. Unlike at an office job, you won’t be staring at your computer screen waiting for 5 p.m. to come. Presumably, you’ve chosen a field that excites you, and every day you can draw on that enthusiasm to make your company a success.

Entrepreneurs also have the satisfaction of creating something. Whether you’ve developed a new web service, opened a coffee shop, established a consultancy, or are selling custom-made t-shirts, you can take pride in knowing the products or services exist because of you.

Con

Just because have a vision, don’t expect everyone else around you to see it, too. Your former coworkers may scratch their heads and wonder why you’re leaving the comfort and familiarity of your old job. By the time you start your company, other people in your life—even family and close friends—may find it strange that you’re so devoted to this one idea.

Other entrepreneurs can understand your plight, but they’re so similarly devoted to their own companies that they won’t have time to commiserate. It can be lonely at the top, and to succeed as an entrepreneur, you have to make sacrifices, including working so many hours that you may have to cancel vacations or even miss family events—although, again, you make your own decisions about such sacrifices.

For some aspiring entrepreneurs, the tradeoffs will simply not be worth it. If you’re among those who decide they are, it’s helpful to make a list of goals to keep you motivated when running your company starts to feel overwhelming.

Weighing the Pros and Cons

Before you make the jump into entrepreneurship, consider the points above and be honest with yourself. Are the potential benefits of starting your own business worth the uncertainty and the risks? For some people, it's simply too great a leap. For others, the possibilities outweigh the hardships inherent in becoming an entrepreneur. However, only you can decide.