Blog | Entrepreneurship

Pros and Cons of Starting Your Own Business

Do you have what it takes to go out on your own?

Since the beginning of the coronavirus shutdowns, more than 42.6 million jobless claims have been filed in the United States. To give you a little perspective of just how astonishing that number is, it’s larger than the combined population of the 22 smallest states in the country. You probably know someone who has lost their job over the last few months — you may have even lost your own job. But before you take the leap, discover the pros and cons of starting your own business.

It just goes to show that relying on a corporation for your paycheck is a risky career choice — they can furlough you, fire you or even go out of business without giving you any notice. And where does that leave you? Unemployed, unable to pay your bills, and struggling to find another job since your competition for any openings is now through the roof. You may even be forced to accept a job you don’t like, is a step down in responsibility, or pays less than your previous position just to make ends meet.

It’s no wonder that — even before we’d ever heard the word “coronavirus” — more and more people were starting to walk away from their corporate jobs in order to pursue their passion on their own terms. These self-employed and independent workers were being lured into an entrepreneurial lifestyle filled with flexible schedules, the ability to work from anywhere, and a chance to cherry-pick the projects that are of most interest to them. Considering all of the benefits of owning your own business, who wouldn’t want to hop on this train?

In light of recent events, of course, many people are also attracted to the thought of being in charge of their own destiny, being in control of their earnings, and avoiding ever being handed a pink slip again. Many people are finally seeing the benefits of having their own business. But what exactly does that mean? What are your options?

How to start your own business

Let’s look at a few examples of how people are eschewing the traditional corporate ladder climb (since getting a “good job” is a total scam, by the way) in favor of having their own business:

1. Starting your own business. My friend Marilyn’s weak spot was designer handbags. Most of her luxury spending was on the latest Louis Vuitton, Armani, Prada or Gucci purses. Her friends would occasionally ask her if they could borrow her bags. Jokingly, one day her best friend said, “You would make a fortune from just renting out your fancy handbags.” The lights went on — and today, Marilyn makes a healthy profit every month from her small boutique of rental handbags.

   You can do this too: Look for a problem that exists where you can provide an unconventional solution. Or take a skillset or hobby you have (such as bookkeeping, photography or travel planning) and find clients who need your services. Either way, don’t let the prospect of raising capital deter you from starting your own business — there are many ways to raise capital for business.

   Don't know where to start? Here are a few free classes we offer to help you get started with your own business:

   • Sell physical products online. Have you ever wanted to create your own product? It's now easier than ever. Leverage the power of Amazon to take advantage of the greatest wealth transfer the world has ever seen. Determine where to find large groups of people who are starving for products only you can provide. Watch this free presentation on how to get started.

   • Create digital products. Are you looking for a way to generate passive income based on a topics you're already knowledgeable and passionate about? It's never been easier. Use other people's time (OPT) to generate content that you own and directly profit from. Watch this exclusive webinar to create your own publishing empire.

   • Develop a personal brand. Do you have a “larger than life personality?” Learn to leverage your true self and become your very own industry leader. Start with this powerful free video series.

2. Network marketing. You may also know this option by another name: multi-level marketing (or MLM). You choose the company, sell their products, and invite others to join the company. Not only do you make money from the products you sell, but you also receive a percentage from the product sales of those you brought into the company (aka, passive income). This is a great choice for those who want to work with a company that has already figured out its business model and systems — plus, they’ll often provide the training you need to be successful.

3. Real estate investing. There are two reasons to invest in real estate. The first is for cash flow from rental properties (an ongoing stream of income). The second is for capital gains when you buy and sell (or flip) properties. If you’re resourceful, you can invest with little to no money down. Don’t believe me? Check out these six ways beginners can find investing money.

Benefits of owning your own business

Getting started in business simply begins with an idea. We all have ideas, it’s just a matter of rising to the occasion and putting that idea into practice. But is that path right for you? First, let’s examine the advantages of starting your own business:

1. Control. You have full control, including over your income, expenses and debt.

2. Leverage of OPM (Other People’s Money). If you choose to raise money for your business, you can fund the start-up or growth with investors’ money instead of your own. You can learn more about how to leverage OPM here. If you are investing in someone else’s private company, then you are the OPM.

3. Leverage of OPT (Other People’s Time). Eventually, OPT can replace your time completely. If you are working in someone else’s business, then you are the OPT.

4. Unlimited revenue. There is no limit to how much revenue you and your company can make.

5. Tax advantages. Most of the tax law, in most countries, is geared toward reducing the taxes of business owners. Almost all business expenses are deductible, meaning you deduct them against the revenue, which reduces the company’s taxable income. If you are investing in someone’s private business, the losses from the business are deductible against income from other passive business or real estate investments. Gains often are subject to the lower long-term capital-gains rates.

6. Flexible hours. You set your own hours, so you can prioritize other things as needed (picking your kids up after school, your favorite yoga class, taking your mother to a doctor’s appointment, etc.).

7. Flexible location. While this won’t necessarily work for every business, owning your own business may very well mean you can work from anywhere you want — a home office, a rented space, or from a laptop on the beach.

8. Freedom to express yourself. You can fully express who you are and what you stand for through your business, instead of dampening your spirit to toe the company line.

Disadvantages of owning your own business

Like anything in life, you have to take the good with the bad. Being an entrepreneur isn’t all sunshine and rainbows. A few cons of owning your own business may include:

1. Difficult. Operating a business is the most difficult of the four asset classes to get into and sustain. The four asset classes are owning a business; real estate; paper, like stocks and bonds; and commodities, like gold). If you are thinking of investing in a private business, this is a major factor to consider and is why the track record of those operating and growing the business is so important.

2. High failure rate. According to the Small Business Administration, only about half of all businesses will survive five years or longer. Only about one-third will be around a decade after launching.

3. Long hours. This isn’t a 9-5 job, where you clock in and out and take a nice lunch break. You will likely work nights, weekends and holidays. It’s your baby to raise by whatever means necessary.

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4. No guarantee. There is no guarantee of a steady paycheck. Some months you might hit your goals, some months you might even surpass them. But there will be months you don’t, so you’ll need to plan accordingly.

5. People. You must deal with and manage people — employees, clients, consultants, vendors, etc. — along with their various personalities and moods. This can be quite stressful if you don’t enjoy this type of work.

Despite these few disadvantages (which won’t be disadvantages for everyone), hundreds of thousands of women just like you have succeeded in starting their own businesses — and you can read some of these inspiring stories in my book, It’s Rising Time. Are you ready to rise up and do what it really takes for the reward of financial freedom?