Being an Entrepreneur - Advantages and Challenges

Recently a reader asked about the challenges and rewards of being an entrepreneur. You'll find the first part of my answer to her question about becoming an entrepreneur here. What follows is the second part of my answer to her question.

Based on my own experience being an entrepreneur and talking with other entrepreneurs, the most common challenges related to becoming self employed are:

1. Money
While there are some types of businesses that can be started on a small budget, you will need access to capital to fund your business, whether that money comes from another source of household income or from some type of loan, you will need to be realistic about startup costs.

New entrepreneurs often underestimate the length of time it takes for a business to become profitable and the amount of money they'll need to invest in the business before it's profitable. Developing a thorough and honest financial plan will help you to avoid this mistake.

2. Skill and Knowledge
When you're an employee, your responsibilities are limited to a narrow job description. However, when you launch a small business, you become responsible for everything from research and development to product delivery to bookkeeping.

That means there will definitely be some tasks that will be beyond your area of expertise.

Depending upon the scope of your business, you may or may not have staff on board to handle different responsibilities. It is important to be honest about your own limitations and seek out expert advice and the support of good mentors when needed.

3. Feedback
Being an entrepreneur, particularly if you are running a very small or home based business, you will likely feel at times that you are working in isolation, and that can cause you to question decisions.

Because it takes time for a new business to become profitable, it's very helpful to find other sources of feedback beyond the latest sales figures to assess the growth of your business. Seeking out and meeting with other entrepreneurs can help give you the feedback you need to understand and assess the growth of your business.

4. Time
When you are becoming an entrepreneur, you'll work harder for yourself than you would ever work for any employer. While self employment can bring flexibility to your work schedule, building a successful business requires a large investment of your time.

It will be important to schedule specific work hours, and arrange childcare if necessary. Setting goals can also help you to stay on track.

So, with all of those challenges, why would anyone become self employed? Here are some of the rewards of being an entrepreneur:

1. Money
When you are someone's employee, the amount of money you earn is limited by the labor market. You'll earn the going rate for your field and typically not much more.

When you are self employed, your earning potential is only limited by your own brains and motivation to build a successful business. The more effort and smart planning you put into your business, the more you will directly benefit from your own work.

2. Opportunities
Many entrepreneurs say they launched their business in order to create opportunities for themselves that they could not find in traditional jobs within their local labor market.

A parent with a young family may want flexibility that is not available in traditional jobs, a new immigrant may want responsibility and opportunities for professional growth that they may not have found in their new country.

When you build your own business, you can build opportunities and working conditions that are a good fit for your needs in ways that you may not find in traditional employment.

3. Accomplishment
Building a successful business can provide you with a sense of pride that you have created something yourself based on something you value.

You get to make the decisions. If you think a project is a great idea, you get to make it happen. You get to build something from the ground up that is your own and a reflection of your values, and any business success is always your success.

4. Time
While you will invest a lot of time in building your business, depending upon the type of business you launch, being an entrepreneur can provide you with a lot of flexibility and freedom with your schedule that you would not often have with a traditional job. A flexible schedule allows you to create personal and family time and opportunities that you may otherwise miss out on.