Millennial and Gen Z employees in the workforce are talking about business ownership in larger numbers than generations before. This is perhaps no surprise since the gig economy has been flourishing, and since it’s also no secret that if your business is successful, you can make much more as a business owner than an employee.
Small business ownership can seem glamorous and appealing. And in many ways, it can be. As a small business owner of a freelance writing business, I love the work I do in my home office. I get to set my own schedule, choose my clients, and even choose the projects I want to work on, and the pay rates I’m willing to work for.
All of that is wonderful… but there are also very real aspects of business ownership that aren’t so enticing. There are seven things I tell everyone who comes to me asking about freelancing or business ownership so that they can make a more informed decision and know what they’re getting into.
So let’s take a look at 7 things no one (or at least most people) won’t tell you about small business ownership.
1. You’ll Wear a LOT of Hats
When you’re starting and running a small business, you’re going to wear a lot of hats and have a lot on your plate.
I don’t just create content for my clients. I also need to:
- Manage invoices
- Track and manage business expenses
- Keep up with third-party contractors that I hire
- Manage relationships and scheduling for around fifteen clients a month
- Pay different types of taxes around nine times per year
- Understand and manage legal contracts
And my business is extraordinarily simple.
Small business owners should expect to at least be supervising customer service, quality assurance, finance, legal, and product development. This can be overwhelming at times.
2. It’s Harder to Take Time Off
As you’re wearing a lot of hats, you’re going to be heavily involved in multiple areas of the business. As a result, it may be harder to take time off.
If you’re a single-member business like me, taking time off becomes incredibly difficult. Clients each have unique deadlines, and some need revisions unexpectedly. It’s hard to just press pause, even for a few days, especially since if I’m not working, I’m not making money.
Be prepared for your phone to ring even if you’re away from the office. Even a well-trained, hard working team may need assistance when you’re working on scaling.
3. Decision Fatigue is Real
The number of decisions you make on a daily basis can be exhausting in its own right, and decision fatigue can be difficult to overcome.
How much do you want to charge your clients?
Are you willing to negotiate on that price for high-value, high-visibility clients that could get you more work in the future?
When is your schedule full? Are you willing to take those extra projects on a weekend to make extra?
What software should you use?
Should you work with a third-party contractor or hire an employee?
Are you ready to scale? Do you want to?
You get the idea. There are a lot of big and small questions that you may need to answer daily, and it can be mentally draining. Making sure you prevent burnout becomes essential.
4. If You Don’t Stay Competitive You’ll Fall Behind
You can have an outstanding product or service, and a solid base of clients. It can be challenging to get to that point… but it’s also sometimes hard to stay there.
While small business ownership relies heavily on momentum, you need to keep that momentum going. As new talent emerges onto the market, they’ll step up if you start to falter.
For me, that means staying up to date on content marketing, search engine optimization, copywriting, and social media changes and best practices.
SaaS companies need to monitor the competition to make sure their features are stacking up to what else is on the market.
You need to ensure that you’re never getting complacent and that you’re always pushing to grow. While this is true for many employee positions, the reality is that the cost of additional education is on you.
5. You Want to Know Your Insurance Options
Most employees consider health, life, or disability insurance policies as part of their benefits packages when they first sign-on with a company. Aside from that, they don’t need to consider insurance much.
For business owners, that’s not the case. You’ll need to consider what happens if your business is sued. What if your products hurt someone? Or cause a legal liability, including due to cyber security issues? Or what if one of your employees is injured at work and sues?
Look into different insurance options to protect your company from all legal threats. You may not think you’ll need it, but you never want to be without insurance if you do need it. Consider talking to a business lawyer about what sort of policies are most essential in your business’s industry and location of practice.
6. It Can Be Bad for Anxiety
The anxiety of business ownership and freelancing is hard.
I’ve always been on the highly anxious side, but freelancing just about broke my brain the first few years. Every month I was so nervous about how much income I’d generate the next month and if my clients would dry up.
I’ve learned to manage that anxiety, but now there’s still an edge of panic that’s hard to overcome every time the word “recession” pops up.
For many, business ownership is a dream, and there’s a lot riding on it, including potentially significant financial investments. And the anxiety of knowing it’s all on you to make your business a profitable success despite the fact that there’s so much out of your hands can be challenging.
7. There’s Both More & Less Job Security
When everything first spun out of control in March 2020 during COVID-19 shutdowns, I lost five clients in a day. I wondered if my business was going to go under with nothing I could do to stop it. My now-husband and I went to the courthouse the next day to get married six months ahead of schedule, because we had no idea what would happen.
If I lost my business, I’d get no severance. There was, in some ways, no job security. Clients could drop me because I was low-hanging fruit, and it meant they could hold onto their actual employees a little while longer.
At the same time, however, it’s worth pointing out that I also have more job security than standard employees because my eggs aren’t all in one basket. During the huge tech layoffs last summer, I lost two clients. Those clients laid off large portions of their employees. If I worked only for one of them as an employee, I’d have been totally out of a job.
As it was, however, I only lost a small portion of my monthly income, which I was able to replace within three months.
You have both more and less job security as a business owner. There’s more on the line, but there’s also more you can do (in most situations) to control the outcome.
Business ownership of any kind (including managing my very small freelance writing business) is not for the faint of heart. It can be full of highs and lows, and the lows of struggling to get momentum, facing rejection, and the anxiety of what will happen can be a challenge.
That being said, if it’s the right fit for you, it’s also worth it. There are plenty of resources and tools available to make business ownership easier, and you can (and should!) hire people to help your organization grow. With the right people, tools, and strategies in place, it can be an amazing and profitable adventure that’s well worth it!
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