Introduction

Your own business: an expensive German car or even a red Italian one, a vacation in the Swiss Alps, your own condo on a remote island: all the potential benefits of owning your own business. On the other hand you have the prophets of doom highlighting long hours, difficult employees, economic downturns, stress, and high rates of business bankruptcy. What is the reality?

In fact, most entrepreneurial start-ups fail in the first few years. Only a small percentage actually make good money. There are several risks in starting your own business that cannot be ignored. However, these risks can be drastically reduced with detailed market research, proper business planning, and effective management. The potential rewards, for the successful entrepreneur, make the effort worthwhile.

Some of the major risks are:

Financial risk

The personal financial investment of having your own business is generally quite high. Business failure can mean substantial financial loss for the entrepreneur (and other stakeholders) and can even lead to bankruptcy.

Social risk

A business requires a lot of input from the entrepreneur. This implies less time for family life, friendship, sports, leisure and vacations. The potential to lose a friend and even a spouse is very real.

career risk

When an entrepreneur starts his own business, he usually quits his current job. If things go wrong, it can be difficult or even impossible to resume a career.

psychological risk

People handle different kinds of stress. Good stress, called eustress, gives a person enough adrenaline to handle difficult situations in a positive way. Heartbreak, on the other hand, can be destructive to the entrepreneur and the business. It can lead to severe burnout and depression. Anxiety can be caused by working too hard for long periods of time, too much worry about various aspects of the business (especially if everything doesn’t go as planned), the lack of an adequate support system (such as a spouse), and even the feeling that the deal was a mistake and that the entrepreneur is climbing the wrong ladder.

Fortunately, substantial rewards await the successful entrepreneur, including some of the following:

financial rewards

A successful business has the potential to generate good profits and provide substantial wealth for the entrepreneur. If this wealth is managed carefully, it can make a big difference in the financial well-being of an entrepreneur (and his spouse and offspring).

social rewards

There is rarely a greater reward than making a positive difference in someone else’s life. Entrepreneurship is already creating most of the world’s new jobs and wealth. The successful business provides work, pride, and financial security for its employees. Personal wealth can also be used to make a difference for a family member, friend, community, or any worthwhile cause.

independence rewards

Owning your own business gives you the privilege of working on your own, at your own pace, without a boss, and with a sense of freedom. Financial success increases the potential for independence. growth rewards

The entire entrepreneurial process is a process of personal growth and an entrepreneur learns about failure and success, difficult people and situations and especially about himself. Knowledge of various disciplines will also be enhanced. Successful entrepreneurs generally experience a sense of self-actualization.

Resume

Owning your own business definitely carries substantial risks. However, if you have the right personality profile, the necessary experience, and a willingness to diligently prepare and work hard, your chances of business success improve dramatically. The potential rewards far outweigh the risks.

Copyright © 2008 – Wim Venter