Small Business: Advantages and Disadvantages, Statistics, Professional Tips

Many people who want to be independent, seek to realize their ideas, and intend to receive a good reward for their labor, dream of starting their own business. Find out the main benefits of having a small business and discover the challenges that the company owner will face.

A Little Statistics for Those Who Wish to Start Their Business

Let’s consider some interesting statistical data on the reasons why people start their business and how they do it. This information has been collected by several leading analytical companies and will be useful for all those who wish to start their business. It shows the challenges faced by US entrepreneurs, the chances of success and failure, and the factors that have a considerable influence on business development. This data will help you better understand market peculiarities, evaluate the competitors and the customers’ needs, and determine the advantages and weaknesses of the whole affair: 

• 5 million new companies appeared in the USA in 2022.
• 41.5% of all entrepreneurs are women, while 58.5% are men.
• The highest level of five-year survival of new enterprises is observed in the mining industry (51.3%).
• In 2022, the US startups in the healthcare field were the strongest industry and brought a profit of $12.6 billion.
• 14% of new businesses fail as they do not take customers’ requirements into account.
• 82% of successful business owners admit that they have the required qualifications and proven experience to manage a company even if the cash flow is limited.
• About 90% of new businesses fail, and 10% of startups close within 1 year.
• The main reason why startups fail is connected with a wrong understanding of market demand (occurs in 42% of cases). The second place is taken by a shortage of funds (29%). Other popular reasons for new business failure (10% and up) are the pricing/cost issues, inconvenience of products for users, poor marketing, and wrong time for the particular product.
• Each third entrepreneur in the USA starts a small business with a capital of less than $5,000.
• Salary will consume the majority of your funds at the start.
• New business owners can spend about 40% of their working time on tasks that do not bring profit, such as hiring employees, HR, and salary calculation.
• The companies with the total number of employees from 11 to 50 face the highest risks of failure.

You may be interested to read about 11 Most Common Mistakes in Small Business Accounting and Methods of Their Elimination

Tips for Those Who Are Going to Start a Business

Experts analyzed the statistical data and provided recommendations to those who are going to start their business:

• According to Forbes, the best way to find out more about entrepreneurship is to set up a company
• Before you do so, study the activity of similar companies that have been on the market for over 5 years
• Before you make a team, study the weaknesses of your business to identify the skills required to satisfy the company’s needs
• 92% of entrepreneurs think that a website is the most efficient digital marketing strategy
• The most valuable thing that a business owner can do is to identify its drawbacks in advance and learn the lessons based on the failures of other companies

Discover Top 5 Widespread Reasons Why Small Businesses Fail

Benefits of Owning a Business

The benefits of small business ownership are numerous, and this is a real motivation for those who want to launch their projects. Some of these small business advantages are described below.

Independence

One of the main benefits of owning a small business is the possibility to make decisions and independently make a roadmap for your business development. Company ownership means that you are not influenced by other people’s instructions, rules, and limitations. You can engage in the activity you like and create a product or service based on your personal preferences (make sure to take into account the market requirements, though). One more important small business benefit is the possibility for business owners to choose customers, partners, and employees, and set the work and rest schedule. Besides, they have more options for creative potential realization and experiments with new ideas.

An important benefit of owning your own business is that the company owner cannot be dismissed as he or she is his/her own manager.

Wondering how to turn your small business into a big one? Read the article to discover the most efficient strategies!

Self-Realization

One of the benefits of starting a small business for some entrepreneurs is the possibility for self-realization in achieving personal ambitions – for instance, growth and success of the new enterprise. Others find it exciting to conquer the unknown and achieve personal goals. No matter how the budding entrepreneur may determine personal satisfaction, the advantage of starting your company gives additional opportunities to fulfill your ambitions.

Financial Advantages 

One of the advantages of owning a small business is that the company you run does not limit the level of income. You are free to earn any salary which is otherwise set by the employer. The owner independently calculates the prices based on market conditions and has all the instruments required to influence income growth. Despite a high financial risk, conducting your business gives you an opportunity to earn more money than working as an employee.

Different Benefits

The governments of most countries support businesses. For example, they provide different tax incentives for small and medium businesses and simplify administration. In addition, companies that engage in research, development, and innovations are granted preferential business conditions. Different instruments of state support make it possible to increase business efficiency – especially at the initial stages of entrepreneurial activity.

Discover 10 Common Mistakes Small Business Founders Make.

Flexibility

There is one more tangible advantage of starting a business: it gives you the possibility to adapt to different circumstances in your life. You can choose the time, place, and method of work. Running a business also implies an opportunity to combine work with family life, studies, hobbies, or other interests. The company owner can give instructions and manage his/her company from home, cafe, from another country, or from any place where you can get an Internet connection.

Possibility to Help People

If you have a business, your products or services give you a chance to make the world a better place. A company owner can solve problems, satisfy the customers’ needs, or create value for their clients. Their own business enables many entrepreneurs to see the results of their work and receive feedback from customers. Company owners can influence the lives of other people not only as professionals but also as leaders, mentors, or benefactors.

Implementation of Innovations

One of the advantages of owning a business is the wide space for creativity and innovation. It is easier for business owners to invent and realize new ideas, develop new products or services, and implement innovative technologies or methods of work. You can become a pioneer in your field or create absolutely new markets. Innovations increase the company’s competitive advantage and give a possibility to stand out among other businesses.

It is always useful to know more about the Challenges That Small Business Faces and How to Overcome Them

Own Business: Challenges and Drawbacks

Own business is not just about success. Starting a company is often connected with many risks and has a number of drawbacks that should be taken into account before you finally launch your business. Here are just a few examples of what an entrepreneur will have to face.

Financial Risks

An individual often uses all personal savings to start a business. And if this amount is not enough, you will have to take a loan secured by property.

You always face the risk of your business going wrong, which may result in considerable financial losses. In addition, your income is not guaranteed. Sometimes (especially in the first several years) your business will not bring enough money for a comfortable life. On the contrary, you may often lack the funds to satisfy minimal needs.

Constant Stress

There are many things you will have to worry about:

• competition
• employees
• accounts
• equipment breakdown or failure
• problems with customers

The business owner is also responsible for the well-being of his/her employees.

You should definitely know How to Grow Your Business Competently: Main Recommendations of Experts

No Time for Yourself

The possibility to independently set the work hours is the benefit of a small business, but it does not always happen that way. Running a company takes a lot of time, and business owners are often unable to go on holiday.

According to research, the majority of entrepreneurs think that their business requires much more than 40 working hours a week. More than 90% of entrepreneurs work more than 8 hours on a daily basis. Besides, business owners should always be in touch even if they are on vacation or have a day off: there is always a possibility of problems arising in their absence that cannot be solved without contacting them.

Undesirable Responsibilities

A beginning entrepreneur often has to be responsible for performance and control of practically all aspects of work, which may entail a risk of getting stuck in the details of tasks he/she doesn’t like. It should also be taken into account that a business owner will probably have to do unpleasant things (like dismissing people).

However, despite all the drawbacks mentioned above, you will get a lot of opportunities and advantages of owning a small business. So if you are interested in company registration, administration, or other services related to running a business, please get in touch with our experts for a free consultation.

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• Open a Corporate Bank Account in the Bahamas
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These are just some services that we can offer depending on your needs and preferences. If you want to know more or book a free session with our consultants, please contact us right now!