• Recognize the advantages and disadvantages of starting a business
• Understand why some businesses fail
• List important things to consider when deciding whether to start a business

Evaluating Entrepreneurship

As author and retired entrepreneur Carol Denbow writes in Are You Ready to Be Your Own Boss?, “If you want your new business to succeed, you must know why most businesses fail.” New business survival statistics are grim. Approximately 20% of new businesses failed in the first year and half of new business fail within five years.^[1] Before you jump into starting your own business, take a look at the pros and cons of starting a small business and how to improve the odds of success.

Advantages and Disadvantages

There are very few things in life that can compare to the experience of creating your own business. As investor and former entrepreneur James Caan expresses it: “Nothing will ever replace the thrill of creating a profitable company from scratch.”

Starting a small business is a matter of self-selection and self-determination. While the founders of small businesses still are a part of the society they live in, their business ventures can allow them to step into an alternate reality, part of a social order in which each person—regardless of gender, race, ethnicity, religion, birth, or circumstances—can achieve their fullest potential and receive recognition for their achievements.

A small business owner has great freedom in both business and lifestyle choices, from developing the business concept and operating environment to defining success. The benefits—measured in impact, revenue, or infrastructure terms—are essentially unlimited. Perhaps the most nebulous, but important, benefit of being a small business owner is the freedom to choose your business’s purpose and goals.

However, as an entrepreneur, you own the decisions and the results of those decisions. Evasion is not an option. You can’t say, “It’s not my job,” point fingers, shrug, or check out. Additionally, as a small business owner, you will probably be risking your own (and, perhaps, friends’ and family’s) financial capital. Essentially, you’re flying without a net. There’s no guarantee of a regular paycheck and no paid or subsidized benefits (for example, a retirement plan, holidays, or perks). You’re responsible for business development, business planning, HR, IT, and every other function as well.

Freedom from an employer’s expectations comes at a cost: you’re responsible for setting and managing expectations—for yourself and others—and for making the magic happen. Starting a business, you have the potential for freedom and success but the price is responsibility for your business and all the stakeholders who rely upon it. You have to decide if the risk is worth the reward.

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