Owning your own business has a lot of advantages, it is also balanced with plenty of challenges. We explore a few of the Joys and Perils in this article:
Joys
• Satisfaction – being self-supporting, possibly employing others, achieving targets, doing something you enjoy, developing new skills, stretching yourself
• Flexibility – possibility to choose your own hours, or work around family commitments
• Reward – potential to earn a great income, or amazing profits, vs being an Employee
• Independence – responsible for your own success, make decisions, your own boss
• Expense deductions – possibility of claiming some outgoings as a business expense that you may incur anyway, eg phone/internet, motor vehicle running costs, home office claims, travel, training, and therefore reducing your taxable income
Perils
• Uncertainty – income can fluctuate, clients can move on, competition, technology, legislation changes
• Financial Challenges – profits can be elusive, cashflow can be in short supply, taxes can be challenging, rapid growth can be as tricky to navigate as low profitability
• Under-charging – not ensuring you allow for unproductive time such as administration, marketing, networking, downtimes, sick leave, annual leave, stat holidays, Kiwisaver, ACC
• Poor Work Life Balance – not setting boundaries, working weekends, evenings, not switching off.
Reflecting on these joys and perils, a common challenge for people taking the plunge to go out on their own is, that just because we are successful in our chosen expertise, it doesn’t translate perfectly to being good at running a business.
The best advice we could offer here is to reduce the risks by knowing what you are good at and what you would be best to outsource. The sooner you do this the better off you will be.
At the very least, have a great accountant who keeps you financially on track and an accountability coach or mentor who will help you develop and keep you focussed on the steps.
There are many other factors to consider if you are thinking about becoming your own boss, this article just touches the surface. See the other articles in this site for some more great resources. If you have any questions feel free to reach out. If we all do well business will thrive.
(Excerpt from a session between members of the Independent Board facilitated by Tracey Floyd – From ‘Ask your Accountant’)