Updated: 7 Jun 2022
For many business owners, running their own company makes them feel liberated, excited and gives them a profound sense of achievement. However, working for someone else’s company also has its perks, like job security, less financial concerns and stability.
If you’re considering going solo but are unsure if it will create the right lifestyle for you or what business to start, then we’ve chalked up some pros and cons of owning your own business vs working for someone else’s, to offer a helping hand in making that big decision. Whether you’ve got a business idea or want to start selling your product, here’s everything you need to know before launching your successful business.
Pros Of Owning Your Own Business
1. Freedom At Work
In a recent survey we carried out involving 500 small business owners, we discovered that 75% of SME owners are happier owning their own business than they were in previous job roles.
We think a huge reason for this is the freedom and independence which comes with running your own company. You call the shots, you decide when you work, how long you work for, what work you take on and what work you decline. This sense of control over everything you do is a huge reason why so many people are choosing to lead a more entrepreneurial lifestyle over working for someone else.
2. Control Over Your Finances
Although finances may be a struggle at first for most small businesses, if you are successful then you need to remember that you will be in control of that money. If you worked for someone else’s company, although you may gain bonuses and commission, you won’t be the one deciding where the money goes.
If your financial skills are a little rusty, there are lots of free online courses you can take to help you gain the necessary knowledge for running your own business. This is especially important as your business grows and you start to take on more staff - being in charge of your own wage is one thing, but managing others can be a lot of pressure, so make sure you upskill yourself before taking on that responsibility.
3. You Can Follow Your Passion And Do Something Which You Love Every Day
Even if you land the job role of your dreams, if it’s for someone else’s company then there will be a set job description in place which may not be filled with everything that you’re passionate about. For example, if you love writing and take on a new writing role, it may also involve administrative or sales jobs. If you own your own business, then you have the option to hire people to do the jobs which you don’t want to do.
From the business survey which we carried out with 500 SMEs, 70% said they would never go back to working for someone else and prefer owning their own company. Which more than likely has a lot to do with them being able to work on what they’re passionate about and what they love.
Pros For Working For Someone Else
1. Job Security
Many people fantasise about running their own company, but when it comes down to it they’re often scared by the idea of not having a secure job in place. It’s true, that when you run your own business you will have much less job security than when you work for someone else’s company, or at least until your business becomes a success and starts to generate a good income. For a lot of people who have families and mortgages, job security is incredibly important and is a huge reason why many people don’t make the jump to setting up their own business.
It’s a good idea to set up business insurance when you first start up. Your policy can cover a range of areas, such as building damage and theft, to help protect you from financial losses. The type of business you start might determine the type of cover you take out so be sure to check out all of your options!
2. A Clear Work/Life Balance
In a job role within somebody else’s company you will more than likely have much more fixed working times, such as you start at 9 and finish at 5. This will make it a lot easier for you to keep a good work/life balance and to not let your work take over your personal life. It will also give you your weekends and holidays, which many people enjoy and look forward to. When running your own business, especially in the first year or so, you may also find that you don’t have as much free time as you did when working for someone else.
3. Social Interaction
If you were to decide to go freelance or run your own business, then you may find that at first before you start to employ people, you work predominantly alone which can feel isolating for some. Whereas, when you work for an established company generally you will have a team, organised social events and be part of a community, which for many people is a huge bonus about going into work. Working within a team and bouncing ideas off like-minded people can give you a great feeling of job satisfaction, which you may not have if you run your own business.
Cons For Owning Your Own Business
1. Financial Worries
For a lot of people, one of the main concerns of launching and running your own business is the costs behind it. For many people, launching their own company will be their main source of income. So, you need to make sure you plan your finances carefully and set a realistic budget plan. There is a lot of financial help available to you which you may not be aware of, such as loans and grants, so make sure you carry out sufficient research to understand if and what your business is eligible for.
Alycia Yerves, owner of Alycia Yerves Creative, discussed with us how she felt before she launched her company and then how she feels now it’s a success.
‘‘I was very nervous upfront. I believe that a lot of the fear regarding the what ifs and the fear of not knowing certain business setup procedures, kept me from starting my business even sooner than I did. When I finally decided to buckle down and jump in, what surprised me was that a lot of it was actually so much easier than I expected and I realised that much of my fear, stress and worry was completely unnecessary. For example, I had no idea that acquiring a Tax ID would take just a few moments. I was surprised at how quickly I could set up a business checking account.’’
Many of your financial concerns can be quashed by doing some simple research on what help is out there, what you need to do as a business financially and how to pull together a realistic budget plan.
2. Pressure And Stress
It goes without saying, running your company will at times be highly pressurising and stressful, but this also means it will be incredibly satisfying when you gain those wins. If you’re the type of person who thrives from overcoming challenges then you will more than likely flourish as a business owner and, on some level, enjoy the stresses that comes with it.
Plus, it’s worth remembering that you will probably feel stress and pressure when working for somebody else’s company too – all jobs will naturally come with different forms of stresses, especially if they’re high paying roles.
3. Difficulty With Work/Life Balance
When starting your own business, you may find that the boundaries between your home and work life become a little more blurred, but that’s not necessarily a negative thing, and it’s something which can easily be managed.
It’s good to be so passionate about what you do for a living so much that you want to focus on it and ensure that it’s a success, however, it is vital that you still make time for other parts of your life which you love, or you may start to resent your business.
Work-life balance has been something many have struggled with going remote or hybrid following a rise in working from home opportunities during and after the 2020 pandemic. You might find it easier to separate your work and home life by taking yourself out of the home to a library or café when you’re working on your business.
4. Juggling Priorities
As a business owner, especially at first, you’ll find yourself facing tasks you might never have completed before. From finances and insurance to product development and even marketing and customer service, business owners wear many hats.
Being able to prioritise your workload is going to be crucial to launching a successful business. You might find that you’re better at some tasks than others, and as your business grows, it’s wise to start employing people who have the necessary skills to grow your business further.
Cons For Working For Someone Else
1. Little Control Over Your Job Role
A con for many business owners when it comes to working for someone else’s business is that you have little control over the finances. For example, if you land a huge deal for someone else’s company you may not reap as many benefits as you would if you ran your own business. Additionally, if you work for someone else’s company then you would rely on the overhead to give you promotions and pay rises, whereas, when you work for yourself you are the boss and decide what you should be taking home money wise.
Although generally, if you work hard and bring in the results, you will gain pay rises when you work for someone’s company, if you run your own business you may find that you take a cut in your income especially for the first couple of years no matter how hard you work.
2. Bad Commute
For many people, some of the best work opportunities are in the city centre which can often mean enduring a long and exhausting commute to and from work. If you work for yourself, you can choose where you work and when, but this could also make it difficult to stay focused or for you to feel like you’re ‘at work’.
However, the rise of remote and hybrid working has been propelled by many being forced to work from home during the pandemic. This means it’s now easier to find flexible working opportunities that can mitigate the commute.
Whether you’re working for yourself or someone else, maintaining a good work-life balance will be key to staying productive when working from home. We recommend setting up a desk or home office space that’s separate from the places you relax.
3. Working With Clients Or People You Don’t Want To Work With
If you run your own company, then it’s your choice who you work for and who you employ. If you work for someone else’s company, then you more than likely won’t be calling the shots on everyone who’s employed or all the clients which you take on. However, if you gain a higher position in a company then it’s more likely that you will have more of a say over what clients you work with and what staff you hire, plus, there may be opportunities to work from home even when working for someone else’s company.
If you’re keen to learn more about starting a business to see if it’s right for you, it’s a good idea to start market research for your product or service to identify potential customers and get writing a business plan! Whatever the types of business you’re considering launching, check out our business plan template here.