Building a small business requires resilience, strategic thinking, discipline, and a clear vision. While being an entrepreneur can be an exciting and rewarding venture that allows one to attain freedom and growth, it also comes with certain challenges.

According to Moniepoint, research shows that 50% of SMEs fail in their first year of operation while more than 95% fail during their first five years. 

While most of these challenges cannot be avoided, being aware of them can help to manage or minimize their risk to your business.

At the end of this post, you’ll be able to learn about the benefits of having a small business and the challenges you might face as one.

Who Is A Small Business Owner?

A small business owner is an individual who creates and manages a business. In Nigeria, small and medium-sized business owners account for 96% of companies and 84% of employment.

These individuals are those who take the initiative and create a product or service that provides a form of solution to people. Let’s look at some of the advantages and disadvantages of owning a small business. 

The Advantages Of Being A Small Business Owner

Being a small business owner comes with so many benefits. For some, it could be the personal satisfaction that comes with it.

To others, it could be the financial rewards or the ability to make an impact. While for others, it’s a mixture of it all. Let’s look at these advantages in detail.

1. Personal and professional growth

A founder who detested reading became a book lover when she started her small business. There was a lot to do and she couldn’t make any more excuses, especially if she wanted her business to thrive, so she put in the hours and built her business from the ground up. Now, she loves reading and learning a new thing every day.

Running a small business offers you countless opportunities to learn and grow in both your personal and professional life. From leadership skills to financial management, you can acquire a broad range of skills and ideas that will contribute to your growth.

Furthermore, being skilled and vast with knowledge makes it easier to build a positive work culture, build a strong team, and influence and motivate them through your leadership skills.

2. Gain total independence and flexibility

One of the top benefits of being a small business owner is the ability to make decisions without needing approval from anyone or having to be dictated to by someone. This independence allows you to lean into your creative side and bring your business goals and visions to life.

Aside from the ability to make decisions independently, most entrepreneurs enjoy the flexibility that comes from running a small business. Whether you’re working from home or you have a designated workplace, owning your own business allows you to live a life that fits your personal life while also meeting up with your professional life.

3. Leads to financial independence- being a small business owner

Owning a small business has a lot of advantages to it, and one of them is the financial independence that comes with it. A small business can grow to produce lucrative returns, especially when the business is well-managed with business strategies.

The ability to create something from the ground up and watch it start bringing in returns is a benefit that keeps most entrepreneurs going. However, it’s important to understand that most of these rewards don’t come immediately. This is why most small and medium-sized business owners fail. Your business might take some time before you can start enjoying the financial benefits. 

Moreover, a scalable business will always bring back returns once it sets off from the ground.

4. Personal fulfilment

For some entrepreneurs, the goal is usually bigger than making money. Many small business owners start their business because they have a goal or a cause they are passionate about.

For instance, health brands that build their business to help people live better lives, or people who create products or services because of a loved one or just to make an impact.

Being a small business owner allows you to create a vision board and build something you believe in from the ground up. The personal satisfaction that comes from being able to solve problems, help customers and grow your business can be really fulfilling. 

Furthermore, as a small business owner, you can test out your creative ideas and experiment with tools and technologies in your industry.

5. Make an impact- being a small business owner

As a small business owner, you have the opportunity to hire people, patronize suppliers and contribute to the economic growth of your community.

More than that, you can also make an impact in the lives of people by sharing your growth tips, hosting free webinars and creating e-books to help people who are interested in business find their way. 

Furthermore, creating a business helps you hire people based not just on their technical know-how, but also on their alignment with your company.

This makes it possible for young talents seeking for more experience to gain some and become a part of your business growth.

Disadvantages Of Being A Small Business Owner

1. Long working hours

Many small business owners wear so many hats, especially at the beginning of their business. This automatically equals to:

-Working late nights 

-Working through the weekends 

-Having to handle multiple responsibilities 

-Trying to keep the business afloat. 

This usually blurs all the exciting things you’ve heard about a business and might even make you want to quit. However, it’s important to remember that the first few years of a business won’t be as rosy as you think. 

2. Responsibilities and stress

Running a small business comes with high levels of responsibility. There is a need to become an expert in your field, manage finances optimally, handle day-to-day activities and also conduct market research. 

These responsibilities and the pressure to succeed, if not managed properly, can lead to burnout. 

3. Financial uncertainty

While there is a lot of potential in creating a business, this also comes with lots of financial risks. Unlike employees who expect a certain amount at the end of each month, a business owner needs to build a thriving business if he wants to be financially independent. 

4. Inability to manage cash flow

One of the biggest challenges small business owners can face is the inability to manage cash flow. This can happen due to late payments from customers, overspending and lack of a business budget.

5. Handling legal obligations

Small business owners need to handle certain legal obligations such as registering their business, obtaining necessary licenses and complying with regulations and industry standards. This can be difficult for business owners who have no idea how to go about it and can lead to hiring a legal expert.

6. The need to be more knowledgeable

As a small business owner, you need to seek knowledge. This can seem impossible with your busy schedule and inability to find time for yourself. But a business owner who isn’t knowledgeable will find it hard to understand essential leadership skills, how to build a work culture and how to hire the best people for their business.

Conclusion

The idea of running a small business can be exciting, but you need to be aware of the benefits as well as the challenges that come with it. Winning as a business owner requires discipline, resilience and strong management skills. Therefore, take it one step at a time, read books, listen to podcasts and watch videos that can ready you for the journey ahead.

What specific challenges are you facing with your small business? Drop them in the comments below.