Being your own boss can be great, you set your own hours, location, there's no ceiling on how much money you can make, but there's a dark side of being your own boss that's often overlooked, which most entrepreneurs are simply not prepared for. This is likely a big factor in why 90% of startups fail within the first year.
With great freedom, comes no freedom whatsoever. Being your own boss means great responsibility. In fact, 72% of Gen Z said "entrepreneurship" is their first career choice. Being your own boss becomes your entire livelihood, there is no margin for error, and consequences of mistakes are often 10x more severe than they would be working for someone else.
Here are 6 things all upcoming entrepreneurs should know about becoming their own boss:
1. You are what you earn.
You have no assurance of salary or compensation. What you make entirely depends on your business, your clients, your market, and your performance. When you take the leap into becoming your own boss, you might make 10x that of what you made working for someone else, or you could end up having no idea what you'll make next month (if anything.)
2. Responsibility
Being your own boss brings a tremendous amount of responsibility. You're responsible to yourself for making your dream a reality, you're responsible to your investors and shareholders, and you're responsible to your employees whose livelihoods depend on your ability to make sure they're doing what they need to, and you're doing what you need to ensure the company's success to keep them employed.
3) Sacrifices
You're going to have to make a lot of sacrifices when becoming your own boss, which will eventually reveal who you really are.
-It can take a long time and a lot of hard work to build revenue. You'll have to sacrifice going to the club Friday night, instead spending the night working on your marketing campaign, perfecting your website, or brainstorming a problem with a client--hell, you likely won't even be able to afford the club at this stage.
-You won't have time for romantic relationships for a while, this might sound cold-hearted but out of respect for the other person, you can't put the emotional weight of balancing a business and a relationship on yourself, and you certainly can't expect the other person to either.
-You'll have to adjust your lifestyle, from the food you eat, to the clothes you wear. Both as a matter of image and watching your budget.
-You'll be leaving the security of healthcare, insurance, and other benefits of the corporate world behind, at least until you're better established. This is often a major factor in whether people become entrepreneurs or not, especially for those with families.
4) Regulations, taxes, paperwork
On a more practical note, being your own boss means different taxes, keeping organized books and even hiring a full time accountant, and depending on your business and industry, you could be looking at an alphabet soup of different rules and regulations. Making a mistake here could mean the life of your business if not well protected. This is another area where new entrepreneurs make the biggest mistakes.
5) You're not your own boss
Being your own boss is one of the biggest myths of entrepreneurship. When working for someone else, you typically have one superior. But contrary to popular belief, when you're your own boss, your investors, lenders, employees and ultimately your customers all own you--not the other way around. By choosing to become an entrepreneur, you've traded one or two bosses for tens, hundreds, or even thousands of bosses: the customers.
6) If the business fails, it's your fault
The only time you should take the leap and become an entrepreneur is when you've decided that you, and only you are 100% in control of your circumstances, and only you have the power to change them. No more blaming the economy, your spouse, or your family, change can only happen when you make a conscious decision to make it happen.
When working for someone else, you might blame failures on the work environment, a poor boss/poor direction, etc. But when you're running your own business and you make a mistake, or the business fails--when you can't afford to pay your employees' salaries anymore, you have to accept 100% responsibility. You can't blame the market, you can't blame your personal life, it was your responsibility to do the research when starting a business, it's your responsibility to keep business and your personal life separate, and it's your responsibility to make sure the ship doesn't sink when times get tough.
Being your own boss can yield tremendous rewards, but it's important to understand the risks before taking the leap. If you think starting your own business if for you, try it on the side first. Don't quit your day job until you've determined you've found something you love, and you're good enough at whatever that is that people will pay you for it.