Why Not to Start a Business

Starting a business can be a rewarding, fulfilling experience. There are all kinds of great reasons to start a business: you’re passionate about what you’re doing, you believe you can fill a need (or better yet, create a need) in your customers’ lives, you believe in yourself and your abilities.

But there are a lot of shakier reasons people cite for starting their own business that may be an indication that you’re not quite ready to take the plunge. If any of the following reasons to start a business sound suspiciously like your own rationale, it’s possible you haven’t fully considered your options.

I’m starting a business because I dislike working with others.

I’ve got news for you. If you’re starting a business because you can’t handle coworkers, you might be in for a nasty surprise: depending on your industry, you’ve either got vendors and suppliers and accountants to deal with, or you’ve got employees (who you pay to deal with these people) to deal with. Either way, you’re going to be dealing with people.

And in addition to this, you’ll probably have customer complaints to address, partnership queries to respond to, credit card merchants to discuss regulations with . . . if you have a problem interacting with a limited number of coworkers in a well-defined job-description setting, will you be able to interact with even more people in your new position as entrepreneur, when—let’s be honest—you’re spending a significant amount of your time flying by the seat of your pants?

I want to set my own rules.

Starting a business means being your own boss. And that's not always a good thing.
Starting a business means being your own boss. And that's not always a good thing.

Of course, being your own boss is a legitimate desire for many people, and an important factor in determining whether to start a business and set out on your own. But don’t make the mistake of thinking that because you don’t have a boss, you can do whatever you want.

When you’re an employee, if you have a situation with a customer that you’re having difficulty resolving, you can hand the situation over to your supervisor. But when you’re the boss, suddenly you’re the end link in the chain (possibly the only link in the chain), and you don’t have anyone to pass difficult situations off on.

And, more broadly, you’re essentially the keeper of the bottom line. You can’t slash prices willy-nilly; many of the numbers you’ll need to take into account aren’t controlled by you (supplier fees, warehousing costs, and so on). It isn’t that you no longer have a boss at all—it’s that now you have many.

If I build it, they will come.

Cliché, but worth mentioning—having a great idea just isn’t enough. Now that you’ve freed yourself from top-down inhibitions to your innovations, you’ll find that it wasn’t just The Man that was holding you down; as a small business owner, you’ll need to work even harder at getting your name out there, finding your target market base, and putting yourself and your products in front of that market base.

I don’t need experience to build a successful company.

Starting a business doesn't require a lot of experience. But it does require a lot of learning.
Starting a business doesn't require a lot of experience. But it does require a lot of learning.

It’s true that you don’t have to go to business school to run a business; even Richard Branson agrees that sometimes inexperience is a good quality. But don’t misinterpret the good sir—he’s not advocating leaping blindly into your business.

There are two schools of thought as far as relevant experience goes. One is that it’s best to anticipate everything you can possibly anticipate. The other is that paying close attention to your regulations and filing requirements will inhibit you from spending your time and energy on innovation, and that if a late fee or penalty here or there is the price of pushing your business forward, so be it.

But there’s another option here. While paralysis by analysis never helped anyone, it does make sense to keep an eye out for the future. Some penalties and late fees are relatively unimportant in the long run, it certainly helps to make yourself aware of what you’re doing.

Here’s an example. A small company might incorporate and remain the default entity type, a C corporation, simply because they don’t know that there are other options. And while a C corporation does offer flexibility as far as the amount of shareholders, their citizenship, and other structural issues, those benefits may be wasted on a C corporation. (Is the ability to have more than 100 shareholders really important to a company that only plans on having 5 of them?) And a C corporation will pay much higher taxes than an S corporation. Had the company done a bit of research before leaping into things, they would have saved a bundle in taxes.

Here’s an inverse example: since an S corporation is a pass-through entity, a company registers as an S corporation to take advantage of the tax benefits—only to realize that this drastically inhibits their expansion plans. (An S corporation cannot own stock in another company; shareholders must be US citizens or residents; multiple classes of stock—which would reflect different tiers of voting power—are not allowed.)

While it doesn’t do to bury yourself under a mound of paperwork and regulatory codes, a basic understanding of what you’re doing is a necessity so that you can sidestep easily avoidable pitfalls.

Why start a business at all, if it’s such a terrible idea?

It isn’t a terrible idea at all, if you go into starting a business with the right mix of apprehension, hope, confidence, and the knowledge that your company is not infallible. If you’re willing to be flexible, put in the necessary work, and keep an ear to the ground so that you can reposition your business in response to growing trends, you’re already a step or two ahead of the game.

Starting a business can be incredibly rewarding.
Starting a business can be incredibly rewarding.

Incorporating a business is a risk, but with realistic expectations and dedication, your journey from entrepreneur to successful business owner can be a rewarding one.


Have you started a business? What did you find to be your greatest challenges? What were some of the areas you were pleasantly surprised to find went smoothly?

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