We often hear that small businesses are the engines of job creation in the United States. In our community many of our small business are in the form of individuals and self employment. Jeff Romine, partner in the Financial Planners of Missouri and small business owner, stopped by the set of Good Morning Heartland to discuss the advantages and disadvantages of self-employment.
Question: Why are self employed individuals important in our community?
Answer: The importance of small business in our economy is sometimes underestimated because each business is small, but the truth is there is nothing small about the total impact they have on our economy. They provide both jobs and innovation.
there are between 25 million and 27 million small businesses in the U.S. that account for 60 to 80 percent of all U.S. jobs.
And, a recent study by
, says that small businesses produce 13 times more patents that larger firms.
Perhaps for an example, if you drive somewhere and look out your car windows to the left or to the right you often see farm land. The farmers that are running and operating that land are typically self-employed and collectively they feed America and much of the world.
Question: Why would someone want to be self-employed?
Answer: Owning a small business and being self-employed is not just another job. Itâ??s a totally different lifestyle. The success or the failure of the business rests on your shoulders. It can be more exciting or it can be more worrisome than working for someone else. The bottom line is that many self-employed individuals use their business to survive and to provide resources for them and their families.
Being self-employed requires a personal commitment that is greater than what most jobs will generate. This can mean very long hours, many days of each week, and be an enormous source of pride.
Question: What are some of the advantages of being self employed?
Answer: 1. You are your own boss. You can have some flexibility in when you work. No one is going to fire you. You have job security. This will provide you an opportunity to put down roots and provide a sense of stability for your family. You can belong to a community.
2. You will have the chance to put your ideas into the business. Hopefully your business is in a field or area that you enjoy. Your business can be adaptable to what you see that needs to be done. This flexibility makes small businesses able to change virtually overnight to meet a perceived need.
3. You work hard and enjoy the rewards of your hard work. You'll never work harder for someone else as you will for yourself. I have always said, â??When you are your own boss, you know when you are loafing or when something more needs to be done! You will participate in very aspect of running the business. But if you want to schedule a day away from your work, you can do that.
4. You get to feel the enormous sense of pride and personal satisfaction when your business is successful, when your business has a good reputation, and when the business grows.
5. You will have the opportunity to lead others. When you need additional employees, you get to choose who you employ and then lead their growth and development.
6. You will get to work closely with your customers. You can develop strong meaningful relationships with your customers or clients.
7. You will develop a breadth of talents. In the course of running your business you will learn and acquire significant skills of marketing, accounting, negotiating and selling which are sought after skills in the workforce.
8. A successful business can provide financial reward. Hopefully, your business will prosper and reward you for your sacrifices. You may have a chance to make a lot more money that if you worked for someone. You will also have a chance to build real retirement value, if you can build your business and then sell it when you retire.
Question: What are some of the disadvantages of being self-employed?
Answer: 1. Risk of failure. Most new businesses fail in their first years. When you are self-employed, it is your own money or money that you have borrowed at risk. Having your own business increases the problems associated with failure.
2. Your decisions can be wrong. There will be no one to bail you out from your mistakes. And as a general rule, you cannot move forward without some mistakes. The big question is, can you learn from your errors and be adaptable?
3. Owning your own business can require a sacrifice of your personal life, you may need to work long, long hours, you may need to work on weekends, and you may not have a vacation for several years.
4. Your income stream may fluctuate throughout the year. You may have very little to live on during the early times.
5. Your health insurance and pension costs are not included automatically. When comparing self-employment income to a job, you need to remember the employee benefits that are associated with employment such as health insurance or perhaps a pension contribution to a 401(k) are not automatically included. You will have to meet these needs from your income.
6. Strict record keeping and attention to detail are very important. You will have the ultimate responsibility for such things as the required licenses, sales tax returns, employment and unemployment taxes returns, payroll information, and income tax returns. The details that are recorded on these documents will need to come from your record keeping system.
7. Some tasks may be unpleasant. You may find yourself doing things that you do not enjoy, but no one else is there to do them. This may include firing employees, or saying â??noâ?? to a family member looking for work.
8. You may have a hard time hiring qualified employees.
9. There is always a risk of being sued. Creditors and customers may possess the ability to seek your personal assets if you default on your business obligations. If a customer or vendor believes you acted in error, he may file a lawsuit against you. To protect your assets, you can seek liability insurance for your business, but some new business owners may find it difficult to afford insurance premiums.
Question: There is a lot to consider, is help available?
Answer: There are a staggering number of places that will assist individuals who want to start and operate a business for no charge. A simple search on the internet will yield numerous places in either Kirksville or Ottumwa. Plus there are many articles and resources available on line and through the Small Business Administration (SBA). I personally know several individuals that will help people wanting to start a business.
Financial Planners of Missouri
110 S. Franklin St.
Kirksville, MO. 63501