The Ups and Downs of Small Business

I read this morning that Microsoft is laying off workers again. This seems to be happening a lot lately in the IT sector, and really, across all industries. The more I read about these layoffs, and having lived through a few of them myself, the happier I am that I am my own boss now, and don't have to answer to some executive's bottom line, or third quarter profits.

Don't get me wrong... being self-employed is its own special kind of terrifying. Everything that goes wrong is your fault. Any mistake could be potentially fatal for your fledgling venture that you've poured your heart and soul (and blood and sweat and tears and hopes and dreams and...) into. Owning your own business is a daunting process, and I don't think a lot of people understand exactly how much goes into it, and how much uncertainty there is, even in a business that's actively taking in money.

The real problem is that businesses have a lot of extra expenses, costs, and disadvantages that individuals don't have. We may have to buy expensive equipment or tools just to enable us to do our work. Many businesses require commercial space, which is usually more expensive than residential space. There are tons of companies that take a cut of every single transaction we complete, which means less profit for every sale. It's not just the suppliers, either. The credit card companies and banks charge fees for every transaction. Our online services have fees associated. If we need special software to run any functions, that also has a cost. Many businesses have to pay a bookkeeper or accountant to handle their finances if they are complicated or the owner doesn't have time. We have to have commercial insurance in case of accidents on our premises, otherwise we could be financially responsible for an unfortunate incident we're not even actively involved in.

And on top of all that, we don't qualify for the protections and discounts that normal, corporate employees enjoy, such as group health insurance. Individual plan are extremely expensive (because they're based on actual usage, and there's nobody else to offset the cost). There's no such thing as a group insurance plan for small business owners (wouldn't that be wonderful?). This means we pay out of pocket for all medications, non-standard procedures, and other associated medical, dental, and vision costs that many other Canadians don't have to deal with, depending on the quality of their group plan.

So small businesses have a lot of costs associated with their operations and their owners' expenses, which can have a real impact on their profitability, and how much money they actually have when the day ends. This is part of why so many small businesses fail, and why new owners often joke about how little their actual salary is once they factor in all the costs, and non-billable hours associated with trying to find customers.

But despite all that, there are a lot of advantages, too. Not having corporate overlords, who may decide at any time to lay off more employees, is one of them. So is being around to see my family more (which is especially important for me since my son has medical issues and requires pretty constant attention to ensure his ongoing health). On the whole, I'd take being my own boss over working for another company any day, despite all the panic, stress, and long hours.

So the next time you're working with a small business owner, and they seem a little manic or distracted, just remember: there's a lot going on behind the scenes that you don't see. And maybe think of the little guy before walking into that big box store.