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Starting a Business: Advantages and Disadvantages Essay

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Updated: Jun 2nd, 2021


Currently, the development of market relations implies a free and equal coexistence of various forms of entrepreneurship and sectors within each type of ownership. A special place in the international economy at this stage belongs to start-up businesses. These are small enterprises that do not require large initial investments and guarantee a high rate of turnover of resources that can quickly and economically solve the problems of economic restructuring.

The formation and saturation of the consumer markets are the key elements in the current destabilization of the economy. It should be noted that for a highly monopolized economy, the small business acquires paramount importance since it makes a significant contribution to the development of a competitive environment. However, there are both rewarding advantages and serious disadvantages of starting a business, which need consideration.



If a person plans to open a business, it is important to consider the upcoming possible gains and losses. People who have already passed this way advise to divide the estimated income by two and the cost multiplied by the same amount. After all, one can never foresee all the risks that await any entrepreneur. An important factor is the personal qualities necessary for starting and running a business. If positive prospects do not seem attractive compared with the possible difficulties, it is likely that it is better to concentrate on employment. In addition, in the case of successful career advancement, an individual is able to also achieve a high professional and financial level.

Starting a business is always accompanied by risk factors; therefore, a starting entrepreneur will need a lot of enthusiasm, the ability to make non-standard decisions, and the willingness to take responsibility. However, the possible rewards for hard work can be significant. Any business requires constant attention and development; otherwise, it will not be victorious in the competitive market.


By analyzing international and domestic experience in the development of entrepreneurship, the following benefits of starting a business can be pointed out: faster adaptation to local business conditions, greater independence of actions, and flexibility in decision making. In addition, it allows people to have relatively low costs in the implementation of activities, especially management cost, and a great opportunity for an individual to realize his/her ideas (Jackson, 2015). Starting a business enables one to show one’s abilities with lower initial capital requirements and the capability to quickly introduce changes in the product.

The entrepreneurs are more inclined to savings and investment, which has a beneficial effect on the whole enterprise. New businesses are more informed and adapted to the level of demand in local markets, often produce goods by order of specific consumers, and provide a livelihood to a substantial number of employees (Amankwah-Amoah, Boso, & Antwi-Agyei, 2018). In addition, small start-up businesses contribute to greater growth in employment compared with large companies, thereby influencing the spread of practical knowledge and the training of professionals (Jackson, 2015). Small and medium-sized enterprises, as compared with large ones, in certain countries dominate both in the number and proportion in the production of goods.

There are several advantages to starting a business, and the biggest benefit is money. An employee working for someone is confident that he/she will receive a salary. A person can get paid only within the limits that have been established beforehand. However, if an entrepreneur starts a business, then with proper management of his/her business, he/she can hope to increase profits and income.

Another significant benefit of starting a business is the ability to manage time without one’s approval personally. It is among the main reasons that make a company attractive for many. It is also plausible to state that a businessman has the opportunity to do what he/she desires. In addition, when an individual starts a business, his/her interests in work are always pursued. There is excitement associated with an increase in personal profits. Moreover, it is not at all interesting for the majority of employees to increase profits for employer organization. The advantage of starting a business is that it’s not mandatory to be held accountable to anyone because a person is independent and takes responsibility for his/her actions. Establishing an individual schedule is also a distinct advantage.

Starting a business gives an entrepreneur freedom from the desires and whims of superiors. A person will not be worried by thoughts of whether he/she will be fired tomorrow or not. An entrepreneur will not be delayed wages, not pulled out of the weekend or vacation, and will not worsen working conditions. If a businessperson sees potential in IT, such as 3D technologies, virtual reality, or in new markets, such as trading in electronic cars, he/she can make a managerial decision to pursue these markets. The next positive side of the business is personal growth. Creating and starting a business is an opportunity to check what an individual is worth.

Overcoming difficulties, solving problems, and achieving a goal is an invaluable experience that will remain forever. In any hired job, a person will not be as satisfied with success as in his/her business. In addition, the social status of an entrepreneur is higher than that of a full-time employee.

Furthermore, the job search is often tied to one’s specialty and not to the area in which an individual would like to develop. When starting a business, an entrepreneur can choose any direction in which he/she wants to shape a firm. In addition, he/she can select and select the team with whom to work. Thus, there are a lot of advantages to starting a business. The scope of benefits may also include psychological comfort in communication.

A business owner can choose his partners and communicate with them freely. However, an entrepreneur possesses the full managerial right to enter into contracts and agreements only with those people who are pleasant to him/her and whom he/she trusts. A businessperson does not need to tolerate incompetent and inefficient employees because he/she can fire them.


The practice of start-up businesses has specific problems, among which the most significant ones can be identified as higher levels of risk, therefore a high degree of instability in the market, and dependence on large companies. In addition, there are shortcomings in managing a business accompanied by poor managerial competence and heightened vulnerability to shifts in the economy. Difficulties in obtaining loans and borrowing additional funds and uncertainty of business partners when concluding agreements are among the disadvantages of starting a business.

Deficiencies and failures in the operation of businesses are determined by both internal and external causes, including the operating conditions of start-up enterprises. Studies show that the majority of failures of starting firms are associated with professional incompetence or managerial inexperience of small and medium business entrepreneurs (Nikolaev, Boudreaux, & Wood, 2019). There is also a low survival rate among new companies due to market competitiveness.

Small Business Survival Rates.
Figure 1. Small Business Survival Rates (Glenn Kessler, 2014, p. 1).

The most common reasons for failure are incompetence, unbalanced experience, and the lack of experience in commerce, finance, supply, production, management, and partnerships. Common causes of bankruptcy for small firms are business neglect, poor health or bad habits of the head of the company, and disasters, such as fires, theft, and fraud (Chadwick & Raver, 2018). Small businesses’ chances of success increase as they grow older. Firms that do not change their owners for a long time bring in a higher and more stable income. American statistics show that women-owners of small firms are more successful in business than men (Chadwick & Raver, 2018). In the course of the research, it is noted that entrepreneurs who work for prolonged periods succeed.

Moreover, if not one person is involved in the management, but an entrepreneurial team that consists of multiple people, the chances of success are higher due to collective decision making is more professional (Abd-Hamid, Azizan, & Sorooshian, 2015). The size of financing at the first stage of their existence also affects the viability of small firms. The greater the initial capital invested in a small firm, the greater is its ability to maintain activity during crisis periods.

A constant search for emerging and disappearing social needs and continuous adaptation to them form the basis of the small business strategy. Some Western experts tend to consider small business as a school of new personal relationships, a testing ground for testing methods and principles of organizing entrepreneurship in the future. However, due to the objective availability of less favorable economic conditions than that of large enterprises, small businesses are less stable and competitive and therefore need government support by federal and regional programs to support and develop small businesses.

The major disadvantage of starting a business is an increased level of responsibility. Unlike hired work, a businessperson has to be responsible for everything. At first, he/she may be a salesman, an accountant, a janitor, and a lawyer in his/her company. In addition, any key problem or error cannot be resolved by a colleague or leader. An entrepreneur has to continually make decisions on which the further development of a business depends or which can lead to its complete collapse.

Another big drawback of starting a business is complexity; therefore, an entrepreneur has to go through numerous mistakes to succeed, often without knowing if he/she is going in the right direction. The search for start-up capital, networking with partners, the struggle for a place in the market are among the frequent challenges for a firm. Meanwhile, a quick payback for a businessperson is not guaranteed. He/she needs to understand in advance what difficulties he/she will have to go through. The next disadvantage is the instability, and it another frightening barrier for starting entrepreneurs. No matter how much money he/she invests, there is always a chance that it will not be sufficient. However, even if everything does not end in failure, then instead of huge profits, a person can barely make ends meet.


To sum up, it is highly relevant to realize that numerous and sometimes unidentifiable factors influence the failure or success of a business. There are certain risks of business going bankrupt, insufficient income, and stress from increased amounts of responsibility. Nevertheless, starting a business also offers an opportunity to earn an unlimited number of rewards, both financially and emotionally. An entrepreneur can adequately regulate and manage a firm, and he/she is able to freely implement the important managerial decision.


Abd-Hamid, Z., Azizan, N. A., & Sorooshian, S. (2015). Predictors for the success and survival of entrepreneurs in the construction industry. International Journal of Engineering Business Management, 1(1), 2-5.

Amankwah-Amoah, J., Boso, N., & Antwi-Agyei, I. (2018). The effects of business failure experience on successive entrepreneurial engagements: An evolutionary phase model. Group & Organization Management, 43(4), 648–682.

Chadwick, I. C., & Raver, J. L. (2018). Psychological resilience and its downstream effects for business survival in nascent entrepreneurship. Entrepreneurship Theory and Practice, 1(2), 1-6.

Jackson, T. (2015). Entrepreneurship training in tertiary education: Its development and transfer. Local Economy, 30(5), 484–502.

Nikolaev, B., Boudreaux, C. J., & Wood, M. (2019). Entrepreneurship and subjective well-being: The mediating role of psychological functioning. Entrepreneurship Theory and Practice, 1(1), 1-7.

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