It is estimated that 64.
2% of new businesses fail within their first 3 years of operation.
One of the biggest reasons for this high failure rate is the simple fact that not everyone is suited to be self-employed.
In our society entrepreneurs are romanticized as the smartest, the richest, the best looking people that make money while they sleep as the sales pitch goes.
Please along with other misconceptions that working for yourself is some magic road to financial freedom is far from reality.
Don't get me wrong working for yourself has many advantages such as greater freedom, tax advantages and the feeling of accomplishment that you have built a successful business.
To be successful as a self-employed entrepreneur you must create a mindset that will allow you to rely on your own instincts as well as your expertise in your field.
You will have a greater freedom than you will ever have working for someone else but along with those rewards there also comes added responsibilities and stresses.
Another perk of working for oneself is that you have an unlimited earnings potential.
According to the Wall Street Journal's self-employed people who provide services usually are paid anywhere from 20 to 40% more per hour than an employee of a company that would be performing the same type of work.
As any business owner will tell you there are more tax benefits to being self-employed then there are tax disadvantages.
There are numerous deductions available to a self-employed business owner as long as these expenses are business related.
In addition to the deductions a self-employed person can also establish retirement plans that have definite tax advantages.
By establishing a retirement plan for yourself as a business owner you will be able to shoulder a substantial amount of your in, to be ready for retirement.
Because of this type of tax benefit the self-employed off in pay less in taxes than employees who aren't similar incomes.
Despite the advantages of working for yourself being a successful self-employed businessperson takes a special type of individual.
This individual must be able to deal with the lack of job security and the knowledge that all income is truly determined by their own decisions and efforts.
Also there are no free benefits being given to you from an employer.
Things such as healthcare or paid vacations or even sick leave are a thing of the past when you become self-employed.
Also you must realize that there is no such thing as unemployment insurance for self-employed businessperson.
There also is no Worker's Compensation should you get hurt on the job so you would need to consider adding to your own insurance policy to cover for someone for seeing accident particularly if your business involves some kind of construction or installation work where you could become injured on the job.
So before you start your own business it's important to do an honest self-evaluation and ask yourself if you are comfortable with being completely responsible for the income and support of yourself and your family.
A good idea would be to list the pros and cons of your business endeavor before making a commitment to it and not afterwards.
The cons would be things like paying double Social Security tax, having personal liability for your debts, all collections of fees and money owed to your company from clients and ongoing legal and accounting issues that may arise.
If after looking at the worst-case scenarios you feel that you are up to the challenge of running your own business and taking responsibility for your own income level then and only then should you proceed would your business venture.
In conclusion the success or failure of any business venture has more to do with the mindset of the person running the business than any other factor that they would encounter.