What are the pros and cons of creating a startup?

Statistics show that most people set up businesses as they want to be their own bosses and pursue their deep passions. While running a company can be an extremely rewarding experience, there are a few potential drawbacks that may make it less suitable for some would-be entrepreneurs. Today, we are shining light on the pros and cons of creating a startup. Read on.

Creating a startup – table of contents:

1. Advantages of creating a startup
2. Disadvantages of creating a startup
3. Creating a startup – summary

Advantages of creating a startup

There are a lot of benefits that come with establishing a new business. No wonder that in the United States alone more than 6.5 million startups are created.

Low cost

You don’t have to be a millionaire to launch a startup. In fact, you often don’t need to invest any money in the early stages of its development. Statistics show that 1 out of 3 people who start a new business have a budget of less than $5,000. 77% of new companies are financed with the founder’s personal funds.

Freedom

Founding a startup gives an incredible sense of freedom. Forget rigid schedules and being tied to the typical 9-5 working week. You become your own boss and get an opportunity to fulfill your dreams. In the initial phase, no one imposes anything on you, which obviously can change when an investor appears.

Creativity

As a startup owner, you can take a creative approach to your business. You have a chance to follow your own vision and provide innovative products or services. Startups can’t prosper without creativity. No wonder that startup founders are often called visionaries. Running a startup, you have to look creatively at its every aspect.

Flexibility

Startups offer great flexibility. They usually hire top candidates that can adapt to a new reality very quickly. Change is the essence of every startup. When running such an organization, you need to be able to modify your working methods quickly.

Versatility

Versatility is a great value in business. It is especially evident in startups where teams are usually very small, and the employees perform various tasks. Such a solution allows them to carry out duties that would normally require more staff.

Disadvantages of creating a startup

Unfortunately, you need to be aware of the fact that founding a start-up also has its disadvantages. We have selected the biggest drawbacks of launching a startup. They are as follows:

Risk of failure

The biggest problem and disadvantage of starting a new business is the huge risk involved. Unfortunately, 90% of startups fail, and 10% of them fail within the first year of existence. It doesn’t matter what industry you operate in since the failure rate is similar in all sectors.

Funding problems

In the case of startups, the financial risk is also very high. One out of four companies are unable to obtain the required funding, and only 1% of them turn into unicorn startups. They continue to operate as long as the founder has enough funds, or until the loan money runs out. As the competition is fierce, it is not always so easy to find external funding options.

Limited resources

New ventures usually operate on small budgets, which has its consequences. You can’t allow yourself to swing the imagination and spend a lot on marketing campaigns. When confronted with competitors that have much bigger assets at their disposal, your company may be quickly pushed out of the market.

Lack of business processes

A common problem of startups is a lack of defined business processes. The absence of operational procedures may translate into poor customer service and financial losses, as well as expose your company to legal liability. The right solution here might be outsourcing some tasks to external providers, but this would involve extra costs.

Creating a startup – summary

Is launching a startup a good idea? When you set up a new business, you’re taking a chance. You don’t know if you’re going to succeed or fail. If you are not willing to take that risk, don’t do it. However, if you feel that you have the ambition to start something on your own one day, believe in yourself and start looking for your business concept.

Here we have discussed the pros and cons of creating a startup. You may look at the following article to learn more: Crowdfunding for startups.

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