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Set Your Small Business Up for Success: Strategies, Best Practices, Insights, and Tips (Part 4)

How to Be Your Own Boss
Nancy Bilyeau
Nancy BilyeauUpdated August 15, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
This is the fourth in a five-part series on small business success. Part Three: “The Essentials on Small Business Funding and Building Credit”

Part Four: Being Your Own Boss: Benefits, Drawbacks, and Tips

It takes guts to start your own business. But many people, after weighing the pros and cons, feel they can’t not make this move.  As Amazon’s Jeff Bezos said, “I knew that if I failed, I wouldn't regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day, and so, when I thought about it that way, it was an incredibly easy decision.” While the failure rate for small businesses is sobering—one in five go under within the first year—pursuing a vision for yourself and overcoming all the obstacles has definite rewards. And learning how to grow your business often goes hand in hand with learning how to be your own boss, followed by being the boss of others. Recommended: How to Run a Successful Business: 9 Helpful Tips

Are People Who Work for Themselves Richer?

The adoration our society doles out to the self-made actually has some basis in the data. In late 2019, a market research firm created headlines when it said that 67.7% of the world’s “ultra-wealthy” population—those with a net worth of $30 million or more—were self-made, while 23.7% had a combination of inherited and self-created wealth. Bringing this down to earth, research from Payscale showed that U.S. small business owners make, on average, $70,300. (Worth noting is that many company founders take no salary in the first years of running a business, while others take so much that they have trouble scaling their business.) But creating a successful business can lead to long-term and life-changing financial gains. According to a report released by the Small Business Administration in early 2021, “On average, the self-employed are wealthier than the non-self-employed and are significantly wealthier than workers and retirees.”   What must be factored into the equation is that the person who started the business spawning generational wealth may have had significant advantages in education, inheritance, and connections. As the SBA says, “It is not clear if the self-employed choose self-employment because they started with greater wealth, or if they created it, or both.” Moreover, racial disparities are glaring in these analyses. “Business equity makes up a larger share of nonfinancial assets for white (non-Hispanic) families at about one out of every three dollars than it does for Black (non-Hispanic) or Hispanic families, where business equity makes up about one out of every eight dollars for each,” said the SBA. “Over the last 20 years, business equity shares for Black and Hispanic families fluctuated with the business cycle, while white families have had pretty steady increases.” According to the US Census’ 2020 Annual Business Survey (ABS), only 18.7% of U.S. employer businesses were minority-owned.

Are People Who Work for Themselves Happier?

Despite the long hours and serious challenges, entrepreneurs report consistently higher rates of happiness than wage-earning employees, says research reported by The Wall Street Journal. “If you look at the data, it turns out that entrepreneurs on average earn less money than a typical employed person, work 13 hours more a week, and report that it’s a very stressful occupation,” says Boris Nikolaev, assistant professor of entrepreneurship at Baylor University in Waco, Texas, told WSJ. “But despite that, there’s overwhelming evidence in the literature that entrepreneurs report significantly higher levels of job satisfaction.” Harvard Business Review found a similar breakdown when studying work and happiness. “We find that being self-employed is associated both with higher overall life evaluation and with more negative, daily emotions such as stress and worry,” wrote one study author. “It will most likely come as no surprise to anyone who owns a business that being self-employed can be both rewarding and stressful.” No, it’s not a surprise. But can anything be done about the worry and stress that devour so many small business owners?Recommended: How to Pay Employees When Starting a Business

How to Recognize and Banish Burnout

Anyone might think they know what burnout feels like—you’re exhausted and overwhelmed—but it has specific markers for small business owners.
  • Passion for your startup is being replaced by resentment and cynicism
  • You keep putting off important things because procrastination is a habit
  • You’re plagued with brain fog and forgetfulness
  • You’re wiped out even after a night of unbroken sleep of at least seven hours
A small business owner with no staff or a small one is in a tough corner when it comes to reducing burnout. Delegating is not always possible and every minute seems to count toward staying in business. But the bottom line is if you fall victim to serious burnout, your business will become toast along with you. Do you want to ruin your health as well? According to Harvard Business Review, research has linked burnout to many lingering health problems, including hypertension, sleep disturbances, depression, and substance abuse. Here are three advice points that can help.

Don’t “Fake Relax” — Really Do It

For at least 30 minutes a day, you must truly relax and take your mind off work completely. Sitting on an exercise bike while you worry about invoices is not cutting it. Empty your mind of stressful thoughts without judgment and do deep breathing. Or do something you really enjoy: Listen to music, garden, split wood. This is not a cop-out from keeping your business going. It’s a key to business survival.

Go Big Picture

It’s easy to slide into feeling bad about the setbacks and fretting over the competition, but a proven way to restore perspective and fuel yourself anew is to reflect on how far you’ve come.  Reflect on your past achievements and successes. Get away from the day-to-day. Look at what you achieved over a longer period of time to remind you how successful you’ve been.

Get Better at Saying No

Over-extending yourself is a path to burnout.  It’s too easy to build up stress and anxiety when too much is on your plate. Try saying no more often.

Reach Out to Others

“The best antidote to burnout, particularly when it’s driven by cynicism and inefficacy, is seeking out rich interpersonal interactions and continual personal and professional development,” says the Harvard Business Review. “Find coaches and mentors who can help you identify and activate positive relationships and learning opportunities. Volunteering to advise others is another particularly effective way of breaking out of a negative cycle.”

The Takeaway

Worrying about running out of funds is a top stressor for new business owners, and many forgo salaries in order to keep the lights on and keep up with payroll. Getting a small business loan can help ease some of that stress. Lantern by SoFi helps you easily compare lenders who match your business goals and qualifications so you can quickly secure the capital you need. Then, once you’ve got cash in hand, you can focus on actually getting down to business.Recommended: 10 Things Business Loans Can Be Used forNext in the Series:Part Five: "20 Small Business Startup Grants, Programs, and Checklists 2022"

About the Author

Nancy Bilyeau

Nancy Bilyeau

Nancy Bilyeau writes about student loans, mortgages, car insurance, medical debt and many other finance topics for Lantern. A veteran of the magazine business, she has edited stories on personal finance for Good Housekeeping and DuJour magazines and has written articles for The Wall Street Journal, Readers' Digest, Parade, Town & Country and Lifetime/A&E, among others. She is a graduate of the University of Michigan.
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