Ten Cons of Working for a Small Business

One of the biggest financial decisions that we make in life is the decision of where we want to work. There are both pros and cons to working for a big business and working for a small business. While I’ve said that I think working for a small business can be surprisingly beneficial, it can also have many undeniable drawbacks. It’s important to know both the good and the bad before you commit to any workplace situation, especially to one where you’re going to be spending the majority of your days. Below are some of the cons that come when working as a team member of a small business.

Lower pay

Many small businesses simply do not have the resources that large companies do. While you may get more experience, you’ll often get paid less than you would doing the exact same work for a larger company. When there’s less money to work with and no human resources department around to figure out how to set up a small business 401k or dental insurance, you’re also unlikely to get as many benefits as a large company could offer.

Fewer vacation days

Small businesses have fewer employees, which means that there are fewer people around to pick up the slack when you’re gone. This translates to bosses that are reluctant to let you take a real vacation. Of course, this happens in large companies, too. If vacation days are important to you and you’re looking at working for a small business, make sure to pick a boss who values his vacation time as much as you do and will want you to stay home and recover when you’re sick.

Increased workload

There is a lot of work involved just to operate a business, including payroll, taxes, business insurance, and business licenses, and these things alone can take up a lot of time. On top of that, the business’s actual work needs to get done. With more work and fewer employees to spread it around to, any increase in workload will frequently fall on you and you alone.

Less opportunity to meet new people

Large companies can be great places for making new friends. If you don’t really click with the people in your department, you can always find some people in accounting to have lunch with instead. If your company only has five employees and you don’t get along with them, you’re out of luck. Working for a small company can be lonely at times, too — there will be days when everyone is out except you.

Less job security

In the age of Enron, this one is questionable, but let me put it this way: if your company has one boss and five employees (none of whom have any ownership of the company) and your boss suddenly dies in a car accident, there goes your job. At a large company, someone would be next in line to take over your boss’s role, the the company and your job would remain intact.

Increased likelihood of menial tasks

Small business often do not have cleaning staff, suppliers, or dedicated receptionists. If you think that taking out the trash, doing the dishes, answering phones, opening mail, and making trips to Office Depot shouldn’t be in the job description of someone with your credentials, a small business environment may not suit you. You may be able to avoid this issue if the business has multiple employees and your skills and experience automatically place you high in the ranks.

Limited mobility

Particularly in well-established small companies and extremely small companies, job titles may be well-filled or beyond your reach. If the only job titles in your company are President and Assistant, there isn’t a lot of room to get promoted.

8. More blame when things go wrong: Since you’re likely to have greater responsibility in a small business setting, you’re also more likely to be the one who gets blamed when things go wrong. If you work for a small company, you’ll need to be extra diligent about not making mistakes or be convincing enough to successfully blame your errors on potted plants.

Fewer resources

Small business usually can’t afford the kind of top-of-the-line software and equipment that bigger companies can. They can’t get volume discounts on these purchases and are operating on a smaller overall budget. You’re also unlikely to get invited to a lavish company holiday party in a fancy art museum — the resources just aren’t there. In my experience, smaller companies seem to be more focused on work product and less focused on impressive perks.

Lack of name recognition

: In many fields, it doesn’t matter if anyone has ever heard of your company or not, but in some fields, working for a company with a big name can be the key to your future success (McKinsey, anyone?).

Now that you are familiar with some of the most important pros and cons of working for a small business, you’ll be well-equipped to decide if this option is for you the next time you’re searching for a job.

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9 Responses to Ten Cons of Working for a Small Business

  1. Fern says:

    As someone who has spent their entire career (all 26 years of it) in small and mid-sized businesses (not planned, it just happened that’s where the jobs were), I can relate to many of these points.

    One thing you didn’t mention, working for mostly small companies can be a handicap when you look for jobs in larger corporate environments; the concern is that you lack the ‘corporate mentality’ and may not understand the heirarchal structure and customs. Actually, I understand it very well. And good riddance!

  2. Alfa says:

    These cons make running a small biz more challenging, which is what many entrepreneurs are looking for.

  3. Elena says:

    There are some intangible good points of working for a small business too. There is a “family feeling” about. A savage loyalty to each other that you won’t find in a conglomeration, and your good work shines forth! It may not be for everyone but if you want to feel like a respected, needed person, small business might be the right way to go.

  4. Pingback: Ten Pros of Working for a Small Business - SavingAdvice.com Blog

  5. I like your connections BUT I do not agree on many points here. Your Pros for working with a Small Business resonates better. I have worked with Small Businesses and two large ones. Many of your Cons in working with small business applies to working with large businesses if you are working for a new arm of a large and older business.

  6. Mule says:

    Let me begin by saying that the 10 cons are absolutely true but they’re described in very favorable and “diet” light compared to the real world.

    I would say that the one thing missing is the biggest problem of a small company boss VS a large company manager/boss.

    The problem is “My wallet” mentality VS Corporate Capital mentality.

    That is the source of all problems within a small company run by 1 person (usually a closeted, greedy tyrant).

    One of the biggest difference between a SME and a corporation is that EVERYTHING you do is looked at as taking money out of the boss’s pocket. If you take a sick day (god forbid) that is looked upon as theft of company property aka boss’s wallet. If you dare take a lunch (at Boston Market) on a business trip, that is blatant theft. Also a slave master tendency often arises in SME bosses where if you’re a salaried employee (read slave/indentured servant) you are expected to stay many hours after work and with very little thanks if at all. However if you dare ask for a vacation day, that is always labeled as inappropriate behavior (bordering outrageous and mentally unstable), you’re reminded that you’re a salaried employee (slave) and politely escorted out of the office with hushed whispers and an aura of secrecy and shame as if you have committed a horrible atrocity and is being easily let off for the crime.

    I’m not saying this is always a case, just a RL experience. If you’re going to work for an SME, make sure it has more then 1 owner!

  7. fern says:

    While Mule’s case is extreme, I have to agree that this can sometimes be the case. I worked for two very small businessees (owner on the premises and maybe 5 employees) that “did not work out.”

    In each case, I was fully qualified for the position, but the owner had unrealistic expectations and demands. And it is certainly true that in a small company, you need to be willing to do everything, from working ‘mail room duty’ to dealing with office machine repairs, not just your specific job function. You have to be willing to pitch in whenever needed and have no prima dona mentality.

    Many small businesses, in my opinion, lack the more formal, often written, policies and procedures that protect employees in a larger corporation. While small companies offer potential rewards and satisfaction that can’t as easily be matched by working in a large company, i guess it depends on what you’re looking for from your job, in addition to making a living, of course.

  8. Michael says:

    This sounded like my life exactly. Loved the response number 6. I have worked for 3 small biz each only had one owner. Each worked out the same way all work and no security then they get mad when I quit HA beware sole proprietorship if you don’t want to share the wealth than don’t hire do it all yourself

  9. Fred Smith says:

    I wish I had read this article when it first came out. A small business is usually started by someone with no financial responsibilities, who live with their mommy or well-off spouse. The afformentioned person starts their own business because they normally lack the maturity to listen to anyone other than themselves. (know it alls). They normally enjoy the feeling of watching their small staff do all the work that they will take credit for, while anything that goes wrong will be blamed on anyone other than themselves. There is never a retirement program, helth insurance, pensions, paid-training, or anything else which might enrich the lives of the employees. By making part of your pay cash, the “never wrong” business owner will also rob you of some EIC, and the chance to even retire on social security. If you ever do interview with a small business, make sure that the person running the business has actual goals for the business, and for the employees of the business. To sum it all up, in a large company ladders exist for growth, and it is up to you to climb them. In a small business you walk in every morning, stare at a sign on the wall in front of you that reads “dead end” and you are expected to run into it. Nothing will crush your soul, or your sense of self worth faster than working at a small company.

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