Entrepreneurship. Rhonda Abrams
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you’re your own boss. The idea of not having a boss is intensely appealing for many. You have no one to answer to, no one to judge you, and no one who can fire or transfer you. If you’ve only had bad bosses, not having a boss can be a huge draw.
PROFESSIONAL BENEFITS
You’ll also reap extensive professional benefits from your entrepreneurial endeavors. For starters, you can advance more rapidly than you would in a traditional office setting. Lack of experience, seniority, or office politics won’t hold you back. What your boss thinks of you won’t limit you. You’ll succeed or fail on your own merits.
You’ll also be able to fully leverage your creativity and ingenuity. Rather than simply carrying out other people’s ideas or implementing their visions, you reap the professional benefits of any exciting insights or “ahas!” you get. You can aggressively pursue exciting new ideas for products and services. When you have a good idea, you can act on it—instead of waiting for a committee or encountering bureaucratic opposition.
You get to choose the people you work with. When you’re in charge, you can hire a team that works well together, with people you respect and like. You’re not stuck with the other employees whom some boss hires. Your only limits on whom you can hire are your company needs, your cash, the available labor force, and labor laws.
Finally, you’ll thrive because of the sheer adrenaline factor. Entrepreneurs are challenged and surprised every day, and because of this they grow at a much faster rate, professionally, than their counterparts in traditional employment situations. And because you’re the boss, you can invest in further education and training as you want or need it.
REAL-WORLD RECAP
Advantages of entrepreneurship
■ Personal benefits
■ Professional benefits
■ Financial benefits
FINANCIAL BENEFITS
The financial benefits of running your own firm can be substantial. Research performed by Thomas Stanley and William Danko for their book The Millionaire Next Door found that self-employed businesspersons were four times more likely to be millionaires than those in traditional employer-employee roles. Your earning potential is theoretically unlimited: You can go as far as your business idea will take you. You also benefit directly from your success. The fruits of your labors belong to you. You can take as much or as little out of your business as you choose. And you’re untethered from the economic ups and downs—and whims—of a traditional employer. You make, and reap, the financial rewards of your own hard work.
Challenges
You’ll inevitably confront and surmount a number of challenges on your entrepreneurial journey. Among other challenges, you’ll need to find ways to manage the following realities.
YOU’LL FACE RISK
There’s a chance—a very good chance—that whatever business or enterprise you start may fail. Reports of the percentage of entrepreneurial failures are often overstated, but nevertheless there’s a high likelihood that you’ll end up having to (or choosing to) close up shop. With failure comes loss—loss of pride, loss of time, financial loss. The stress of dealing with a failing business puts tremendous strains on personal and professional relationships. Your family may not understand the pressure you’re under. You may have friends and family who have invested their money, and their hopes, in you, and they may not be as understanding or patient as you’d like. And you may feel guilt and shame at disappointing them. Failure is never easy.
Even when you don’t fail, you have a greater sense of risk in an entrepreneurial undertaking than by being someone else’s employee. Sure, you may get laid off from a job, but generally, employees don’t deal with the day-to-day reality of risk that business owners do. And when you’re the one in charge, especially when you have others dependent on you for their livelihood, this can put you under a tremendous amount of pressure.
What’s your chance of success?
When you start a business, you’ll often hear one statistic repeated over and over: “Fifty percent of all new businesses fail within five years.” The facts are actually somewhat different.
About 50 percent of all new businesses still exist after five years, and about 50 percent will have closed. Those may have closed for many reasons: The owner found a good job, moved, decided to pursue another line of business, and so on. “Failure”—meaning the business couldn’t make a profit—may have been only one of many causes.
YOU’LL DEAL WITH FINANCIAL INSTABILITY
When you own a business, expect your income to fluctuate considerably. Frequently, business owners experience an economic roller coaster, with great highs and deep lows in income. This is far different than having the comfort of a steady paycheck. What you sell to customers or bill clients is what you get. You’ll inevitably experience dry spells or go through times when your resources are stretched. And you may need to look beyond your own means for the cash to grow your business or even to keep your doors open if times get tough.
Moreover, when you have employees, you get paid last. By law, you must pay employees what you owe them—and by ethics, you’d want to make sure you’re paying your employees on time. That means that when the coffers are low, you’re the one who has to make do, who goes without a paycheck, who gives up income.
And you don’t get benefits. Want a vacation? Sure, you can take one any time you like, but it’s not a paid vacation. Need health care insurance? When you start your own business, you have the same kind of decisions to make as the largest publicly traded companies: What kind of health benefits can you afford—both for yourself and for any others you employ? Which insurance company (or companies) will provide them? How will you fund these benefits? Likewise for retirement savings—both your own and for any employees. Will you contribute to a 401(k) plan?
YOU’LL WORK HARD AND DRIVE YOURSELF
This is a given of the entrepreneurial life: Self-employed individuals tend to work longer hours than the typical employee. There’s no such thing as a typical workday—you’ll often find yourself working nights and weekends, on family holidays, during vacations. You don’t get paid for the time you don’t work. This means that you will lose revenue for each day you are sick and for vacation days, so you’ll likely find yourself taking fewer days away from work. Moreover, many entrepreneurs have to continue doing their “day” jobs until they establish their entrepreneurial ventures. So expect long hours for many years.
You also must be a self-sufficient worker and a disciplined self-starter. No one assigns you tasks—that may seem liberating at first, but it may also feel burdensome when you don’t know which way to turn. Depending on the type of business you start, you may be working on your own most of the time. You won’t have the traditional network of coworkers to turn to for support or assistance. If your computer breaks down, you’ll have to figure out how to get it up and running again—either by yourself or by hiring outside help. You’ll either do your own books or find a good accountant. And you won’t have the built-in social structure of the traditional workplace.
YOU MUST COPE WITH CONSTANT CHANGE
The one constant you face is change. And just when you think you have everything under control, something new will come along—count on it. You’ll need to develop your capacity for rolling with the punches. Nimble companies that can quickly evaluate and respond to changing conditions will most likely succeed.
Therefore, you must be a fast learner. Unless you’re a most unusual person, you will be largely jumping into the great unknown when