If you are involved in entrepreneurship, then you are actively engaged in the process of setting up a business of some type. You are also the kind of person who is willing to take a risk, putting it all on the line, because you want to see an idea reach its natural conclusion. Will you earn a profit? Maybe – or maybe not.
What drives the entrepreneur forward is the creative component of the work that they do. Every person defines this role in different ways. What they all have in common is the ability to identify a need – any need – to fill it in the best possible way. It is an internal urge that is independent of any other drive.
The world needs to have entrepreneurs in every industry to make a difference. They are the people who are the innovators, the world changers, and the money multipliers. If you are part of this world, then your day is defined by four words: define, invest, build, and repeat.
Entrepreneurship can be an exciting way to work, but it isn’t the right journey to take for everyone. These are the pros and cons of being an entrepreneur to review if you’re thinking about pursuing your next great idea.
List of the Pros of Entrepreneurship
1. You get to be the person pulling all the strings.
When you choose to work as an entrepreneur, then you get to pursue an opportunity which drives your passions forward. It is up to you to take advantage of your skills and strengths. There is no “settling for a paycheck,” or the other excuses employees tell themselves when they dislike the job they’re doing. If you don’t like what you’re doing in this field, then you have the power to change it. That’s why people who self-identify as being entrepreneurs have one of the highest job satisfaction rates in the world today.
2. It gives you an opportunity to discover your true self.
Have you ever tried to climb the corporate ladder? There are multiple obstacles that can get in your way. There are office politics which you must navigate, relationships you must build, and skills that you must prove before you even get the chance to apply for a promotion. Then you must follow the same steps for each additional rung you wish to reach. That issue goes away when you’re following the path of an entrepreneur. The only roadblocks that get in your way are the ones you allow to be there in the first place.
3. You get to become your own boss.
There is a lot of flexibility that comes with entrepreneurship that offsets the extra hours and long commitments you must make to be successful. When you don’t feel so good, then you can decide to take the day off. There are no bosses to question if you’re sick, supervisors that hand out the worst assignments to you every time, or all of the other hassles that come when you report to a superior in a hierarchy format. You set the chain of command as an entrepreneur. You dictate what course to follow.
4. It is exciting to work in the world of entrepreneurship.
Some people love to have a consistent routine where they get up, go to work, and come home to do the same things every day. You won’t find that in the world of entrepreneurship. If you have two days that seem similar, then it feels like you have done something wrong. You are never comfortable when pursuing these opportunities. It is a high-energy position that keeps you on your toes, always waiting for the next chance to push forward. There are new opportunities to discover every day.
5. You are not limited by anything as an entrepreneur.
You can become anyone that you want to be when you pursue the world of entrepreneurship. If you want to be a self-published author, then do it. Think you have a great idea for an app? Then make things happen! Want to spend some time tinkering with an invention? Entrepreneurship will make that happen. You decide which business sector to pursue when you create this opportunity for yourself – or you could put multiple irons in the fire to see what happens.
6. It offers an atmosphere of independence.
There is nothing like the independence which comes when you pursue an entrepreneurial opportunity. Even though you might not earn as much money, or you could put in longer hours, the freedom to know that you can do what you want whenever an excellent idea strikes is a benefit which is difficult to ignore. You can work from home, establish an office somewhere, or tether your phone to your computer to go on a trip somewhere. It is possible to earn an income in the way that best suits your needs when you decide to become an entrepreneur.
7. You earn a rational salary in the world of entrepreneurship.
Earl Cunningham* (not his real name) worked in the contract processing department of Yellow Book for over two years. He was earning $9.95 per hour, which wasn’t a bad wage in the 1990s. The only problem was that he was working on a quota system. Earl could complete his duties in less than two hours, but it would take most of his co-workers the entire day to complete the same amount.
To prove his point, he completed five times the amount of work in a single day that anyone else could do. Then he asked for a raise that was reflective of his output. Earl was denied. If he was an entrepreneur, there would be a better chance to earn a rational salary in that situation. Earl’s solution was to finish his work, and then sit at his desk and do nothing. Which option would be more satisfying?
8. It is possible to earn good wages as an entrepreneur.
Most people give up their dream of becoming an entrepreneur because they want to settle for the guaranteed paycheck. The passions that they felt as a freshman or sophomore in college go away in the decades-old tradition of trying to find their first career-related job. There’s a lot of glamor surrounding the idea of doing your own thing, but can that compete with the $200,000 graduate salaries if you graduate from a top MBA or tech program? The reality of wealth for an entrepreneur is a little different. Can you earn a living? Absolutely – most eventually earn around $60,000 per year.
You also get to spend more time with your family. If you have a home office, then you get to enjoy a commute to work in your bathrobe and slippers. You get to define success in this world instead of pursuing the definition that someone else has for you. That’s the true advantage of this field.
9. You have an opportunity to get to know your community better.
Active entrepreneurs are always engaged in community development projects. Volunteerism and activism are high priorities in this field. The involvement isn’t just because of the goodness of their heart. You must get to know the people you plan to serve with your business opportunities, and this is the best way to do that. It is a chance to change the world for the better, one person at a time, and it usually becomes a very rewarding experience.
10. It allows you to get your idea out first to your demographics.
Being the business that brings an idea to the market first is an experience that no other career opportunity can replicate. It is one of the true joys of entrepreneurship. Not only are you solving problems for people, but you are also making good on that effort to turn your passions into profit. It is a chance to become exceptional at what you do. The best part about all of this is that you can pursue many of these ideas with a minimal investment, which limits the risk you face when trying something new.
11. You have much more excitement in your life.
Although entrepreneurship requires you to work longer hours, harder days, and more holidays away from your family, there is a lot more excitement that you get to enjoy each day as well. You never know what to expect when you begin the day as an entrepreneur. There are always new puzzles to solve, problems to stop, and successes to celebrate when you decide to pursue an opportunity in this sector.
List of the Cons of Entrepreneurship
1. You are going to work harder than you can ever remember.
Entrepreneurs don’t get paid to slack off at work. While your buddies are busy playing social games on Facebook without getting caught by their boss, you’re trying to figure out a new way to change the world. Employees get a paid lunch, but you’re skipping it because there is a deadline you can’t afford to miss. They get holidays off. Entrepreneurs look at holidays as a quiet day to get some work done. Do not be deceived. You will work longer, challenging hours as an entrepreneur than you would as an employee.
2. It does not offer a guarantee of payment.
It is up to you to make sure that you get paid when you’re pursuing a career in the world of entrepreneurship. You must have the skills to identify deadbeat clients before you do one second of work for them. That means you need to avoid the bargain hunters, the leads who aren’t sure that they need your services, and anyone who is hesitant to sign a contract. Then don’t be afraid to hire a collection agency to get what you’re due. That’s assuming, of course, that you were able to sign a deal in the first place.
3. You must have your leadership skills firing on all cylinders.
Entrepreneurs must have the discipline to direct their actions toward the work that must be done. Is it nice to take some time off whenever you want? Absolutely! There is also the fact that if you’re not working, then you’re not bringing home a paycheck. Although it is helpful to have leadership skills in place that can help you guide your direct reports to successful outcomes, the first step on that journey must involve yourself. Those reruns of Jerry Springer are just going to need to wait.
4. It takes time to earn a return as an entrepreneur.
When you perform a Google search for the “average salary of an entrepreneur,” then you will find some encouraging results. Websites report that you can earn anywhere between $50,000 to $75,000 per year as a salary. That figure is a little misleading because the median takes into account the top 10% and the lowest 10% as well. Most first-year entrepreneurs go into the lower percentile of salary. It’s not unusual to make less than $10k during the first year of your business. If you’re willing to keep working, putting in that slow and steady growth, then these figures will build over time.
5. You will discover more stress in the world of entrepreneurship than anywhere else.
Entrepreneurs experience higher levels of cortisol (the stress-related hormone) than any other professionals in the world. Roughly half of all people who pursue a career in this field say that they are stressed out all of the time. Gallup reports that one-third of entrepreneurs are worrying frequently, while another 30% say that the loneliness and isolation of the work they do are “very” bothersome.
6. It requires you to pay that pesky self-employment tax.
If you are an entrepreneur who operates an LLC, a partnership, or a sole proprietorship, then there’s a good chance that you’re paying that costly self-employment tax. The 2018 tax code for the U.S. places this tax at 15.3% of your income. That’s because you are playing the employer’s share of your Social Security and Medicare withholding. Make sure that you budget this expense into the rates you charge to avoid coming out on the short end of things.
7. You will likely need to raise your own funding.
There are VCs and angels out there who are willing to take a chance on an entrepreneur – if you structure your business as a corporation. If you want to work independently, then you will usually need to bring your own funding to the table. There are business funding platforms, like PayPal Capital, that can help you raise some cash quickly without risking your credit, but don’t be surprised if you’re putting some costs (including your payroll) on your credit card from time-to-time to help make ends meet.
8. It still requires you to report to your customers and investors.
Although you do get to be your own boss as an entrepreneur, you must still report to the investors that helped you to get this idea off the ground. You’re required to produce goods or services that your customers want. There is more freedom here than the average employee experiences, but it still happens within a set of guidelines and expectations.
These entrepreneurship pros and cons help to paint a picture of what reality is like within this field. Is there freedom and independence available? Yes – but it comes at the expense of your free time. You must have the self-discipline to stay committed to what you are doing to be successful. It can be years before you start earning a profit. Since you are also pursuing ideas that you’re passionate about, there is nothing quite like the experience that comes when you are a full-time entrepreneur.
Natalie Regoli, Esq. is the author of this post and the editor-in-chief of our blog. She received her B.A. in Economics from the University of Washington and her Masters in Law from The University of Texas School of Law. In addition to being a seasoned writer, Natalie has almost two decades of experience as a lawyer and banker. If you would like to reach out to contact Natalie, then go here to send her a message.