This article discusses all the key advantages and disadvantages of being an entrepreneur.
Before we begin, I’d just like to establish the fact that I’m not a huge fan of the word “entrepreneur.” The reason is that it’s almost impossible to describe yourself as one without sounding like a dick.
The possible exception to this is if you’re so successful in your solo endeavours that you’re making millions and hiring private jets. But even then, it’s a label that raises eyebrows. (Or perhaps that’s just my British “reserve” coming through!)
Anyway, let’s start by looking at the dictionary definition of an entrepreneur:
A person who sets up a business or businesses, taking on financial risks in the hope of profit.
When you look at it that way, it’s fair to say you’re an entrepreneur if you’re doing anything from setting up in business as a freelance writer, to building a blog to establishing a cupcake business. If you’re willing to get out there and go it alone, breaking away from the “security” of a traditional job – you ARE an entrepreneur – even if, like me, you shudder at the thought of using the word!
So, with that out the way, let’s look at the advantages and disadvantages of being an entrepreneur. If you’re considering making the jump into home working and self-employment, these points should help you weigh up your options.
The Pros of Being an Entrepreneur
1. You can run with any idea you like
When you work for yourself, you truly are the master of your own destiny. Whether you want to launch a new service or a new promotion, or do something more extreme like attempting to disrupt an industry, you’re completely free to do so.
Contrast this with working for a company; Some people are fortunate enough to work for a business where they’re bought-in to the values and the way the firm does things. Sadly, a great many people are not.
The reason many people start pondering the advantages and disadvantages of being an entrepreneur is that they work somewhere where they feel stifled; They dislike having to do things in the “established way.” It’s hugely frustrating to see a company move in directions you don’t believe in or approve of.
As an entrepreneur, you don’t have to deal with this frustration.
2. You get to choose who you work with
Entrepreneurs don’t get to completely sidestep everyone they dislike! To do so would probably mean turning away potential clients and business partners. However, when you’re self-employed, you get to be a LOT more discerning.
Again, compare entrepreneurship with corporate life; As a freelancer, you don’t have to deal with the pervy guy in accounts, the overbearing boss, or the upstart new manager who’s only there because “Daddy’s a director.”
You also get to choose your customers. Obviously, you can’t go turning business away on a whim, but if you encounter clients who are too rude, too demanding, or simply pay too late for your liking, you can send them packing. Think of all the people in traditional jobs who are paid to absorb abuse and stress from their employer’s customers, and it’s clear how liberating this is.
3. You can lead the lifestyle you want
I’m massively into the concept of the freelance lifestyle. As I discussed in this previous article, the lifestyle is easily as important to me as the financial aspect of freelancing, which can be “up and down,” to say the least!
This week has delivered loads of examples of how much I benefit from “being an entrepreneur” (shudder). Some of these are little things, like the fact I’ve been making fresh mid-morning smoothies in my own kitchen every day this week, or that I’m feeling inspired and motivated after being free to take a last minute trip a couple of weeks ago.
But others are far bigger things. My four-year-old son started school this week, and it was very important to me that my wife and I were able to take him and collect him together on his first day. After well over a decade of self-employment, the thought of having to get permission to do stuff like this just seems alien to me. Returning to the first point, I’ve also kicked off a new “mini-business” with my wife this week – something that was simply born out of an “off-the-cuff” idea.
All in all, it’s often rather exciting, never dull, and you tend to look forward to starting work most mornings.
4. You don’t have to only choose one thing to do
If you’re working for one company for 40 hours a week, you have to be very determined to make much of a go of anything else.
Side gigs are great, and we write about loads of them on this site. But I hear from plenty of people who’d love to be able to try something they’re passionate about, but simply don’t have the time once they’ve added up work, commuting and family life.
That’s why one of the advantages of being an entrepreneur is being able to spread yourself across multiple ventures. In a typical week, I often spend some time on HomeWorkingClub, a day doing IT consultancy, and a couple doing writing work for clients. I discuss this freedom in this article about portfolio careers.
5. You can build something that’s yours
It doesn’t matter how much you’re being paid; If you’re just an employee, all you get to keep of what you help build is your salary and perhaps a bonus (unless, of course, you’re given company shares).
Over the years, I’ve been involved in several companies that have gone on to be hugely successful. This has meant I’ve had some harsh lessons in how few people truly benefit from the success.
What I now know is that if you build a company that’s reliably profitable, you have something you can sell or pass down to your family. In a world where “pension crisis” hits the news on a regular basis, having a business that’s worth something, when you’re ready to step away, seems increasingly appealing.
The Cons of Being an Entrepreneur
1. A complete lack of benefits
To kick off the flipside of the advantages and disadvantages of being an entrepreneur, let’s start with a BIG con: a complete lack of benefits for freelancers.
This means no sick pay; no holiday pay; little or no help when you have children and – for those in the US, in particular, issues with ensuring you have the certainty of healthcare.
I consider myself lucky to be in the UK, where – at least for now – we have the wonderful National Health Service. This means that healthcare isn’t nearly as big a worry here for aspiring freelancers. However, the majority of HomeWorkingClub readers are in the US or elsewhere. At the time of writing, I’ve recently commissioned a big article on benefits and healthcare for freelancers, so subscribe using the box at the bottom of the post to ensure you see it!
Even with the worry of healthcare removed, the lack of benefits for entrepreneurs IS a big deal. In the last year alone, I’ve had a couple of huge reminders of the reality of this. First off, we’ve had some runs of illness in the family, and as I discussed here, being ill as a freelancer is no fun at all. Secondly, my wife and I had a new child at the end of 2017. In the absence of a big firm with a generous maternity policy, six months of only one of us working full-time left us with a financial mountain to climb.
You DO get used to being “out there on your own” as an entrepreneur, but it never gets any less real. Every week we take off is a week when our income drops hugely, and that will always be the case. Paid vacation is a HUGE benefit of being an employee!
2. A lonely existence
Whether loneliness is a disadvantage of entrepreneurship is something that depends a lot on the individual. Personally, I rather like my own company, and I feel that I’m constantly “talking” to business contacts on Skype or Slack anyway, and to readers via email and social media.
But a lack of social interaction is something many entrepreneurs and freelancers cite as a major disadvantage of the lifestyle. Some people (apparently!) enjoy the atmosphere of an office, complete with the “water cooler” chat. If this applies to you, don’t underestimate the fact that working for yourself can feel incredibly solitary.
3. You have to motivate yourself
Once again, this isn’t something I personally have a problem with. However, I’ve lost count of the number of people who have said to me that they simply wouldn’t be able to keep their motivation going without a manager to push them to do so.
This is particularly relevant in the early stages of starting any business. There’s usually a huge amount of grind and graft that has no immediate visible (or financial) reward. I’ve spent more than six months working on websites, for example, before seeing enough financial return to even treat my children to a McDonald’s!
It’s undeniable that it’s easier to press on through times like this with the help of a team. As an entrepreneur, you have to do it all by yourself. If you’re on the cusp of deciding whether to jump into self-employment, it’s really important to be honest with yourself about how well you’ll deal with this.
One really great thing about knowing how much money you’ve got coming in every month is that you know you’re going to be able to pay the bills.
If you’re an entrepreneur, it doesn’t even matter if you’re owed more than enough money to cover everything. That doesn’t actually mean it will arrive on time!
The life of a freelancer, particularly in the early stages, is a life of financial tenterhooks. There are times when food shops go on a credit card; Times when your invoice gets paid just in time to cover the rent or mortgage, and the rare but depressing times when a customer doesn’t pay and you have to start the legal letters.
Obviously, as time goes on, a certain sense of financial security does come with success. However, life does have a habit of expanding to consume the amount of money you have coming in! I’ve worked with people who run multi million Dollar businesses who still have serious cash flow issues due to late payments.
The simple fact is that being responsible for every penny that comes in is a world away from receiving a regular paycheck.
5. A shortage of empathy
The lack of empathy entrepreneurs can often feel is linked to the loneliness discussed above. However, I feel it deserves its own section in this roundup of the advantages and disadvantages of being an entrepreneur.
Let me explain what I mean by a shortage of empathy:
- When you first start a business of your own, it’s likely a fair few friends or family members won’t believe in your idea and will think you’re crazy.
- Even among the community of entrepreneurs you become part of, people are typically at different stages in their business journeys, or working in different industry sectors. You don’t ever get the same feeling of camaraderie you have when you’re working with people who are doing exactly the same thing as you.
- Once you start to enjoy any success that’s externally visible to others, jealousy can creep in. Often it’s the same people who didn’t get on board with your idea in the first place who want to try to bring you down once it’s proven to work!
I realise this paints a bit of a bleak picture, but the reality is that not many people beyond your family and your closest friends really have the time or inclination to properly root for you. In some cases, even some of those people can be bad apples who give no support.
And while I’m being bleak, I have to say – almost without exception – that as soon as businesses get successful, people emerge who want to see those businesses fail. HomeWorkingClub is in its early stages, but I’ve already dealt with my fair share of trolls and a smattering of legal grief. I’ve also personally seen countless small firms threatened and sometimes almost destroyed by the actions of rogue staff members – often just as things are starting to go well.
Bringing this back around to empathy – or a lack of it – the problem is that there just aren’t that many people who will understand. There’s not a line manager to complain to or a co-worker to drown sorrows with. While those who’ve never been self-employed may be able to understand in theory what it’s like, it’s rather like someone trying to explain how it feels to have mental health issues to someone who’s never been afflicted.
Ultimately, you can’t truly feel the mixture of freedom and uncertainty that comes with entrepreneurship until you’ve done it for yourself. And this means there are an awful lot of people out there who won’t ever be able to empathise with you.
There are communities that you can turn to, and you’re in the presence of one right now. HomeWorkingClub was specifically set up to help people who are freelancing and home working! There are also all kind of things you can do to network. But until you’ve built a company big enough to form a team around you, that team won’t exist.
That concludes my roundup of the advantages and disadvantages of being an entrepreneur. Are there any others you would add? Please do let me know in the Facebook comments.