Consider these 6 factors before starting your business
Thanks to the internet and the decrease in job stability in the job market, many professionals have opted out of the regular employee-employer relationship and decided to venture into the world of entrepreneurship. If you are contemplating this career path, I offer you 6 factors to compare between what your life will feel like as an entrepreneur vs as an employee. You can also hear my full podcast episode about this topic, at the Schmooze & Booze podcast here.
1. Job stability
Although the growing trend in the labour market is that long-term or permanent contracts are hard to find, job stability is arguably better as an employee than an entrepreneur, especially in the early years of entrepreneurship. If stability and predictability are strong values for you, and if you easily get anxiety when you cannot predict what your career path will look like, entrepreneurship may not be the best option for you. As an employee, you can organize your job search in a way that provides maximum job stability through selecting specific companies, or government jobs, that can often provide many years of job stability. In the worst case scenario, if you lose your job, you can relatively easily get another one since you spent several years polishing your resume. It's a matter of time before you are back on a stable routine. Unfortunately, entrepreneurs cannot count on the stability of their own business, especially in the first two to five years as their concept and market is being developed. There are many risks that could lead a business to fail (a topic for another blog) and when an entrepreneur is left "jobless" after closing his business, he/she is also often left in debt which is a big set back. Moreover, the curriculum of a "failed" entrepreneur definitely does not appeal to most employers. Going to interviews and finding another job can be very difficult after a business closure because essentially employers might easily label you as having "failed" and therefore not being good enough for whatever position you are seeking. I also cannot emphasize enough the importance of knowing how much stability is an important value for you.
Building a business knowing that it may fail any day, can be a constant stress, difficult to manage throughout the journey.
2. Work schedules
As an employee, assuming you have a healthy work environment and fair relationship with your boss, when you "clock out", you are actually done working. Your off-time is 100% yours to spend as you please. You have the luxury to pivot your mental energy and your emotions towards the things that matter to you outside of work, like your family, your hobbies and yourself. When you join the entrepreneurial path, you need to kiss goodbye the concept of "clocking out". There simply is no real "off time". Again, this is especially true for the first few years of your business. This is important to consider especially if you already have weak health habits or a family that depends on your complete devotion both in time and attention.
As an entrepreneur, you will always feel like there are several more "things to do" and all of these things must get done NOW.
This is just the nature of it. I have yet to meet a business owner who refutes this concept. Since nobody will care about your business as much as you do, you will be consumed all day and night with thoughts of what more needs to get done. You will not necessarily feel burdened by this because your business will also be a passion of yours and because you will have invested much money into it. These
two factors will lead you to be constantly working, even in the evening, even on weekends, even on vacations. If you have children and/or a partner, it's important to have a conversation with them and have a clear plan of how entrepreneurship will affect your life at home. I also recommend you take an honest look at your health habits so that you do not embark on this path without solid boundaries and routines related to sleeping, eating, and exercising regularly.
As an employee, you have a well defined job description. You know where your responsibilities begin and end. If you are in charge of accounting or finance, you do not deal with hiring and training staff nor do you get involved with fixing a broken machine or making sure the company's website hosting yearly subscription doesn't expire. You know what you need to do, and you do it well. You may have studied or gained your skills on the job, but either way, you feel confident in your abilities to perform the tasks asked of you. When you start your own business, you will need to learn about how every single aspect of the business works. This can be extremely challenging and time consuming. But the truth is, nobody will care as much as you do. Chances are your resources will be limited at first, so to save money you will need to do everything yourself.
Even if you have capital to invest in hiring someone, this person will count on you to make the final decisions.
So like it or not, you will have to learn about all kinds of things that have nothing to do with the service or the product you wish to sell as your business. Ways to identify if you might not excel at this aspect of entrepreneurship are: if you have difficulty seeing the "big picture", if you don't like to participate in strategy and vision building, if you don't like to manage people and if you don't like to learn about money and investment. Stay away from entrepreneurship if any of the above listed feels like a total nightmare to you. Important note: you should not KNOW how to do all these things prior to becoming an entrepreneur, you should only be ready to learn and enjoy them along the way as they apply to your own business.
4. Cash flow
This one is very easy to understand: as an employee, you get a check within two weeks of starting your job and you are guaranteed this same check (and maybe commissions and bonuses during the year). You have what is called "cash flow". Money comes in the bank regularly. You are only asked to mange it responsibly based on your personal spending habits. When you start a business, and sometimes for several years while building it, you do not have any regular cash flow. This means you have no guaranteed check in the bank. Neither in your business account, nor your personal account. Unless you received some very high investment from an angel investor that can cover for your salary, you simply don't know if you will have money to pay yourself at the end of the month.
You may have gotten money as a loan, but since you know you have to pay it back, you will probably also be very hesitant to use it to pay yourself and prefer to use it to grow the business. This consideration is the most important one prior to starting your business. Ask yourself: how will I live? Do you have savings? Will your partner pay all the bills for the next year while you get the business off the ground? Will you move back in with your parents? The meaning of a safety net and a financial plan will never resonate as strongly with you as when you will start looking at the numbers in your bank account for building a business. Remember in point #1 when I mentioned that if you get anxious when the concept of stability escapes your reality. Money will be one of the biggest anxiety triggers during your entrepreneurship journey. So make sure you have a plan and start learning about how money works. It is more likely than not that you will make less money in your first two years of entrepreneurship than what you could earn at a stable job. Make sure your passion for entrepreneurship is higher than your need for a big fat check in the bank every two weeks.
5. Time Management
This is one of the most beautiful aspects of entrepreneurship: you control your time 100%. Plain and simple. You don't need to ask for permission to take off Tuesday morning for your dentist appointment. You can take as many vacation days as you want because nobody is counting. You can arrange your schedules as it suits you and your family best. I already mentioned that you will also probably work more hours as an entrepreneur than as an employee, but it will be on your own terms and it will (should) not last forever. Again, the first years of your business will probably be more time consuming but eventually the goal is to build a structure that will give you more flexibility to manage your time according to what you want. One of the hardest obstacles to entrepreneurship is often small children, especially before they start going to school. Ironically, this is also often the biggest motivation! Many parents want to control their time so they can be more present with their kids without the hurdle of asking for permission from their employer. My suggestion is to start building your business before you have children. If you already have children, you can chose to start building your business, but just more "slowly" so that you don't overwork yourself and don't miss out on the precious moments with your children as they grow up. You will still build your business, it just might take longer for it to become successful.
6. Decision making power
I admit this is my favourite entrepreneurship perk! I simply love having an idea an being able to execute right away, without asking for permission. As an employee, you have limited decision-making power, and sometimes it can be frustrating, but hey, at the end of the day, it's not your business so you shouldn't take it to heart if one of your ideas is not implemented. Enjoying having decision making power is not about being "power hungry". It's about loving to take risks, bursting with creativity and not allowing anyone to get in the way of making your dreams a reality. And the most satisfying part of being able to act on all your decisions freely, is that when things are successful, you feel incredibly proud of yourself. When things fail, you learn invaluable lessons that also boost your confidence levels for the next challenge to come. If you are the kind of person who cannot take a decision alone and who gets depressed each time you make a mistake, entrepreneurship might be dangerous for your mental and emotional health. But entrepreneurship could also be a journey for you to develop a new outlook on life that is more forgiving of your faults and provides you with a more wholesome self-esteem in all areas of your personality and life.
To me, entrepreneurship feels like freedom.
And as the saying goes, with great freedom comes great responsibility. If you are still considering starting your business after reflecting on the 6 factors mentioned above, I applaud you and wish you all the best to make things happen! I also encourage you to continue following my blog, podcast, and videos to get weekly tips on how to be successful.
Read out loud: I GOT THIS.
Check out my podcast episode on how to get ready to build a successful business down here:
The Make Things Happen blog is published every Sunday. Make sure to come back next week for more advice on how to be successful in your business by developing the right mindset, skills, and tool kit!