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Are you on the fence about turning your side hustle into a thriving business? Venturing off to pursue your dream can be daunting, especially if you don't know where to start or what pitfalls to avoid when venturing off as an entrepreneur. So, what's one thing we should consider when deciding whether to be an employee or an entrepreneur? The following 11 business leaders and entrepreneurs offer the following factors you should consider if you're interested in starting your own business.
How To Decide if Entrepreneurship Is Right for You
Personal Circumstances
Entrepreneurship often involves experimenting. It's hard to predict if your business idea will work out and if you will have enough resources to pursue your dreams. You should think carefully before changing from stable employment to entrepreneurship. Think of your life situation at the moment. If you just started a family, starting a new business might not be the best idea. Even if you have enough financial resources, you might lack the energy to meet the challenges of your private and professional life at the same time.
So how do you open yourself to new opportunities while minimizing the risk of failure? Don't put all your eggs in one basket! Evaluate your situation and consider how much risk you can take. Many people decide to follow their passions and start developing a new career but do it next to their actual job. It might be challenging to do these two things simultaneously, but it will give you extra security if your plan doesn't work out.
- Dorota Lysienia, Community Manager, LiveCareer
Tolerance for Instability
How comfortable are you with instability? Entrepreneurship can be highly rewarding, but it's not as safe a bet as traditional employment. On average, under 50% of businesses fail in the first five years. If you are a person who values stability in your career and dislikes risk, you may prefer to be an employee. If you feel comfortable with the risk-reward ratio and want to create your own business, entrepreneurship might be for you. It all comes down to your personal needs and interests.
- Chris Vaughn, CEO, Emjay
Income
Consider whether you want to have control over your salary or whether you would rather your employer handle that. There are pros and cons to both. Having control over what you get paid means that you do not risk getting taken advantage of, yet if you run your own business, you do not always necessarily know how much you will be able to pay yourself. So, between all those factors, consider what is the most important to you in terms of how you get paid.
- Miles Beckett, Co-Founder & CEO, Flossy
Maintaining Discipline
One of the things most people who aspire to be entrepreneurs are surprised with is the amount of self-discipline you need to have to keep going. As an employee (as annoying as it may be not to be an owner or work on something you truly believe in), you still have the reliability of a set schedule or amount of tasks you're working on. And a relatively stable form of income. Whereas, as an entrepreneur, you'll find that everything relies on your ability to maintain discipline.
Don’t confuse motivation with discipline. Motivation comes and goes. Discipline is what keeps you going. You may not always want to do certain tasks or stick to a set-out plan. You have to do it anyway without the assurance of stable results. Being an entrepreneur can be a source of fulfillment, but if you think you can't learn self-discipline, it's best to choose the path of an employee. Remember, neither is a good nor bad choice—it's all a matter of the approach and the qualities you want to develop.
- Nicole Ostrowska, Career Expert, Zety
Tax Obligations
When deciding to work as an employee or start your own business, it's important to consider the difference in tax obligations. As an employee, taxes are typically withheld from your paycheck and paid directly to the government. As a self-employed entrepreneur, you may be responsible for paying estimated taxes throughout the year and filing self-employment taxes on top of regular income taxes. It's important to factor in the added responsibility and potential cost of these taxes before deciding on your career path.
- Michal Jonca, Community Manager & Travel Leader, US Visa Photo
Level of Responsibility
The skills required to be a successful entrepreneur and a successful employee are usually different. For the latter, you need a wide range of skills and less specialization in one area. For the latter, the more specialized you are, the better. But that's not the main thing to consider. The main area that you need to be absolutely sure of is the level of responsibility you want to take on.
As an entrepreneur, you are the final decision maker, and, in the end, you're responsible for everything that goes on at the company. Even if you don't know the specific activities carried out by an individual in a particular department, it's still your responsibility to know how to address the following: the direction of the company, payroll, product quality, client and customer experience, and team building. Even if you're a level or two removed from the work, it's all still your responsibility.
- Daniel Ndukwu, CMO/CoFounder, UsefulPDF
Devotion to Your Craft
Commitment is a heavy word both in the game of life and business. In a competitive industry, not everyone can succeed or excel in the field. Devotion to your craft plays a huge role in choosing between becoming the boss or the worker. Becoming an employee is not as easy as it seems. You are a mere follower abiding by orders mandated by a leader. Given that you are working for someone else, the pressure and burden of the company do not weigh on you. Hence, more time for yourself.
Meanwhile, starting a business requires a lot of attention and time. Dedication and responsibility are vital if you want a successful enterprise. You must be 100% committed and decisive that this is the path you want to take. In general, it all relies upon your visions and goals if you are hesitant about what career to pursue. If you could see a future in any of the two, don't be afraid to follow it. The only thing stopping you from achieving anything in this life is your doubts and worries.
- Laura Martinez, Consultant and Content Writer, PersonalityMax
Availability of Capital
Entrepreneurship requires proper planning and prioritizing with the resources available. As an aspiring entrepreneur, determine if you have the necessary capital to start and maintain the business since you will input more than you will get from the business at the early stage. Know if you have viable investors that you can approach or a plan B that you can resort to if the unexpected happens and you need to use more resources to boost the business.
- Yongming Song, CEO, Live Poll for Slides
The Real Risk of Being An Employee
A job is only as safe as your position within the company. If the company falls on hard times or makes a bad decision that negatively affects its overall performance, it's likely that the employees will be the first to feel the consequences. You're basically at the company's mercy when you're an employee. If the company makes a bad decision, or if the company's performance suffers, you could be the first to feel the negative effects.
When this happens, you may be forced to look for another job, or worse, you might be forced to file for unemployment. The risk of being an employee is that you have less control over your future, and you're entirely dependent on the company's decision-making. Moreover, you risk being fired if you don't perform well as an employee. However, if you're an entrepreneur, you risk losing all your money if your business venture fails.
- Luciano Colos, Founder & CEO, PitchGrade
Complete Autonomy
What fundamentally separates the two roles is that as an entrepreneur, you have the freedom to spend your time doing what's important to you. It comes with shouldering greater responsibilities, but the pros outweigh the cons for many. Life is short, and the one thing we can never get back is time. As a result, time is one of your most valuable resources, and you should treat it as such. While, as an employee, you don't have the same luxury of choice, when you're working as an employee, you do so on the company's time, you're limited in terms of flexibility, but you also have a greater sense of security and support.
- Guy Sharp, Relocation Advisor, Andorra Guides
Relationship With Risk
Examining your comfort with risk is critical when considering whether to be an employee or an entrepreneur. While both options include risk, entrepreneurs must be risk-takers to move their businesses forward. They'll make tough, informed decisions from the information they have. Sometimes those choices pay off significantly, while others cause failure and challenges. Entrepreneurship is a high-risk, high-reward path, while being an employee typically offers more stability.
- Kelli Anderson, Career Coach, Resume Seed