As any business owner can tell you – entrepreneurship is never a sure thing. In fact, the most common reason people give for not starting their own business is that it's "too risky." Risk of great financial loss, risk of loss of relationships, and risk of instability and failure are just a few potential entrepreneurial dangers that come to mind. And those are the risks in good times! In an economy like we're experiencing today, many people have the misconception that the risk of starting a business is multiplied many times over.
Did I say misconception? That's right. I don't think it's riskier to start a business in this economy. In fact, I think it's the perfect time. Don't believe it? Let's explore the risks for starting a business today, compared with those related to working for someone else.
When discussing those two options, I often hear people refer to a job as a more "stable" choice. Of course, what they mean is that while you have the job, you'll get a paycheck on a regular basis, and that, in most cases, you can count on that check being a certain amount, over and over again. On the surface, it's easy to see why someone would interpret that as stability.
By contrast, when you set out to start your own business, you really can't say for sure when, how much, or even if you'll get paid. Although it's true that some ideas take flight pretty quickly and end up paying off big for their founders right away, the reality is those cases are the exceptions. More common is the scenario where the entrepreneur works his or her butt off, 16 hours a day, for a year or more, and then finally gets to begin taking home a modest salary.
Sounds Risky So Far
If the story ended there, you'd be right to call entrepreneurship risky. In fact, you'd have to be crazy — or at least some kind of daredevil — to start a business – in this or any economic climate. But the story doesn't end there. Many other factors need to be considered. First (and most obviously, with a 9%+ unemployment rate), there is certainly no guarantee that the steady paycheck you're counting on every month as an employee is going to continue rolling in. There are millions of people in the job market right now who can attest to that. So while employment is fairly stable while it lasts, you're at constant risk of losing that stability.
Secondly, if you do lose your job, it can take months or even years to replace the salary you lost; and in a great number of cases, an unemployed worker has to settle for far lower pay, often taking multiple jobs just to put food on the table. Worse yet, when all is said and done and you finally do get a job, you've built no equity for yourself. Your new employer(s) can boot you just as easily as the last, and you're right back to square one. With a large percentage of families living paycheck to paycheck, it's apparent just what a high-risk proposition working for someone else can be.
The Stability — or at Least Control — of Entrepreneurship
Now let's look at someone who starts a business. Yes, entrepreneurship is a lot of work, it can take a while to see a decent income, and there's obviously a risk of failure. Working two or three jobs — or one job you're afraid of losing — is a lot of work too. And during the early days as a business owner, when you might not be making much money, you're still building something. As a job seeker, your time is lost, and until you finally get a job, you have nothing to show for your work. Most importantly, if someone loses their job and sees getting a similar job as their only option, they're in for a long, frustrating road ahead — that will only end them back where they started.
On the other hand, as a die-hard entrepreneur, if I lost everything I've worked for right now, I can think of 20 businesses that I could start immediately, with little to no capital, and I'd be back on top in a relatively short time. My destiny is truly within my control. I don't have to go begging, hoping to be chosen to make a living. I make my living. And the best part is that I make that living doing what I love.
So, what kind of a person starts a business in this economy? Someone who wants to create jobs for others rather than go hunting for one. Someone who recognizes that the infinite opportunities offered by entrepreneurship far outweigh the supposed "stability" of any job. These days, starting a business isn't just for risk takers. The way I see it, entrepreneurship is the choice for people looking for less risk and more stability. Who would have thought?
Adam Toren is an Award Winning Author, Serial Entrepreneur and Investor. He Co-Founded YoungEntrepreneur.com along with his brother Matthew. Adam is co-author of the newly released book: Small Business, Big Vision: “Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right” and also co-author of Kidpreneurs.