Whichever side of the fence we fall, it might well be the case the grass always looks a little greener across the way. So, whether we’re on the path to entrepreneurship or are enjoying the security of being an employee it’s good to try and keep the pros and cons of both in mind.
Whilst entrepreneurs can enjoy plenty of opportunities for growth across various aspects of their professional careers, it’s important to remember that there are also a number of advantages associated with being someone else’s employee.
So join us as we explore the various PROS and CONS of being an Entrepreneur VS an Employee…
Being an Employee – THE ADVANTAGES
Employers are legally required to give their employees a minimum number of statutory holiday days so that people don’t burn out! The basic idea being that employees can take some time off, recharge the batteries, get some sun, generally unwind and come back to the office fighting fit and raring to go. The days that an employer gives you varies from job to job and country to country but remember there is always a legal minimum requirement – so know your rights.
There are additional benefits legally given to employees like maternity leave after pregnancy and paternity leave for new fathers – again make sure you know the law in terms of how many days you are entitled to.
2. Reliable Income
Pay Day = Every employee’s favourite 2 words!
Every month the employee will receive a fixed amount deposited into their accounts, unlike entrepreneurs they have that reliable and dependable financial security. Some employers also offer incentives to attract employees to work for them like bonuses, health and dental insurance and pension contributions and in some cases these benefits extend to your spouse and children too… not to be sniffed at. A dependable private pension can provide real peace of mind knowing that you’ll be looked after in your dotage.
3. Fixed Hours
Your contract should state the set number of hours you are expected to work. There might be a tacit expectation in some jobs to exceed this to finish a project or to meet a deadline, but basically speaking, your hours are your hours and they don’t change.
In many jobs should you be required to put in extra time above and beyond your expected hours there will be additional ‘overtime’ payments. Normally you won’t have to take work home with you and your weekends are entirely your own for looking round the garden centre!
4. Work/Life balance
It’s easier to concentrate on the important aspects of your personal life when you’re an employee over an employer whose time seems to be in constant demand. Usually contracted hours are around 8 hours per day – leaving 16 hours that are ALL YOURS! And remember that leave entitlement we discussed earlier?! Yep… that’s yours for spending with the family too.
Entrepreneurs often never switch off, worrying about micromanaging every aspect of their growing business even when they should be at home spending time with their families – often this can put pressures on their work/life balance.
5. Fewer Responsibilities
You have your job and there will be a number of expected tasks to complete as a result – whereas the entrepreneur has their own work and then also worries about everyone else’s! The Employee’s life is a far simpler and less stressful one. You may manage people, but again you will only oversee your team, there will be other above you to help oversee your work – if you’re the boss you have to look after EVERYONE!
Promotional opportunities may arise as a result of you doing your job well, but there should always be a clearly defined mutual understanding of your role expectations.
Being an Entrepreneur – THE ADVANTAGES
Nothing motivates you to be successful more than doing for yourself rather than for a corporation. Starting your own business allows you the opportunity to try and grow it, and how far you take that is really down to you… and a little bit of luck. Most people are to some degree money motivated and want to be masters of their own destiny – being an entrepreneur allows you to do both of these. The sky’s the limit guys… good luck!
An entrepreneur answers to no one and has all of the autonomy to make their own decisions. You’re the captain of the ship and no one can make plans or company policies without your agreement. Your staff work for you, meaning they do what you say! Obviously managing people comes with its own stresses, but ultimately not being answerable to anyone is quite a liberating experience.
Yes you might have more responsibility and more work– BUT you also have the power to manage that however you like. You could delegate workload and decisions to trusted employees freeing you up to do other things, and you can also decide how you manage your own schedule… if you work best in the evenings, or from home, or from the pub(!) you can do it – who is going to stop you? If you want to spend more time at home or leave early to go to the kids nativity play – you have the power to do that.
No bosses ever work a strict 9-5… it could mean taking calls at the weekend or being woken in the night to respond to email from different time zones… but you will be in charge of this.
4. Earning potential
Let’s face it… we go to work to earn money, or at least most of us do. Being your own boss gives you the opportunity to attempt to maximise that earning potential.
You decide your own salary for instance, and if the company does well you can make sure you get properly rewarded with bonuses. The chances are that if the business really took off you’d be in a position not to need to work as you could then sell the business for millions and enjoy a life by the pool!
The entrepreneur has the opportunity to experiment and take risks far more than any ordinary employee. You’ll see and learn what works and doesn’t and take advice from mentors and strategic partners within your industry. You’ll be able to adapt to changing markets and conditions and you’ll learn and develop constantly. You’ll learn not only about business but about people as you learn more about your employees and their needs and expectations – there’ll be stressful moments no doubt but being an entrepreneur will provide you with limitless opportunities for personal growth.
Being an Employee: THE DISADVANTAGES
1. Depending on Others
As an employee you must follow instruction from your superiors – annoyingly! And unless you’re very brave or very stupid you don’t go against them. They’ll no doubt ask you to occasionally to complete mundane and seemingly pointless tasks which you’ll have absolutely no choice but to do if you want to continue your career progression.
There’s much less freedom to decide how you work and unless a boss figure approves you’ll struggle to implement anything new. You’ll also have to be punctual and follow the terms of you contract to the letter.
2. Reduced Earning Potential
Most employees have a fixed annual income, and unless you’re in sales or something with a performance related salary you wont earn more if you perform especially well in your role. Pay increases are not all that regular and often you’ll have to push for them at an annual appraisal. So your salary might creep up a few percentage points over the duration of your stay with an employer, whereas your boss will see his pay increase proportionally with the success of the business – sometimes astronomically. Many employees find that the best way to increase their salary is to jump between companies.
3. Limited Development
An employee’s individual opportunities for personal developments can be limited unless you have a very kind and nurturing boss, as it’s difficult to do new things outside of your contracted remit. Unless you step up into a new role your learning opportunities are reduced. This can be quite a limiting feeling and some employees with real ambition can grow frustrated at the lack of progression.
4. Job Security
The job market is a competitive arena, and there is often the fear in some companies that unless you’re always on your toes there’ll be some bright young whippersnapper ready to usurp you and take your job!
Sticking to a company’s rules and regulations is important for staying ingratiated with top brass, as is being a harmonious team member. Even if you are dissatisfied it can be difficult to raise these issues for fear of being seen as trouble maker. It might not be that they actually let you go (some contracts are difficult to break) but they can limit your development and promotional opportunities which can feel like you’re stagnating.
Being an Entrepreneur: THE DISADVANTAGES
As an entrepreneur you are responsible for every single aspect of the business. The decisions you take day to day shape not only your business but the livelihoods of everyone who works for you – quite a responsibility. As the company grows you’ll need to keep it progressing in the market and the burden of that responsibility will be heavy.
Your role is across many different aspects – and as well as work related decisions you’ll also need to consider the pastoral responsibility over your employees. Your hours can be insane, especially for smaller start ups, and you may often feel that you can’t cope with the pressure.
2. The Investment
Opening a business usually means a significant initial capital investment. This obviously could come from a number of places – your own savings, bank loans or investors all of which present their own dilemmas and responsibilities. Should the business fail, you continue to be financially obligated to your investors or the bank which puts huge financial pressures on you and your family.
An entrepreneur doesn’t let this dark ominous cloud affect them and still thinks clearly enough to look past that and focus on the day to day of making their business successful. And the financial demands never seem to let up – even if the business starts being successful, the good entrepreneur cant rest on his or her laurels but rather reinvests in the business to future proof it.
3. Working Hours
Until business is booming and you can kick back and start to relax – you are responsible for everything meaning your work/life balance will in all likelihood be significantly compromised. You might have to face the fact that until you’re successful your family will see much less of you, as you’re the first in the office in the morning and last to leave at night – I even know of driven entrepreneurs that had a sofa in the office that they would sleep on in the first years of establishing their businesses – they know own yachts by the way!
4. Financial Insecurity
While business is booming the entrepreneur will in all likelihood be able to enjoy healthy remuneration, but when it isn’t, often the entrepreneur is the first person to feel the pinch in his pocket. Whilst your employees will be basking in the financial security of their contracts – your pay might well go down or in some cases stop altogether – it can be a worrying time, especially as you might have a family to support.
Let’s face it – every year thousands of businesses fail. You starting a business is by no means an indication of success – you need talent, a great idea, a strong team and importantly LUCK which can mean even the strongest business ideas can fail quickly.
A single decision could make or break the business. Often however there is a correlation between risk and reward and the business world is littered with examples of people who took huge risks and it paid off. It’s certain that if you’re going to become an entrepreneur you will be taking a few risks along the way.
So, which side are you at?