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16 Pros and Cons of Being an Entrepreneur VS an Employee

September 1, 2023 By admin

Most people start their working life as an employee. Even some of the world’s most successful entrepreneurs worked for a measly salary in less than glamorous jobs before they made the switch to work for themselves. Oprah Winfrey was a grocery store clerk. Amazon.com founder Jeff Bezos worked at McDonald’s.

Whether to keep on working for someone else for the rest of your life or to make the jump to entrepreneurship is a big decision. There are certainly advantages and disadvantages to both. You may not want to lose the security of a guaranteed salary. On the other hand, you may hate the predictability of an 8-hour workday.

Let’s take a look at the pros and cons of being an entrepreneur vs an employee to help you decide whether you are more suited to one or the other.

 

Table of Contents

  • The Pros of Being an Employee
    • 1. Stable Income
    • 2. Guaranteed Leave Benefits
    • 3. Predictable Working Hours
    • 4. Fewer Worries
  • The Cons of Being an Employee
    • 1. Job Insecurity
    • 2. Boredom
    • 3. Limited Opportunity for Advancement
    • 4. Making Someone Else Rich
  • The Pros of Being an Entrepreneur
    • 1. Master of Your Own Destiny
    • 2. Flexible Working Hours
    • 3. There’s No Limit to Your Success
    • 4. A Blank Salary Cheque
  • The Cons of Being an Entrepreneur
    • 1. It’s a Risky Business
    • 2. Erratic Income
    • 3. Difficulty to Balance Work and Personal Life
    • 4. Mistakes Are Part of the Deal
  • Employee VS Entrepreneur – Which One Are You?
    • Possible Questions to Ask Yourself:
    • Wait! Before You Go, Read:

The Pros of Being an Employee

 

1. Stable Income

If you work for a salary, you are assured of a stable income each month that you can invest in stocks, for example. Employees with fixed salaries (and who know how to budget) don’t have to worry about where the money to pay the rent and other expenses will come from. They even come to depend on an annual bonus which pays for their holidays and Christmas gifts.

 

2. Guaranteed Leave Benefits

Employees are legally entitled to annual leave and other leave benefits such as maternity/paternity leave or bereavement leave. This means you are guaranteed time off to take a holiday or for special occasions like weddings and funerals. And the best part of all? Most leave while working for an employer is paid leave. So, your salary will appear in your bank account as usual even if you spend three weeks on a beach in Spain.

 

3. Predictable Working Hours

The working hours of an employee are stipulated in his or her employment contract. For example, full-time employees may be required to work 40 hours a week from Monday to Friday. While there may be room for some flexibility, daily hours are also normally fixed. As a result, an employee can plan his or her personal life around fixed working hours. Employees can also look forward to their days off each week.

 

4. Fewer Worries

It may be argued that an employee has fewer worries than an entrepreneur because he must only focus on doing his own job well. Other people’s business isn’t his concern. He doesn’t have to worry about balance sheets, insurance, payrolls and other organisational management issues. In principle, he has the right to forget about work as soon as he leaves the office.

 

The Cons of Being an Employee

 

1. Job Insecurity

As an employee, the overall management and financial health of a business are out of your control. If the business goes under, you lose your job. This can happen without warning, suddenly leaving you without a regular income. Finding a new job may not only be difficult but can also result in other challenges such as having to move to a new area. Apart from losing their jobs, employees can never be sure of promotions or salary increases. They’re at the whim of their managers or supervisors.

 

2. Boredom

Employees may be stuck in boring jobs that they absolutely hate. They stay in these jobs because nothing else is available or because they’re afraid of leaving a predictable job for a new one. People in boring jobs hate going to work. The feeling of discontent eventually also spills over into their personal life, especially if they get stuck in a work rut for most of their professional lives.

 

3. Limited Opportunity for Advancement

Many employees hit a glass ceiling in the organization or company they work for. Some may have been promoted once or twice before opportunities for further promotion dry up. Others never get the opportunity for a promotion or to apply for a different position with higher pay and more responsibilities in the same company.

 

4. Making Someone Else Rich

Employees work hard to make entrepreneurs rich. Moreover, the employee doesn’t necessarily get to share in the riches they help create. A salary increase of 5% doesn’t compare with profit margins of 50%, does it? The feeling that they aren’t rewarded for their efforts in a business’ success can lead to bitterness and mediocrity.

 

The Pros of Being an Entrepreneur

 

1. Master of Your Own Destiny

One of the biggest pros of being an entrepreneur is that it gives you the freedom and flexibility to become the master of your own destiny, and establish your own brand name. You can act independently and are in complete control. Success or failure is up to you. This realization is often more than enough motivation to give it your all.

 

2. Flexible Working Hours

Entrepreneurs don’t have bosses waiting for them to arrive at the office. In fact, they strictly don’t need an office. As long as they have a PC or even a tablet or mobile phone they can work where and when they like. They have the authority and power to structure the business around their personal life. For example, a father may take an afternoon off to watch a child’s sports match and catch up on work in the evening. Time is a precious possession and entrepreneurs have complete control over it. They must just learn to spend it wisely.

 

3. There’s No Limit to Your Success

The sky is your limit when you’re an entrepreneur. Who knows what you can achieve with clever and innovative ideas, hard work, motivated employees, and good business management? Embrace success and see where it takes you! The sense of achievement is enough encouragement to reach even greater heights.

 

4. A Blank Salary Cheque

Just as there is no limit to how big your business may become, there is no limit to your potential income. The best thing about it? You are making money doing something you love. The financial return for hard work and effort is much higher for an entrepreneur vs an employee. And once your venture is established and depending on the nature of it, you could even make a substantial passive income.

 

The Cons of Being an Entrepreneur

 

1. It’s a Risky Business

The risk involved in starting and investing in your own business is one of the biggest cons of entrepreneurship. No matter how determined and motivated you are starting out, success is not necessarily guaranteed. One wrong decision can be fatal while you don’t always have control over external factors such as market trends and economic downturns.

 

2. Erratic Income

A stable monthly income is not guaranteed. Some contractors may pay up front and some not. Income from commission is irregular. And never lose sight of your own financial commitments such as loan repayments, taxes, and employees’ salaries that could make a difference to your income on a month to month basis.

 

3. Difficulty to Balance Work and Personal Life

Entrepreneurs may become so focused on their business, especially in the beginning phases, that they lose sight of their personal lives. As a result, relationships with loved ones can suffer. It may even lead to break-ups or divorce. Long working hours and the accompanying stress could also lead to burn-out. The counter productivity resulting from all work and no play is simply not worth it.

 

4. Mistakes Are Part of the Deal

Statistics show that the majority of first business ventures fail. Entrepreneurs must be prepared to make mistakes. However, they should also be prepared to start over after failure. As Steve Jobs said: “Sometimes when you innovate, you make mistakes. It’s best to admit them quickly and get on with improving your other innovations.”

If you want to avoid beginner mistakes and learn how to become a successful entrepreneur, it’s better to go and study with already successful people in your field!

 

Employee VS Entrepreneur – Which One Are You?

Do you think you have what it takes to be an entrepreneur, or would you rather stay an employee after reading the pros and cons of both?

Weigh the pros and cons carefully before you decide. The many choices in either direction can be confusing and even have a paralyzing effect. First, ask and answer the philosophical questions before moving on to the practical ones. The smaller details can be managed when the big questions are out of the way.

 

Possible Questions to Ask Yourself:

  • What would I choose if money wasn’t an issue and anything is possible?
  • How can my idea or innovation help others?
  • What joy and benefits are in it for me?

You must be 100% committed before and after registering your company if you take the plunge to become an entrepreneur. Put systems in place to help you build a successful business and don’t let go of your vision. Perseverance always pays off.

Wait! Before You Go, Read:

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Filed Under: Small Business Tips Tagged With: entrepreneurship

Comments

  1. Freddy G. Cabrera says

    March 23, 2018 at 5:20 pm

    Hey Erik!

    I like your blog post here. It points out really good points to think about on both – entrepreneurship and employment.

    Both have their own benefits and consequences. That is true. But, I would say that in the long run employment is the one that can really trap you and force you to live an unhappy life. Yes, there is a security of a paycheck but that is temporary and limited.

    Entrepreneurship has more unlimited potential! 😉

    Thank you for sharing this interesting article!!

    Have a wonderful weekend! 😀

  2. Mathew says

    March 23, 2018 at 8:07 pm

    Hi Erik!

    Very interesting article thank you also for sharing it!

    Best regards,
    Mathew

  3. Navin Rao says

    March 24, 2018 at 10:20 am

    Hey Erik,

    That was somewhat I could relate quite closely being an Employee working for 8hrs and making someone else rich. Whereas the fixed concerned, yes it definitely something which an employee could plan of their monthly budget, But it doesn’t make you special.

    Certainly, there are extreme benefits, those who work independently and don’t have to rely on someones. Their hard work and effort will satisfy them throughout the time. it’s not just money, it is the inner satisfaction which makes you happy and keep going., flexible hours makes you happy and find time for something else very important. Great work

    Have a great day ahead!

    Navin

  4. Lisa P Sicard says

    March 24, 2018 at 11:01 am

    Hi Erik, right now I”m doing both. I hope to make the switch within 2 years. I would love the flexibility of being an entrepreneur vs. an employee.
    I would love a more flexible schedule and taking time off when and where I want. Not having to work within a rigid 9-5 schedule.
    I think my biggest concern or fear is of benefits but I should really start looking into them so I will be better prepared to make the leap.
    Thank you for this informative piece!

  5. Gaurav Kumar says

    March 24, 2018 at 1:12 pm

    Hi Erik,

    An entrepreneur and and employee both work on different levels. Back in 2013, I was working in shifts, as I was born to work only. Then blogging came to me and I fall in love with that.

    My love with blogging continuous and it showed me path to become an internet entrepreneur.

    Now I am not only enjoying time freedom but I also enjoy location freedom as I can work from where and financial freedom as well.

    There are pros and cons of both, but if you have zeal to become more and do more, then entrepreneurship is the only way to do it.

    Thanks for sharing.

  6. Martin Lindeskog says

    March 26, 2018 at 5:25 pm

    Erik: What do you think is the biggest advantage of being an entreprneur? What are the main cons. according to your situation?

  7. Shruti says

    March 27, 2018 at 8:36 am

    I am working in digital marketing industry from last three years. Although I am happy with my job at times I got irritated with work pressure. So I was thinking to establish my own digital marketing firm. But now I realized that it is not easy to be an entrepreneur after reading your article. I need to take more experience. At this point I can not afford to take any risk.thank you for en lighting me with these facts

  8. Ali Imam says

    March 27, 2018 at 2:54 pm

    Hi Erik, If I have to choose between being an entrepreneur and being an employee, I would always choose entrepreneurship no matter the cost. If you remove the monetization part from these things and let everyone make their decision based on their passion and interest, I think you know the answer to that question.
    For now, I am an employee, but I am making myself ready to take the challenge to be an entrepreneur.

  9. Anil Agarwal says

    March 29, 2018 at 8:59 am

    Great comparison Erik,
    There are indeed a lot of differences between employees and entrepreneurship, and both of them do have their pros and cons like you rightly highlighted here.

    For me, one of the things I like about being an employee is that Stable Income. This is because no matter what, you already know what to expect at the end of the month. Whether business is good or not, you must be handed that same amount when the month ends unlike an entrepreneur whose salary totally unstable.

    Also, you have less to worry about as all the problems and worries associated with the business or company are being carried by someone else, you’re just there to get paid.

    But when you’re an entrepreneur, the worries and risks are enormous. Anything can happen anytime, and you might go back to square one. Most times, nothing is guaranteed especially when you’re just starting. However, when things start to stabilize, you’ll have a little security and guarantees.

    But overall, I’ll forever choose the entrepreneur route no matter what. And to answer the question you asked, “what will I choose if money is not the problem,” I’ll definitely choose to be an entrepreneur, and that’s because of the freedom associated with it. Men, I so much love my freedom.

    Thanks a lot for sharing Erik.

  10. Tania Artemova says

    March 30, 2018 at 12:22 pm

    Hi, Erik,

    Thanks for the great article!
    Several years ago I switched to entrepreneurship and strongly believe that I made the right choice! 🙂

  11. Paul Towers says

    April 13, 2018 at 5:17 am

    I think the most important thing to consider is this, Do you love what you are doing? If you love what you are doing then it doesnt really matter if you are an entrepreneur or employee. You can see success by taking either route.

    However, I couldn’t envisage doing anything else. I love being an entrepreneur and Founder of my own task management company called Task Pigeon.

    Yes, its hard work and long hours, but its also very very rewarding

  12. Vitor de Brito says

    December 13, 2019 at 7:34 pm

    Being an entrepreneur myself, I can tell you it’s not very easy. So many times I have wished I was employed. However, when times are good, nothing beats it.

  13. kathir says

    December 15, 2019 at 9:27 am

    Hi Erik , Thanks for sharing awesome guide.
    Awesome tips.

  14. sayem Ibn Kashem says

    October 11, 2022 at 1:01 pm

    It’s hard to become an entreprenuer. It took almost 4 years to establish my blog as a profitable business. But now I know how anyone can do it within the first year. Anyways good tips Erik.Thanks for sharing this.

    Regards,
    Sayem

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