Employees vs. Entrepreneurs

 

I’m sure you, at some point, have had the occasional whim to just up and quit your job. To become an entrepreneur and start something new. To have what you do make some sort of impact on the world. Heck, who hasn’t?Stick it to the man

Based on current research, close to 48% of Americans want to be entrepreneurs. I mean who wouldn’t? You hear about the benefits all the time: flexible work hours, get to be your own boss, unlimited vacation time, (potentially) more money, a chance to stick it to the man…the list goes on and on.

However, I’d like to dedicate this article to playing the devil’s advocate and supporting the other side. I’m going to shine the spotlight on the rarely discussed topic of why working for someone can be more beneficial. Again, this varies on a case by case basis, but most things I touch upon in this post are focused towards the general white collar, and some parts of the blue collar population.

Vacations/sick days

Whether you’re going on vacation, or simply unwell, working for someone gives you peace of mind from Paid Leaveknowing that your company won’t likely cease to function. In fact, it gets better- you don’t have to choose between making money and taking a few days off. Paid leave lets you do both!

Even if you don’t have paid leave, you can still take unpaid leave without having to worry about the company shutting its doors. Being forced to choose between attending your kid’s graduation and keeping your company afloat is not a decision you’ll have to make often as an employee.

Predictable cash flows

Depending on your source, you will find that 8-9 out of every 10 starts ups fail. That is after burning through a ton of money for a couple of years. It’s not too hard to deduce from such statistics that working for a startup generally implies little to no initial remuneration, followed by:
-the high probability of eventually finding yourself either with a failed enterprise/ bankruptcy on your hands, or
-the low probability of not-so-great remuneration, or
-a very very very low probability of making it big and receiving sky high remuneration.

On the other hand, working for someone gives you certainty and stability. When you sign up, you know howFailing to plan much you’re going to be paid. At times, you can even negotiate for more. You know exactly how much money you will receive in your bank account. This allows you to develop some sort of plan for your personal finances. Never underestimate the importance of planning- failing to plan, is planning to fail.

It also means cash flow stability. Meaning, you know with certainty that said known quantity of money is going to hit your bank account on a certain date, month after month. This allows you to develop your personal finances and plan into the future. It also gives you peace of mind, and allows you to live your life without the constant worry of where you next paycheck is going to come from.

For the haters out there, yes I know there always exists a small chance of your employer going bankrupt, or you being let go off, but compared to a startup I’d say that probability is infinitesimal.

Office perks

Working for an employer comes with its perks. Depending on the employer, these can be lavish benefits like top of the line recruitment packages, free meals and an office vehicle, or more modest perks like tickets to exclusive events, occasional office lunches, and Christmas dinners. Generally, most employers’ perks will fall somewhere in between.

Whatever they may be, they are more than the perks you will probably receive as a young, budding entrepreneur.

Benefits

Apart from the stability of cash flows addressed earlier, employers also offer health care coverage or some sort of subsidized group health insurance program that you can’t access directly. Some even offer stock options, performance based remuneration, etc. Directly, or indirectly, every one of these translates into more money in your pocket. Benefits that most real startups can’t offer.

In fact, benefits are fairly important to most employees. Some quick desktop research shows that health benefits are amongst the most highly valued benefits by employees.

Collegial atmosphere

Personally, I like entering/exiting the office and walking the corridor to my desk greeting or being greeted by High 5everyone with a cheerful Buenos Dias/Hasta Mañana! I like grabbing the occasional lunch or beer with coworkers and chatting about work, or about where they are headed for their summer vacations. I hate to admit it, but I even occasionally enjoy partaking in a bit of office gossip.

All these are things that bring you closer to your fellow workers, and allow you to develop camaraderie and build personal & meaningful relationships. Also, these are all things that you can’t do if you go it alone and be an entrepreneur.  

Role that you want

Another benefit of working for someone is that you can choose the role you want to play. You can apply for the kind of position you want. If you like to travel and meet people, you can find a role that lets you do that, and likewise if you’re an introvert or a desk junkie.

If you don’t like what you’re doing, you always have the option to either negotiate a promotion/change in position to move towards what you want to focus on, or simply quit the company and search for what you want elsewhere.

On the contrary, as an entrepreneur you are all in and stuck with what you started. Your only “out” is shutting down the company. Additionally, as an entrepreneur you have to focus on everything, and not just the aspects of the business that interest you, which brings me to my final point…

Don’t have to sweat the small stuff

Working for someone gives you the benefit of not having to sweat the small stuff. I’m referring to things at a basic level, things related to infrastructure like daily office space, office consumables, electricity, internet, registrations, etc. are not things you need to deal with. As an entrepreneur, in addition to trying to launch your business, you have to waste your time juggling all these mundane issues.

Those are just the basics- then there are more complicated issues. Your employer, for example, deducts your payroll taxes for you. Your employer also pays a large part of your social security taxes. As an entrepreneur, you’d have to file quarterly tax estimates, and pay taxes for your employees’ social security benefits. Both of which are expensive and time consuming activities. Just to give you a sense of the numbers, on average in Spain 38% of the value of your gross paycheck needs to be paid every month towards social security. The employee shoulders 6.4% of this burden. The employer pays 31.6% over and above what they pay you in salary.

Coming away from reading this post, you might have the impression that I am a company man and anti-entrepreneurship. Well, I am not. In spite of my rant about why entrepreneurship sucks, I am not against it. WeekendNot even close. I just wanted to take the opportunity to support the rarely discussed other side of the discussion and bring it to the debate table.

Entrepreneurship is not a bad thing. To be an entrepreneur takes courage. Not everyone can leave the safety and stability of a well-paying job. It takes foresight and the ability to manage a thousand things small and big, all at once. Without entrepreneurs who risked everything, there’d be no companies that have changed the world like Apple or Microsoft. Heck, there’d be no one to employ the non-entrepreneurs.

Entrepreneurs and non-entrepreneurs depend on each other and share a well-balanced mutually beneficial relationship. At the end of the day, each person has to evaluate their own life situation and risk appetite, and decide for themselves which path suits them better.

Comparison

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