Entrepreneur or Salaried Worker? Which Is Best for You?
written by: Mike Sweeney•edited by: Linda Richter•updated: 5/23/2011
Are you thinking about becoming an entrepreneur? What would it take to leave your salaried position? What are the pros and cons, and what should you be considering? Like any important career decision, there is much to think about before making a final decision. Here are a few key tips to ponder.
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What Is Most Important?
Before you seriously consider the entrepreneurship vs. salaried worker debate, identify what you value the most at this stage in your life. What are some of your personal and professional goals at this time?
For example, if you are early in your career, and you don’t have family responsibilities, then what’s important will clearly be different than if you are mid-career with a family and other commitments. There are no right or wrong answers, just a better understanding of what some of the determining factors are for you in deciding what to do with your career at this point.
Stack-rank your list starting with your most important goals. The first couple goals you list will heavily influence your decision, and rightly so. Use your goals and what’s most important to you to lead you in the right direction.
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Give and Take
There is value to both being an entrepreneur and working for a company where you receive a salary or some other form of guaranteed compensation. You will have to do some research and personal introspection to decide which direction is best for you. Let’s look at a few of the most common determining factors and the investment you will have to consider in each one.
The first area to look at very seriously is your financial situation. Can you afford to make the change to being an entrepreneur? Do you require a guaranteed paycheck every two weeks? How about benefits such as health care, are they important? The simplest way to look at the income possibilities is that the salary is guaranteed--but comes with strings attached: Performance reviews, hours, job description. As an entrepreneur, your income is not limited, and the only strings are the ones you place on yourself. However, there is no guaranteed income, at least in the early going.
The next area to consider is the amount of time you are willing to put into being an entrepreneur. It is not a 9 to 5 job. In the early stages, you will put as much time as needed to keep the business moving forward. More than likely, you will be handling many different tasks that will require you to manage your time very effectively. You will have competing projects and responsibilities, all requiring your time and energy, some with deadlines. On the other hand, your time will be a bit more predictable in a salaried position and probably more easily managed.
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In the salaried world there may be many opportunities for job advancement. Each promotion could mean more income along with more responsibilities. It could also mean frustration at not getting a promotion you felt you earned. As a starting entrepreneur, the only promotions are self-created. Eventually, when the business can support it, you can hire people to handle some of the day-to-day work that you may have handled in the past. Your promotion in this case is handling a different workload, which can be a real benefit to you and the company.
Being an owner and making the decisions that affect your lifestyle is a big draw for many people. The idea of being independent and controlling what you do and where you work is very appealing, even with all the risks normally associated with entrepreneurship. As a salaried worker, ownership can come into play through the awarding of stock options or outright stock certificates, depending on the company. However, the amount of actual ownership in the company you work for is generally negligible.
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These are just of few of the things for you to think about when comparing and contrasting whether to opt for entrepreneurship or remain as a salaried worker. There are no easy answers. Only you will know the best course of action to take at this time. Look at your alternatives, weigh the consequences, and make a decision. Decide whether you’re cut out to be an entrepreneur, or you are more suited to work for someone else. Regardless of your choice, you can always readjust and reevaluate based on what's happening in your life.