What are the Advantages and Disadvantages of Being an Entrepreneur?
What are the advantages and disadvantages of entrepreneurship? An entrepreneur is an effective consolidation of courage, commitment, and hard work. It's not the easiest path to tread, but if you know what you're doing and have a great business idea, it is a rewarding choice.
Starting your own business is a challenging endeavor that takes a lot of hard work and drive. Entrepreneur abilities play a major role in his success. It's not for everyone, and it's not the easiest path to take. A great business idea combined with quality execution offers a tested recipe for success.
There are numerous advantages and disadvantages of being an entrepreneur. Entrepreneurship involves taking calculated risks. There is no guarantee that things will go as planned. But what’s the remedy to this risk? An effective risk mitigation strategy along with an accurate calculation of the projected loss, allows you to draft a plan that does not leave you bankrupt. Without risk, there is no reward and this is an ultimate reality.
For most people, entrepreneurship is about starting a company or a business. While this might be true for some entrepreneurs looking to make a fortune, this isn't what entrepreneurship is all about. For some of us, entrepreneurship is an ideal platform for innovation, creating new products, freedom, and adventure. It offers the opportunity to create something that is genuinely innovative and unique, while at the same time helping uplift society.
Entrepreneurship is about freedom both financial and personal. But does it stop there, or are there any other advantages and disadvantages of being an entrepreneur?
What is the need for entrepreneurship? Many of us choose entrepreneurship, out of sheer frustration of being caught up in the corporate rat race and to get rid of a boss always nagging above our head. This most often is not the right reason to choose entrepreneurship as a career choice.
The choice to become an entrepreneur must be calculated and include a passion for the business. Being an entrepreneur is not easy, you get freedom and profits but it is accompanied by stress, workload, employee management, and more. What are the skills of a successful entrepreneur? A “successful entrepreneur's skills” include time management discipline and hard work.
Not everyone has to become a Bill Gates or Mark Cuban, it precedes a specific skill set and perseverance to become one. You can have a job, work hard at it and be very successful like Sundar Pichai (Google's CEO). It's most important to understand your passion and interests. Entrepreneurship is a long journey, a marathon not a sprint and you will need a certain amount of interest so as to pursue it for the next 5-10 yrs of your journey to success. Here we will discuss both the entrepreneurship advantages and disadvantages.
Advantages of Being an Entrepreneur
The advantages of being an entrepreneur are:
Out of the many advantages and disadvantages of being an entrepreneur, freedom is the most lucrative “entrepreneurship benefit”. For humans, freedom is of utmost importance. We have fought multiple wars and have protested for years, to attain freedom from the oppressors in almost all parts of the world.
As an entrepreneur, you enjoy more than a fair degree of freedom. You do not have to report to anyone but yourself, you can go on holiday whenever you wish to. There’s plenty of time you can spend with your family and friends.
The amount of time or freedom you have depends on the type of business and the systems you have created to run your business. Creating systems - is most important as it allows you to run your business effectively even when you are asleep. A system must always be employee and management-centric rather than being centered around yourself. This allows you the kind of freedom to enjoy life without worrying about the business.
Innovation is the need of entrepreneurs and is one of the major entrepreneur advantages. Are you someone who is easily bored with something and always looking for something new that can blow your mind? Most often such individuals find the redundant 9 to 5 job a living hell. When talking about the advantages and disadvantages of Entrepreneurship, this is the most useful advantage we can talk of. Entrepreneurship allows you to innovate in all aspects of the business starting from Human resources management to the product or service that you sell. Moreover, product differentiation is important in competitive markets and innovation is highly essential for it.
Entrepreneurship allows you to experiment with ideas and compels you to activate the otherwise sleeping neurons of your right brain. You ought to go beyond your imagination and think out of the box.
One of the important methods to be creative is “Thinking with the First Principles”, which recommends straightforward thinking without any preconceived notions and prejudice.
Innovation is the key to getting rich quickly. Finding the right solutions to the right problems at the right time is what made a special secret sauce for Microsoft and Tesla-like multi-billion-dollar businesses.
There are multiple advantages and disadvantages of being an entrepreneur but the most important rewards of being an entrepreneur are the “Profits”. These are most essential in a business, and being an entrepreneur makes it possible for you to invest and gain good profits for yourself. You no longer have to “Make someone else Rich”. Working on a salary can never let you and your family enjoy the kind of luxury that one can only dream of. No matter how much money you can save from your job, it can never be enough to afford the luxury.
As an entrepreneur, it's most important to choose your business wisely. A business with less than 50% margins is a big “No”, as low margins reflect high competition in the space. A new unexplored market can offer great margins and low completion which are ideal for any business. It's advisable to choose your niche carefully. The business you choose must have a life cycle of 30-50 years left in it. This ensures that the 5-7 years you spend in raising a business can pay off your bills at least for the next 10-20 years of your life.
4. Time Management and Discipline
Out of all the advantages of entrepreneurship, Time Management & discipline are the most important. Being an entrepreneur is not just about being wealthy and enjoying the luxuries of life, but most importantly it allows you to grow and learn as an individual. Discipline and time management is a skill that is hard to master for any person, but it's also the single most important factor that makes the difference between success and failure. The benefits of entrepreneurship include the important lessons of time and discipline.
Entrepreneurship does not only come with the glory and luxuries but requires you to be disciplined to the core. Right from when you wake up to work and back to bed. Most successful entrepreneurs wake up before sunrise, ie. 5 am, and have a disciplined schedule of exercise, reading, mediation, and reaching office before everyone else does. An entrepreneur has to lead from the front and this reflects through his discipline and time management. Successful entrepreneurs are always on time for meetings, events, and work.
For you to become a successful entrepreneur, you should be able to manage your time and be disciplined. Both these characteristics accompany each other. There can be no Discipline without effective time management and vice versa.
5. Giving Back
One of the most important rewards of entrepreneurship is that you attain wealth that enables you to give back to society. Out of the major advantages and disadvantages of being an entrepreneur, this ranks as the top advantage. Almost all successful entrepreneurs always give back to their community in the form of social causes. Even Bill Gates, through his foundation, carries out plenty of social work in the US, India, Africa, and other countries.
There is an entire field of entrepreneurship referred to as “Social Entrepreneurship” that offers products and service solutions for the welfare of society. These range from providing clean water, microfinance institutions for the upliftment of the poor to generic low-cost medicines, and more.
Disadvantages of Being An Entrepreneur
What is a disadvantage of entrepreneurship? Here we will not discuss the 10 disadvantages of entrepreneurship for the sake of it but will focus on the major disadvantages of entrepreneurship that startups face. Being an Entrepreneur is not as easy as it might seem to some of us. Starting a business from scratch demands a lot of effort, which includes managing human resources, finances, sales, marketing activities, and more. It also comes with long working hours and a lot of stress. Here I will list some of the major disadvantages of being an Entrepreneur.
1. Market Risk
What are the disadvantages of entrepreneurship? The market is the most dominant force in a business. No matter how well your systems are integrated or how good the employees are, the market decides your fate. Think of the market as a Ship and the operating businesses as its passengers. No matter how hard they try to save a sinking ship with a hole, it will eventually be full of water and take the people on board with it.
This is one of the major disadvantages of Entrepreneurship, You can not outsmart the market. Therefore it's advisable to choose your markets carefully from the very outset. Look at the long-term projection and scope of the market, is it a sinking ship or is it just going down with a wave? Select your niche wisely, especially in the technology sector. It is an extremely fast-evolving sector and has led to the rise and fall of many giants including “Nokia”. A once flourishing mobile phone brand, it wasn't able to cope with the fast-changing technology and finally went bankrupt.
Out of the many advantages and disadvantages of being an entrepreneur, this is a major disadvantage for beginners. When starting a business, you have to take care of everything, from Employee management to finances and sales. This creates a huge workload and you will have to work overtime. The number of hours you have to put in will be a lot more than your job, which will lead to No time for your family and a Pathetic social life.
How to get through the beginning phase of a startup? The most important thing to remember is that there’s a light at the end of the tunnel and the amount of effort that you've put forth shall be rewarded in the future. Moreover, it's important to remember that starting a business takes time, and it might range from 1 year to 3 years of continuous effort before you can make a dime out of it.
3. Financial Uncertainty
Being an entrepreneur is way different than having a job. You don't get a monthly paycheck and there’s a high level of financial uncertainty involved. Your income can vary from month to month. Out of the many advantages and disadvantages of being an entrepreneur, this is a major disadvantage, especially when you have a family to feed and bills to pay.
So, how do you get out of such financial instability? The answer to that is simple, there needs to be a war chest or a cushion of savings, rent, or any other source of income that can support you in such times. Trust me, such times can last from a couple of months to 1-2 years.
Most importantly you should remember the 1000 days rule, which says that you must give your business at least 1000 days to blossom and come out as a great success.
Another challenge you will face as an entrepreneur is the funding amount, and how to attain it? Different businesses come with different financial requirements at the initial stage. It is important to arrange a source of funding. It can be through a loan, an investor, or can be taken from friends and family.
It is not that difficult to get funding, but at the same time, you must make sure that you don't blow that away in unnecessary expenditure. The sole purpose of the company at the initial stages should be to repay the credit and reinvest the remaining profits back into the company.
Time is a limited resource and as an entrepreneur who is starting his business from scratch, you have to put almost all your time into the business. A major disadvantage with this is that you are left with almost zero time for your friends, family, and social activities.
Most successful entrepreneurs like Bill Gates and Elon Musk slept in their office and dedicated 12-18 hours to work. It's most important to manage your time and work. It's advisable to take up time management classes and as the business starts picking up, you start delegating tasks to the manager or the employees.
6. Heightened Stress Levels
Stress is a major disadvantage of being an Entrepreneur. Prolonged stress levels can often lead to a state of depression. But what is this stress caused by? As an entrepreneur, you have to manage a lot of tasks such as Employees, Salaries, Finances, and Sales. You become the one-stop destination for all employee demands, which leads to work overload and multi-tasking. As an entrepreneur, you must try to start delegating tasks to the employees and try to take a break when feeling overwhelmed with work.
Don’t discard your hobbies and have fun while working. It's okay to crack a joke or two with your employees or partners to lighten up the mood.
Remember the old saying, “All work and no play makes Jack a dull boy”. An entrepreneur is of no use when he/she can not be creative and lead his business to success via differentiation and unique marketing strategies.
There are numerous advantages and disadvantages of Entrepreneurship. The entrepreneurship advantages include a good lifestyle, freedom, and trying new things; whereas there are some disadvantages as well. At any time the advantages far outnumber the disadvantages and the challenges that an entrepreneur has to face in the initial stages of his business. The skills of an entrepreneur make a difference between success and failure. Successful entrepreneur skills are discipline, time management, and work ethic. When deciding to be an entrepreneur you should be ready to face the challenges for the first 3-5 years. The real taste of success comes to those who have patience and persevere for the initial time frame in their journey towards success.