12/26/2018 18 pros and cons of being an employee vs.

an entrepreneur | The Ladders

ENTREPRENEURS

18 pros and cons of being

an employee vs. being an
entrepreneur
SOPHIA ANDERSON APRIL 17, 2018

Both being an employee and being an entrepreneur have their own

advantages and disadvantages. Entrepreneurs are often portrayed
as happy and free, risk takers that have the bene ts of controlling
their own time and income. They often have uncapped potential
earning and can jump from industry to industry using and
developing business skills that ultimately add to their success and
experience.

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Both being an employee and being an entrepreneur have their own 5 money rules that
advantages and disadvantages. Entrepreneurs are often portrayed as will increase your net
happy and free, risk takers that have the benefits of controlling their own worth
time and income. They often have uncapped potential earning and can DARIUS FOROUX
jump from industry to industry using and developing business skills that
ultimately add to their success and experience.
Forget job security
In the real light of day though, many entrepreneurs fail. They don’t have
(how to take
the guaranteed income and work available that a contracted employee ownership of your
can enjoy. Unfortunately, they often don’t have a team of colleagues to work and design a
rely and depend on, a paycheck to cash at the end of every month, a better life)
company car and medical insurance, and a chance of career progression THOMAS OPPONG
within the same company in exchange for years of service.

From the complexities of registering your company through to arduous

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tax returns, failures, fallouts and business pitfalls. The life of an
today to be richer in
entrepreneur is not as star-studded as people would believe when they 2019
see the word appear in the press.
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12/26/2018 18 pros and cons of being an employee vs. an entrepreneur | The Ladders
TANZA
However, the diversification available to those that chase their dreams LOUDENBACK
with new inventions and madcap ideas can often lead to self-satisfaction
and an abundance in confidence that will help across all areas of life.
Chart comparing
In today’s western society there is more and more opportunity for people stay-at-home moms
to succeed and thrive as a freelancer and entrepreneur. and working moms
sparks outrage
The growth of the internet, remote working and artificial intelligence … AMANDA TARLTON
Along with the advancements in broadband and WIFI technology are
making international freelancing easier and easier.
37% of workers are
Below we’ll discuss the advantages and disadvantages available to both looking for a new job
the entrepreneur and the employee. outside their current
company
SHEILA MCCLEAR
Advantages of the employee:
Leave Benefits Surprising results
about wearing
headphones and
Leave benefits or holidays, are the times available each year for the
productivity
employee to have some time out and enjoy paid time when they are not
working for their employer. ROBIN MADELL

They may take a holiday or choose to work on their personal

relationships, hobbies, exercise, or simply rest. 6 things you don’t
owe your boss
These periods of holiday can give employees the chance to really take TRAVIS BRADBERRY
stock of their lives and refresh themselves. This means that when they
return to work they will have more focus and energy to complete their
daily tasks with a new vigor and satisfaction.
4 hard lessons I’ve
Guaranteed Income learned about
negotiation that can
help you win deals
Obviously, a huge advantage of employment vs entrepreneurship is
guaranteed income. This fixed amount of money deposited on a weekly PRAVEEN TIPIRNENI
or monthly basis into bank accounts means financial security for the
employee and their family.

Employers pay the employee for their services towards their

organization. This pay often includes a range of allowances and benefits
which may include, taxes, insurance, health insurance, provident funds
and company shares. Toolkit
Ladders offers the best professional advice every
Sometimes the family of the employee will also be covered by a health step of the job search process. What can we help
you with?
plan. Even after the age of retirement, the employee may continue to get
private or state income, leaving them and their families secure for the
rest of their lives. RESUME +
Fixed Working Hours INTERVIEWS +
Employees will often agree on fixed working hours that will be COVER LETTERS +
guaranteed and outlined in a contract between themselves and the
organization that employs them. JOB SEARCH +

Overtime or extra hours available will be worked at the employee’s

discretion and will not be compulsory. Hours exceeding that in the
contract are called ‘overtime’ and are often remunerated at a rate higher
than the standard hours agreed when employment begins.

Sometimes an agreement is set out between an employer and employee

to receive lieu time in exchange for working hours that exceed that of
their contract. Hours worked in lieu can be saved and exchanged for
longer periods of holiday or extra days off work.

Less Responsibility

In employment, you are often assigned a particular role and are only
responsible for performing the tasks that are directly related to that role

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whilst you are working.

You don’t need to interfere or worry with how other people are performing
across the company, as you will still receive your payment as long as you
complete all the tasks that are expected and outlined for your individual
role.

You will probably be periodically appraised for your role and this will
affect your chances of promotion and also your success rate within your
profession. Appraisals can be a good opportunity to discover your
individual strengths and weaknesses.

Advantages of the entrepreneur:

Growth in Career

As an entrepreneur, you have the ability to fulfill your goals and

aspirations as an individual. You will not have a boss in place to interfere
or make decisions for you. Your life is your own and the amount and size
of the risks that you take is your choice.

Entrepreneurs all have the opportunity to rule their chosen business

sector. Obviously, this is decided by the market demand for their product
or service along with the amount of drive and determination harbored by
the individual.

Independent

With no boss in place, the entrepreneur is free to make their own

decisions in both their personal and professional life. They can work
whenever they want, however many hours they want, and sometimes
from wherever they want.

They will be able to direct employees and have other people helping
them to make money and achieve their goals.

However, they will need to be natural leaders and set up standards along
with roles and responsibilities for their employees. The more they can
outsource, the easier their life will become.

Flexible Working Hours

Ultimately, the entrepreneur will choose working hours that suit them.
While some entrepreneurs will work 80-hour weeks when they first start
out, others will have the people and resources in place to sit back and
work as little as possible.

The Ability to Earn

The financial growth for an entrepreneur is much greater than that of an

employee constrained to a salary or an hourly rate decided and agreed
on at the start of their employment.

They will own their company outright and often have a large share of the
business profits.

They have the potential to earn as much as they want to, depending on
the demand for their product or services.

Change and Exploration

If an entrepreneur sees a new opportunity to make more money by

expanding or re-training, they have the choice to do so.

Entrepreneurs are often out networking and making new business

contacts and opportunities. This means they are the creators of their own
destiny and can always change and explore new horizons.

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Disadvantages of being an employee:

Dependency

Employees have to follow their employer’s instructions and can become

dependent on their monthly income as they buy things on finance and
slip into debt.

Employees with big families have added pressure and can feel a growing
dependency on their job as their family grows and expands.

Limited Income

The income of an employee is often limited to their agreed salary or

hourly rate, meaning that is capped and can’t be expanded without
overtime or a pay rise.

Limited income puts constraints on almost every part of life. Some

employees may be incentivized with bonuses etc. However, they are
often capped or limited until they change jobs or get a pay rise.

Limited Development Scope

Again, the constraints of employment within a specific industry or role

can really minimize an individual’s scope for development.

Employees often have fewer choices for career progression and can only
advance within a very specific industry.

Job Security

In a competitive world, people are disposable. Jobs are not always

guaranteed for life and employers can often sack employees without
giving a solid reason. Of course, this all depends on how professional the
contract of employment is. But job security is never 100% guaranteed.
Some companies can appear to be doing well and then fold without
apparent reason.

Disadvantages of entrepreneurship:
Stress

With no guaranteed income, no boss for guidance, no colleagues for

support… Entrepreneurship can prove a stressful and lonely place. For
all the advantages that it offers, it has its pitfalls. The stress of being your
own boss, marketing department, legal department, networker, and
accountant can prove too much for some people.

Investment

Starting a business can need a lot of money depending on the type of

business you are starting. Some entrepreneurs start out in debt because
they have had to borrow money in order to cover their start-up costs.

This investment can have a huge impact on performance and can lead to
debt.

The entrepreneur is at the scrutiny of his or her clients at all times. A bad
reputation can lead to a loss in earnings and can incur debt on prior
investments.

Long Working Hours

Some businesses need to work a lot of hours in order to get off the
ground and be successful.

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If you are starting a business that has many competitors, sometimes man
hours are the only way of building a solid reputation and customer base.

Working long hours can have a negative impact on your family and social
life and also your health.

Financial Instability

When starting a business and for the first few years of trading, there may
not be much disposable income available. This can affect your individual
finance rating and lead to trouble securing mortgages, cars, mobile
telephones and other lifetime essentials.

Are you ready to face this level of financial instability?

Risk

Going it alone and deciding to become an entrepreneur carries a lot of

risks. The risk of failing, the risk of others witnessing your failure. The
risk of debt, the risk of hungry competitors, the risk of bankruptcy… It’s
not for the light-hearted!

This article first appeared on YourCoffeeBreak.

More: Employees Entrepreneurs Management Personal Finance

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