Is it safer to run my own business or work for a larger company?
I have been working on my own business, more as a hobby, on the side and am now working to make it a full-time business. I have been debating with my wife the security of having my own business as opposed to working for a larger company, which I have done most of my career. I am curious what others think about this topic.
When I was 29 the company restructured. Department closed. I moved to a different job and Country.
When I was 34, just married, the company restructured. Business unit closed. I moved to a different job and Country.
When I was 42, family of 4, really enjoying my job, the company restructured. 700 positions axed. Cold shower. I started freelancing (for my previous employer) while I was looking for a "real" job. I came to realize that the crisis where I live has slashed salaries by up to 40%. Then, while speaking with other people in my situation, we asked ourselves: what if it happens again at 50?
One year on, and still freelancing. My income has slowly picked up and is now comparable to what it was before. I enjoy my life. I have to balance the delivery work with the business development, but projects seem to come by more and more. I can consider interim or project opportunities that I would have missed if I had been in an exclusive relationship with one employer. I know there will be ups and downs. But I also know I am not going to make my role redundant and I am not going to have to reinvent myself from one day to the next. Given my past experience, I don't feel any less "safe" than when I was in a corporate environment. I know that my success will depend on my performance, which I trust, and not on office politics or the whims of some HR consultant.
This is a silly question so I won't be polite or verbose. if you don't have the passion and don't have support at home you need a job and a hobby you don't have what's required for a successful business. There's nothing wrong with playing it safe and taking care of your family but successful entrepreneurs can't think that way.
Over the past 5 years my husband has worked for a large oil company. He was hired on as permanent but was terminated after 2 years. Then he was hired as a contract operator and again, he has been let go. Working in your own company can be filled with a lot of challenges but if you work hard enough and smart enough, your business could be the rock that you want in your life. There are always opportunities that having your own business, will allow you to develop and adapt to changing markets.
I don't want to sound too pessimistic here... But, I think security in the workplace is a fading memory. I lost my job of nearly 19 years on January 3rd, 2012. (I'm a Creative Director by trade, I worked for a small regional advertising agency). I was surprised to be in my early 40's looking for work. A week or two after I was let go, I had a couple of clients reach out to me. They asked if I could do a project or two for them during my transition. I agreed, All I was doing was looking for work, so I had the time. Fast forward six months, I found I had less and less time to look for work because I had so much "Side Work" to do. At that point, I decided to quit looking for "Work". With those first few clients I started my own little Advertising Agency. My little agency has doubled YOY every year since 2012 and I couldn't be happier. My wife ended up quitting her job and now she works for my company too... as well as a few other part time and contract people. I would've never had the guts to quit my "Secure Job" and start a company. The thought never entered my mind. I have no business degree or years of experience running anything. I just made lemonade with the lemons I was given. I think if you have the opportunity... do it. The sooner the better... Otherwise, you'll always wonder what if? If you decide to do it, you can plan it and be ready to flip the switch on your terms... when YOU ARE ready. Trust me, you don't want to come back from Christmas vacation to find you don't have your "Secure Job" anymore. ;-) Go for it!... it's scary as hell at first... but it gets a little less scary over time ;-) GOOD LUCK!
I love this question and I love this thread...Really good answers...I'd only add that nothing's "safe" in this world when it comes to corporate employment...I say either way you go it's 50/50...
Read through the thread Mr. Harris and apply some this sage advice that is being shared...You are your only security...Nothing ventured nothing gained...Keep pressing forward with your hobby becoming a business...
There is risk in everything - even breathing. Let's face it, big business is not what it once was. There is no such thing as job security; the guy that hired you can fire you.
I spent a career in business, making my employer one of the wealthiest men in America. Did I love it? In the early years, yes. Was if safe? Safe is for sissies!
The most important thing you should do before making a decision like this is to ponder, deeply think about your skill sets, your passion, what gets you excited when you wake up in the morning.
When you finally figure this out (which is not a few minute or hour process-more like weeks of heavy consideration), you'll know the answer to your question.
No one says you have to own a small business - make it a big one.
...I've been self-employed since 1979, highly recommend it but if you're the nervous type, tire easily of don't have the patience or resources to see it through, then don't do it. It will cave in on you.
The only two things that are safe and assured are death and taxes. AND you are not secure working for somebody else either.
There is no guarantee of safety being in your own business. It is what you make it and what the market dictates. At the same time, nothing is totally secure even if you work for a larger company because even large companies fail sometimes or have mergers and acquisitions. If security is your prime concern, then maybe working for a large company might be more secure.
I work with all kinds of entrepreneurs. Most do not put safety high on their list of important criteria. At least not in the early stages. It's hard to make innovative or disruptive decisions if safety is a top priority.
Please understand, I'm not criticizing your priorities. I accepted a full-time professorship a long time ago and one criteria was security. But understand that - from my point of view - a career working for someone else, plus the ability to find another job if one doesn't work out, is much safer than entrepreneurship.
That said, if you can arrange your life so that your spouse's salary can provide a reasonable level of security then you might be able to make the business decisions you need for entrepreneurship. Research shows that spousal income and support account for a lot of entrepreneurial success.
Many of my entrepreneurial clients would agree that they reached a level of security that is totally dependent upon them, not other people. So they are now secure. But it takes time to achieve this.
Dr. Joel Kline
I have done both and enjoyed both for the attributes of each. If one is going to pose a question based on "security" I would recommend that person work for a large corporation for which they have a strong affinity. I believe there is a strong correlation between one's confidence. ability to assume risk and being successful running their own business. Issues such as capitalization, augmented income and viability of concept are very important - but leading your own venture requires more confidence and comfort with risk. Being en employee may have some stress, and certainly will mean the quality of your work must be high, however the need to make a sale and deliver to meet responsibilities is not an easy one to assume. Being an employee removes the need to "make the sale" from the equation and provides a predictable income stream.
As most people have said, there is no easy answer. Traditionally the answer is employment is more secure ... that's changed over the years as small businesses are easier to start and more large companies "reorg".
That said, the phrasing of this question concerns me. "Security" is NOT a reason to start your own business, and it's far from "safe" and needing security is generally a contraindication of entrepreneurship.
You may want to talk to a few others and share experiences. I've personally run many companies, some successful some not so ... but there's always been some amount of financial stress, especially at the beginning. Can you and your family handle the pressure, and keep going?
Safer is a relative question, so I'll leave it to the side for the moment. Here are a couple things I share with friends and others that might help though.
Since you said you are running the business as a hobby on the side, I'm going to presume it isn't yet throwing off enough stable cash for you to be comfortable making the break to it completely. Your corporate is subsidizing it. You also said you are married. I hope that one of your goals here is remaining that way.
One of the biggest issues you'll face is stress-related. You likely won't have the stability of an equal income as you do in your corporate position. Can your wife be happy with an unstable income? Can she handle the stress on her and you if the business goes through a difficult stretch? If the answer is no, or I don't think so, stay where you are, run the business as a hobby & keep your marriage. Earlier in life, I wasn't wise enough to recognize those issues.
You didn't share what the side business is. When you make the jump, you're going to be dependent on what income it's currently throwing off. You're probably also losing benefits, including health insurance and retirement benefits. Can you offset the loss of those both short and long term? Could you sustain the loss of your two or three largest clients or customers? If not, build the business until you can manage that loss, then think about moving to it full time.
Is there enough growth potential to help you maintain the lifestyle you want? That isn't just money. You probably have some vacation time from your current job. As a small business owner, you'll work harder and longer and perhaps find it difficult to get away from the company, especially early in its life. The good news is you'll be more linked to & passionate about it. Do you know yourself well enough to know whether that will be comfortable for you?
Here are a couple other quick questions:
1. Will you be comfortable with and good at hiring and managing employees?
2. Is the idea/product/service really as good as you believe it is? More importantly, will others pay for it?
3. How many customers/clients do you need to make it on your own? How far away are you from that point?
4. Could it survive if [big behemoth company, e.g., Walmart] decided to compete with you?
I realize those things might seem negative. I certainly wouldn't want to chase you away from your company dream if it's your passion and those around you are willing to be along for the ride. When it works, there's not much better. You do need to make sure you are sure though.
Quite a loaded question :) I started my own business when the market was hot in my particular industry. So I made a "safer" bet, where I was able to replace 100% of my income with the clients I have before quitting. Of course, I was much younger with much less life responsibilities. I was able to take on more RISK. Similar to investing when you are younger, you can afford more risk and market turbulence as you have the advantages of time with the increase earnings potential ahead.
If you are doing well part-time from an income perspective, do you feel that being full-time will dramatically effect your bottom line? Also, don't know if this is a product or service based business, do you have a vision to expand your offerings and a plan on how to access the people who needs your offerings? That's often a danger with many small businesses. They might have a very strong initial offering. However, they max out their ceiling as there's no recurring revenue from existing customers, and you might reach a saturation point within the target audience that you are able to currently reach for a reasonable acquisition cost.
Take GoPro for an example. Great product, but no recurring revenue due to the long product cycle for GoPro cameras. No other real viable product(s) to generate more revenue. They essentially cashed out on average investors when they went public on the stock exchange, and the founder created a Trust that insulated his profit by selling through it...there really should be a class action lawsuit if there isn't one. At this point, the only way for them to increase revenue is either pivot and innovate or acquiring another company to expand their offerings.
In this day in age, with virtual assistants available at an affordable price, there's no need to go full-time so you can work IN the business as oppose to work ON the business. if you are doing well part-time, then I would only go full-time if there's a dramatic potential for you working ON the business.
Ka Pang / Principal & Creative Director / volumesquared.com
I got my last paycheck 30 years ago, and have had my own business since then. My wife joined my business over 10 years ago, so we're a two-consultant family. (Yikes! No paychecks!)
In addition to what others have said here, let me point out two other benefits of having your own business:
-- We set our own work style and work hours. We have structured our business so that we can do a good bit of traveling and other activities.
-- We can't be forced to retire. I'm 74, my wife is 67, and we're still working. Not as hard as we used to, not as many hours, and I'm not trying to grow the business.
But there are real benefits to keeping your business going as you get older. Not least that we have something engaging to do. But also tax benefits, and the ability to keep saving money.
We've taken three international trips in the past year. Having our own business made that possible. We've not yet had to tap into our retirement savings.
There are risks in going full time with your own business but when you feel ready and have all the pieces of the puzzle put together go for it. The puzzle has for me 7 Learning Pieces that work together hand in hand which include:
1. Learning Process- learn the systems you need to put in place and have all the necessar tools to make it happen.
2. Know your Product or Service in and out. Redesign it if you have to and make it irresistible to your future prospects and current customers. Know who your ideal customer and create the avatar then build your product around them and especially for them.
3. Know your Marketing and Social Media Strategy and have someone take care of it if you need your time to run your business. Don't try to do it all yourself.
4. Know who is on your team, their strengths and what theu bring to the table. If they are not producers get out there and recruit, interview them 3-4 times and see who is right and bring them on. Your business will thrive when you have a great team with you.
5. Get a mentor or several who have the experience and expertise and learn from them..Hold sessions. By that I mean start networking if you haven't done it already
6. You become a Virtual CEO of your business and by investing your money on different resources, your wealth will grow.
7. Design your business as a Virtual Office and take it with you everywhere...there is no limit to this. If you want to work from home or travel and work from anywhere its up to you to beceome that CEO of you business.
Good Luck... Life is all about having fun while working around the world but remember Learning is fun on your way to becoming a successful entrepreneur!
While working for yourself is great and wonderful, has many people are saying about failing.
I have done both, and I always get the question asked, " Aaron you have worked on your own with clients for so long, why do want to work for someone else"?
My response has been, that stability, I agree with Ray that we do have less control, and there is that factor that you will be let go was well.
I know I dealing with a company, where the owner put so many obsticles in the way. Where I am use to doing a good percent of the work but the owner does not want me to do the bank / Credit card recs, nor when I go to record deposits the systems need an administrator approval and at this point even I asked the owner why am I here.
This is one of many down sides of working for someone else
As you must know from your prior corporate experience you are at the mercy of so many uncontrollable factors that it is a miserable day-to-day existence. In addition, you are investing your sweat equity into somebody else's business and contributing to their profitability, not yours. In most company's the employees do not share in the profits generated by their efforts.At least in your own business you are in control of your destiny, and your success or failure is based upon you alone, not a bunch of others with different agenda's. Do it !
I too have wrestled with this. There are tons of factors in this decision, but ultimately no one can tell you what you want to do. Finances and stability aside - is this business o yours something your passionate enough about that you can do it all day everyday? Because working for your self means youre your own boss - everything falls on your shoulders, and everything will depend on your ability to balance your business with everything else in your life. You will have self doubt and you will be apprehensive in taking the plunge so to speak. If you truly believe you are able to do this for a business on your own then do it - worst case scenario, maybe you have to fold and you end up going to back to work for someone. You can't fail unless you try, but cant succeed unless you work hard, and believe you can do it.
I believe you must be ready in all accepts before you go into your business. Even your family, if they are not a support , you may as well stay on employment.
I agree with Mike Sutton most businesses are struggling nowadays. But this is because most of the business owners and enterprises Don't understand how to analyze their business on monthly , quarterly and yearly base.
The reality is there are hidden profits in any business that can help then really be sustainable if they know how to unlock them. Unfortunately, owners resist and they claim they know their business better than anyone else on the earth. But not before 5 years being in business,they go bankrupt or shut down the business.
They think it is a shame to use a coach or a consultant to help them out.
Your answer to the following question, if you answer it right, shows that you can proceed and establish your own business, otherwise learn it first.
What is the minimum gross margin percentage to let you afford expenses and let you just stay in business?
If you are ready to proceed with your business and if you are looking for sustainability even in bad economy, consider using the help of others in a right way.
Wish you all the best.