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.
It's an interesting question with no simple answers.
Most small business fail and many that survive struggle. But, some do really well.
On the other hand, while employment used to be the basis of both our culture and our economic security, that's less and less true as time goes on. Productivity is increasing along with population, which means we simply have more people (supply) than jobs (demand) and it's only going to get worse.
Short term, a job is probably more secure - until it's not.
Long term, self-employment is more in your control. You can protect yourself with multiple income streams. You have more opportunity for rapid wealth accumulation, which is not typical but much higher chance than as an employee. You are more independent and in control of your own destiny.
Possibly that just clouds the issue further for you, but it's not an easy answer. I guess at it's most basic you could say the primary benefit of starting a company is that you can benefit most because you are taking the most risk. Therefore, going out on your own is more risky. My belief is that there's a more fundamental shift going on in our culture right now and we simply have to stop thinking like employees.
Hope it helps.
There is no real answer to that. There are pro's and cons. A high percentage of new businesses fail. Many who don't fail produce less income than someone could get working for a larger company. On the other side of the coin when you work for a larger company you have less control. You pretty much have to do as you are told. The world changes faster than ever and a successful company one year can be a failing company the next. You have no control over downsizing. Buyouts and mergers happen at an ever increasing rate and there is risk when that happens. There is always the possibility of them bringing in a new manager who doesn't like you even though you are doing a good job. You have to deal with the quirks of your superiors.
With your own business you are the master of your destiny. If you do fail it will be your own doing. You have more freedom to run your business the way you see fit. There is a large risk of failure but there is also a chance of even greater success than you would have found as an employee. You will find yourself working more hours in your own business. A 40 hour workweek will be a thing of the past. You need a wider range of skills. You need some knowledge of sales, marketing, purchasing, accounting, inventory control, time management, legal requirements and much more.
At the age of 21 I turned in my resignation at the last real job I ever held and started my own business. I have never regretted it and that was ages ago. I probably could have made more money working for a larger company and perhaps had more security but I like doing my own thing. Most of that time my income has been excellent but there have been times I was one step above dumpster diving and sleeping in my car. I have never regretting having my own business. There is risk however and it is not for everyone.
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.
Say Jeff, if the matter of security is the first thought that comes to mind I don't believe you are ready to go forward. Begin by assessing your business venture- 1) your intentions (e.g., what you want to accomplish or to gain with the business, 2) marketability of product/service, 3) customer demand for product/service, 4) litmus test (e.g., what is needed to make this business work; what you possess versus what you lack and how/if you can fill the gaps and 5) support (e..g, buy-in of family, financial reserves). With answers to these questions the matter of security will be better understood. The luxury you possess is that you are currently employed thereby eliminating risk and opening the door to a thorough examination before moving forward.
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!
Generally speaking, most would agree it's safer to work for "the man", but you can still get downsized, and there's little fulfillment in building someone else's wealth or dream. Perhaps a better question to ask is whether it is necessary to choose between one and the other, the answer to which is "no".
Once you've discovered this, the next question to ask is "am I willing to do what it takes to hold down a fulltime job while getting my business into positive cash flow?"
Another question to ask if you're wavering is "am I willing to play it safe all my life and bury my dreams?"
If you answered "no", I'd be happy to chat with you to see how best to get your business cash flow positive (after covering your expenses) as quickly as possible and with the least stress possible. There is a way. You just don't have all the information about that yet.
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.
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
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.
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
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.
There's a lot of espionage going on in the business world. A lot of back-stabbing and cheating. I think the first thing you have to get settled is how you would face the rigors of this bear-bull market and the prevalence of intervention by shadowy figures, the potential for riots, shortages of important items, and the rest which goes with a failing or soon to fail economy.
There's lot of writing on the web about the value of side projects. What I've read is that you know when to abandon your job and turn your side project into your job when you are spending more time/energy/thought on the side project.
Safer? that's a matter of personal preference. I personally believe that working for myself lets have me have more influence over my future. Control is illusory, influence is possible. When someone else is signing your paycheck, you will never be entirely safe. BUT you need to have the stomach for it. And since you mentioned your wife, she must Must MUST agree to this or it will never work.
I have been working most of my life for myself. Working for a larger company is probably the safer bet, but there are no guarantee that you won't get fired or forced to move or company change and everything changes. My biggest fault for working for someone else is you are limiting your income to what they want to pay you. It is a challenge to keep a level income but I can make much more and have the ability to take time off when I choose, but the again I do work more sometimes. I have several clients the key is to not have just one or two clients and to spread your business over several clients and acquire new clients as much as possible.
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 get a paycheck once a month for the company I work for. I happen to be the owner of the company I work for and wouldn't have it any other way. You don't say what you do. I have a bookkeeping and accounting systems consulting firm. So lets assume your business will be a business w/multiple clients vs. your job w/1 employer. Your livelihood is based on a few things a) are you good at what you do and b) do your clients/employer need you to do it. If one of your clients no longer need your service, it might sting for awhile, but you will go find another client to replace that income and then all will be right with the world again. However if your employer no longer needs you then you will be in a world of hurt. A lot of individuals state there is more stability with a job. And while that may be true for some, for me it has never been that way as my stability was based one one. While in my business my stability is based on many. Also having my own business gives me the ability to fire clients I do not wish to work for should they not meet my standards. Perhaps they don't treat my staff well, or they don't pay their bills, or they aren't ethical. With a job, you are kind of caught between a rock and a hard place. Now having said all that, as an owner of a company and especially a start up it will be all work and no play and Jeff will be come a very dull boy. But all that work and attention all being well will hopefully pay off in the end. I have been at it since 1993, don't regret it for a moment, I still work 7 day weeks more often than not, however while I may work hard, I play hard too.
First, there is no such thing as "safe" or "secure". These concepts have not been realities for at least one generation.
Depends on whether you want to be master of your own destiny or a victim of someone else's decisions.
A generation or so ago, working for a big outfit - such as IBM, for example - was safe compared to setting up your own show. But hasn't IBM laid off tens of thousands of employees every year for several years. To cap it off, the company is now apparently going to only offer a severance package equivalent to one month of benefits compared to six months previously. So, unless you find something else fast, you had better have several months worth of living expenses stashed away.
Jobs have been cut by big companies across just about every industry.
I recommend that people working for companies squirrel away at least three months of basic living expenses and take out income protection insurance which cuts in after a month or two and pays at least 60% of your provable income every month for a year. (If you try hard enough, you can trim 40% of your living expenses. And don't forget that having a job costs money - transport, parking, clothes, lunches, coffees and so forth.)
You should do the same if you have your own business.
A great question and some great answers here...
You have the 'luxury' of having worked your own business idea on the side for a while. That is a great way to get started. As a result, you should have a feel for whether there is a real demand for your product/service or not. Even if you have had success, make sure you determine the total size of the market and honestly consider your competition.
So, realistically ensure there is a real and big-enough demand for your product/service, ensure you have clear differentiation from your competition, and make sure you have enough cash to support the start-up.
Stating the obvious, you are better to say with your job than to start up a business that will fail. There is no certainty either way, but at a minimum, continue to see if you can build your own business on the side. If you answer the above questions positively, then take the leap. If you can't, yet, then stay with your job knowing that you continue to build a side business which you can fall back on if the worst happens from "the man".
This really is a personal decision. Owning your own business gives you great freedom, but you have to understand it is your business and not your personal bank account. To many people will live off their business which eat away at the business profit. In fact there are CPA which will talk you into do just that, live off the business. Here the problem, if you work from home and you write off part of your house, buy items under the business name and etc. If the business fails, your collectors or creditor have right to collect. That car under the business name, repo. If you live in a state like Texas where personal creditor can't foreclose on you home, business creditor can even if you own the home out right.
Flip, working for a business. You are just in the rat race and today there is no loyalty to the employee or business.
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?