There is a growing interest in entrepreneurship, with many organizations providing services to startup companies, and even courses and competitions for youth at schools. An entrepreneur is a person to starts and runs a business, rather than being an employee. What are some of the differences from being an employee?
I have worked at a university, very large company, several small companies, and recently founded a startup company.
While a business owner has the option to keep all the profits, they also own all the risk. An employee has little financial risk. They can generally rely that they will get paid regularly. The entrepreneur has to invest money up front in order to set up the business, which they may or may not get back. For example, office space, equipment, legal services, etc. An employee does not usually have to make any investment, they just need to be available to do the work they are tasked with. An entrepreneur must decide what work should be done so the business can thrive. An employee works within those decisions and workplace assets.
There are many kinds of businesses. A “startup company” is an early stage, scalable business. Many small businesses may not be scalable – for example a counseling service or drycleaner company. They will have comparatively limited growth. A scalable business might be an online software platform that would eventually be used by millions of customers, or a manufactured product that could be shipped worldwide. Startup companies are high risk, experiencing up to a 90% failure rate depending on which statistic you read.
In the USA, over 99% of businesses have less than 500 employees, and employ 48% of people. Large companies with over 500 employees are only 0.3% of companies, but employ over 52% of people. Smaller businesses are a very important part of the economy! It also underscores how difficult it is to build a large company.
Building any type of company is time intensive, uncertain, and challenging. Because new companies are small, funds are often tight, and the staff are few. Because of the small size, everyone tends to know everyone else, and it can have more of a family-like feel. The team may be more enthusiastic and hands on with the outcome of the business. Small companies are great for people who want to be their own boss, and enjoy variety and challenge. Small companies tend to be more flexible because they have fewer formal processes, which can allow them to be more innovative.
Jobs at large companies tend to be better paid, more secure, and usually include more benefits. They attract employees who enjoy working with a big team, and give opportunities to learn and advance. Larger companies also tend to attract employees who may be more political in their dealings, or expect to be taken care of rather than driving to take care of the company. With a job, you are dependent on a manager to recognize your strengths and share opportunities. You may have more time and energy to have other interests in life. Because of the strong processes required to coordinate many people, it makes it harder for the organization to be flexible and innovative.
Founding a company can be both exciting and terrifying at the same time. It is very empowering – it is 100% up to you to make anything happen. There is also 100% risk. There is no income until you can figure out how to get your first customers, which then you have to figure out to create a regular stream of customers. This is easier to begin if you already have a job, or are early in life and have few expenses and responsibilities. I had neither, so it took a lot of courage to start down this path. What has driven me is the passion for my business idea.
When a company only has a few people, you have to be good at everything. No one is good at everything. So, you have to step up and learn to be better at even those skills that are not strengths. Entrepreneurs need to have skills of leadership, initiative, a can-do attitude, and risk tolerance. You have to learn to set your own schedule and pace your work to ensure progress.
When launching my company, I felt so empowered. If I was good at something, there was nothing to hold me back from doing my best. If I was weak at a skill, then it was up to me to step up to the plate and learn to become better at it, and to have the incentive to look for business partners who might bring those skills.
In business there is no one recipe for success, so finding and staying on the path is always challenging – especially when there is no revenue yet. The uncertainty of everything would really get to me at times, which would bring on anxiety and self-doubt about my choice of direction. Taking time to think through my motivation and what was important to me would help me past that. And, a good night’s sleep always helps to boost my outlook on life.
My perspective and extensive experience in the first part of my career has provided me a rich skillset to draw from as I build my business. Even with all the ups and downs, I am glad to be building a startup company. I have learned so much. The end result is not yet clear, but that is what Adventure is!
Journey of a thousand miles begins with a single step. – Lao-tzu
A photo which has helped me is this one – the early stage office for Amazon.com founder Jeff Bezos:
Some additional sources for would-be entrepreneurs:
Startup statistics https://smallbiztrends.com/2019/03/startup-statistics-small-business.html
Good article on what to do right https://www.forbes.com/sites/ericwagner/2013/09/12/five-reasons-8-out-of-10-businesses-fail/#414498796978
What No One Tells You about Being an Entrepreneur https://medium.com/marketing-and-entrepreneurship/what-no-one-tells-you-about-being-an-entrepreneur-1c84a8249998