The reading level for this article is Novice
Are you considering being an entrepreneur? Are you considering starting a career? If so, it is good to know the pros and cons of each. The table below will help you learn the difference in roles and mindset between an entrepreneur and an employee.
Take a Job or Make a Job: Entrepreneur vs. Employee | |
Entrepreneurs | Employees |
Value wealth over job security | Value job security over wealth |
Can go months or years without payment | Receive consistent paycheck |
Long hours, especially during start-up | Regular, consistent hours |
Potential for very large payoff | Constant but relatively low payment |
Build their own assets | Work to build someone else’s asset |
| Have a higer tolerance for risk | Do not like risk |
Own the company. Can only be fired by Board of Directors. | Could be fired at any time |
Sit behind the desk when interviewing | Sit in front of the desk when interviewing |
Are willing to take calculated and educated risks | Adverse to risk |
Build systems for benefit of themselves | Build systems for benefit of employers |
Pay taxes only on NET income | Pay taxes on total income |
Build assets and then use them to purchase other assets | Do not build assets. |
Build passive and portfolio income, taxed lowest | Build active income, taxed the highest |
Invests from the inside | Invests from the outside |
Can start other similar companies | Restricted by non-disclosure and non-compete agreements |
Adapt quickly to change | Often resist change |
Often have to dedicate yourself fully during start-up stages. Hard to raise a family and start a high-potential venture. | Have time to do other things besides work—such as raise a family or take up hobbies. |
Have access through their businesses to much larger credit limits | Much harder to obtain significant credit |
Financial security once venture succeeds | Will have to follow strict saving and investment plan to reach financial security by retirement |
Can become wealthy at young age | Will not become financially secure while still young |
Have a bias toward action | Often have a bias toward passing the bill |
Create the systems | Have to deal with the bureaucracies created by intricate systems of the companies they work for |
Decides who to hire and who they work with | Have little say over who they work with |
Have freedom to control direction of their company | Have little say over the direction of their company |
Are able to use all of their skill sets | Use only a small portion of their abilities |
Rarely do the same thing two days in a row | Often have repetitive jobs |
Work on building assets so they’ll never need a 401(k) or pension | Work on building 401(k) or pension |
Make money when they sleep | Make money only when they are working |
Hopefully the table above has given you some insight into the different characteristics of entrepreneurs and employees. It is a difficult choice to make for many. Many aspiring entrepreneurs choose to work for someone else for a few years to gain knowledge, contacts, and capital. Others feel that the best way is to start out as an entrepreneur and have the advantage of quite a few years of learning over their peers. Whichever you decide, just make sure that the choice is the one that is right for you, not just the one that everyone wants you to make.
