You cannot go on the internet without hearing about how entrepreneurship is not only an excellent way to forge your wealth, but is a cornerstone of global wealth. Most billionaires are self made, and 45% of all employment comes from small businesses. Furthermore, the average earnings of an entrepreneur is over $10,000 more than the average salaried worker according to PayScale. So why is it that only a little more than half a billion people in this world become entrepreneurs? It is what entrepreneurs will not tell you that pushes people away from entrepreneurship. Keep in mind, most of what I write in this post is more based off stories I have heard from people in my family who have become entrepreneurs.
You Will Have To Pay Yourself Last
One thing entrepreneurs will not tell you is that you will have to pay yourself last. One reason they do not tell people this often is because they want to sound like financially responsible people. One of the battle cries of financial gurus is that you should pay yourself first. That battle cry is largely untrue. Regardless, some entrepreneurs are interested in obtaining investors or at least are not completely against having investors.
Investors could provide entrepreneurs with additional cash and less risk than a loan. Many financial institutions like banks are not broadly considered investors. It is very difficult to classify yourself as an investor if you take little to no risk when giving out money, especially if the money is not yours. The investments could be used to grow a business and in some cases provide entrepreneurs with a salary.
Most entrepreneurs I know have told me that if they wanted a regular salary, they would work a job where someone dictates what they are paid. If you plan on becoming an entrepreneur with a regular salary from investors, first of all good luck finding many investors. Second, investors will want some control of how much you can pay yourself, at least until profits come in. If you want a regular salary and you want to become an entrepreneur, forget about being your own boss. Your boss will now be investors who will constantly push their agendas to make sure they obtain returns on their investments. If their needs are not met they can pull the rug out from under you. According to my definition, that is your boss.
If you are interested in becoming an entrepreneur, you will either have to meet the financial needs of your business, or your investors first.
You Will Have To Make Sacrifices
One entrepreneur I know ate beans and rice with added chicken as an occasional treat and in a modest rental for 3 years before he was making any real profits. Another lived with his parent while he was in his 40s to help get his business off the ground. All of this was to make sure they needed as little money as possible so they could invest their revenue to make their business grow into successes. Neither of these two entrepreneurs are billionaires, or at least they did not tell me, so they were not Jeff Bezos nor Bill Gates successful. They make a good amount to fit their comforts.
I know many people complain about their jobs. However, if I asked people if they would rather take an unsteady earnings with a little more than $10,000 than a stable salary I would not be surprised if people would rather have the stable salary. Instability requires sacrifices and people generally avoid sacrifices.
Even if your business idea requires little or even no money, you will have to sacrifice time. Your friends, family, even maybe your wife may question your sanity because you are spending time building your business instead of watching TV or being on the phone. Hold on, my editor just gave me a look. I wonder if it has to do something with my wife.
Expect Excessive Judgments And Criticisms
In addition to the sacrifice of time you will make in your social and familial life you will receive judgments and criticisms from them. They will ask you why you have delayed having children, delayed buying a house, and sacrificed stability for a “pipe dream.” That may bring up tensions. I have heard all of the conversations. “I just want to be sure you are happy.” Really? And you need validation of my happiness 104 times in one year? It gets worse.
If you think receiving criticism from family and friends is harsh, imagine how it would be from employees. Entrepreneurs will not tell you this, but you are the person who cares most about your endeavor. Your employees may care about the business too. But there is likely a price that will make them switch loyalties (pay your employees well if you want them).
You will be criticized by your employees who may think you do not have the business’s interests in mind. Don’t get me wrong, you should listen to criticisms, but the perspective of a business is very different between employers and employees. For instance, your employees may be judging the cut backs on salaries, but do not realize that you have made even more significant cuts on your own earnings (not all businesses do this, but hear me out). Take a look at some small businesses right now during the Coronavirus crisis. Many small businesses may have stopped paying their employees. Small business owners may still need to pay for business expenses if they expect to open their doors in the future at all. Without work, small business owners have no income like their workers. Unlike their workers they will have debt too, or at least regular business expenses.
As an entrepreneur, you should embrace the idea that you will likely have to make sacrifices before you ask your employees to. You will have to make larger ones to survive during tough times. Your employees are unlikely to ever know of the sacrifices you made to keep the business afloat. They may leave you for that.
Clients, fans, audience, customers, buyers. It does not matter what you call them. They are ultimately the ones who like your product enough to part with their hard earned money to provide you with your hard earned money. It does not matter how much time you spent developing your product, if no one is buying, you are not making money. That is why you must take every criticism very seriously from whoever is buying. The client I am working for in my salaried job has trained me for days on how to handle these criticisms.
Strangers may not know you, but they will judge you. If they know you are an entrepreneur, they may think you have money to spare. Some entrepreneurs I know have been victims of burglary on more than one occasion. It became so bad one of them had personal protection for his business. He had to draw out that personal protection on more than one occasion. Thankfully, he did not have to use that personal protection. Suddenly hearing people say that you are a greedy money grubber behind your back does not sound so bad.
So Why Be An Entrepreneur?
You mean aside from the extra money? And also the potential to have wealth beyond what the average salary worker could imagine? What entrepreneurs especially will not tell you is that not everyone should be an entrepreneur. I would argue that less than 10% of people have the character to become a successful entrepreneur.
Could you imagine a world without entrepreneurs? There would be no jobs. The stability most people crave would be non-existent. And they know it. Why do you think salaries have stagnated? Many experts claim the workplace is more competitive than ever, and it may become even more competitive. Employees have less negotiation power.
Hopefully, you have read The Seven Habits Of Highly Effective People. From it you will learn that the best tool you have to negotiation is the ability to walk away. However, with 250 people applying for a single job, only 4-6 getting an interview, and one person getting the job it is safe and accurate to believe that the ability to just walk away from a job offer is not as solid as it used to be. What entrepreneurs also will not tell you is that as scary and as risky as making a business is, it’s not much riskier than finding a job.
The ultimate point is that for balanced growth of an economy there needs to be a balanced number of employees to employers. Right now I think it is accurate to say that there is an unbalanced number of employees to employers. There is never a shortage of people looking for jobs. However, I very rarely hear people ask about trying to find potential investors or even business loans. I think the economy would do very well having a few extra employers out in the world.
You Have The Character Of An Entrepreneur
If you are an entrepreneur or at least have strong aspirations to be one, none of what I mentioned entrepreneurs do not tell you should bother you. I have a…leaning which makes me feel guilt anytime I relax. You can ask my wife about that. You may have that leaning too. It makes you and I weird, which is just the pessimistic word for unique. If you have this character it is unlikely you would be around normal crowds who can easily ignore the future to enjoy the present. Truth is, your character would keep you from enjoying life the same way as others. I could list the social and personal differences between entrepreneurs and other people, but I may save that for a future post.
Entrepreneurship is a dream many people have, but few achieve. Entrepreneurship requires sacrifice and a lack of caring about what others think about you. Most people cannot do this. However, if you are willing to go through what entrepreneurs try to keep to themselves so they do not scare off potential entrepreneurs, you may find entrepreneurship as a path to help you forge your wealth.