Why Be An Entrepreneur?

Why Become An Entrepreneur?

Once again, we’re drawing from the Reddit well. Sorry for that, but it’s easy pickings.

Yesterday, I stumbled across this:

Now, just like yesterday’s article, it’s very easy to point, laugh and say “what are you talking about?” That said, after addressing the topic I’ll move on to the title of today’s post; why be an entrepreneur? I’ll try to do it in a practical and honest manner – I’m not really a fan of the guru-talk and “You can achieve your dreams!!!” style writing.

Firstly though; let’s talk about risk and entrepreneurship.

Why Be An Entrepreneur When You Can Just Get An AWESOME Director’s Job At A Multi-National?

I’ll give the guy who wrote the above topic the benefit of the doubt and assume he wasn’t really trying to build a decent argument, but his message contained a lot of assumptions which I’ll address:

• “If entrepreneurs are so smart” – entrepreneurship isn’t an overly intelligence-based thing.
• “Why don’t they just join a big company and get a comfortable salary” – this obviously isn’t a case of simply rolling up at Google and saying “Hey yeah have you got any of them good jobs going?”
• “It is much lower risk” – no it isn’t. High-paying jobs = education, connections, luck, skill and timing. Sure, getting any job is lower risk than entrepreneurship, but there’s no guarantee that you’ll land a high-paying job.
• “… and you can still be quite rich through that too” – if you’re talking about jobs that make you rich as in 1% or even arguably 10% of the population, betting on those jobs is very risky and long-term
• “Not become a billionaire but surely one can become a multi-millionaire as a high-level executive. The probability of becoming rich is much higher using this route.” – I mean, this is all arguable but the amount of jobs where you can follow a set (i.e. low risk) career path is decreasing and already quite small. The percentage of those career paths that’ll take you to multi-millionaire status is vanishingly small and highly, highly competitive.
• “If money is the objective, becoming an entrepreneur looks like a dumb move because of the high risks involved.”

Again, the point is arguable but the argument is weak. Entrepreneurship for money is risky, but not overly so if we’re being realistic about what entrepreneurship is. Arguably, becoming a ridiculously highly paid employee is at least as high risk.

Let’s move on and interlace this stuff throughout.

What Is Entrepreneurship?

Entrepreneurship is basically about creating a business for yourself. Now, bizarrely, the definition has somehow become attached to the whole Silicon Valley tech-billionaire venture-capital crowd.

Ironically, when you tie up venture capital, Wall Street and the structure of corporations, you realise that most people working in that sector aren’t entrepreneurs. But that’s an aside.

In reality, most entrepreneurs – or anyone – don’t become billionaires. That’s not even the goal at any point.

Now, if you compare “having a career” in terms of risk to becoming a tech billionaire, then obviously the former is more likely.  But when you consider the fact that:

• Plumbers, builders, electricians etc.
• The guy who installs the pipes outside your house
• Your local convenience store owner
• The woman who designed your cushion covers
• The kids who program the apps you use on your phone
• All nine billion slogan t-shirt designers

…are all entrepreneurs, you realise that there’s a hell of a lot less risk there than you think.

If you own the company, then you are an entrepreneur. And there are many, many entrepreneurs who are entirely invisible in your day to day life who make the world go around. Some of them make astonishing money for what they do.

Some Examples Of (Not-so) “Risky” Entrepreneurship

The most extravagant house I’ve ever been in is owned by a guy who has a company that digs holes in roads. I say “house” because what I really mean is “set of buildings that comprise a home.” His garage is the size of a large detached house, and it holds his Ferrari collection.

Probably the richest guy I’ve ever spoke to ran a window cleaning company. It started with him and a bucket of water, and now his company is a government contractor.  The second richest guy I’ve known imports plumbing supplies – stuff that costs pennies – and sells it to building merchants.

Let’s look at the risks involved in these very real examples.

To my knowledge, none of these guys have anything more than secondary school education. They are smart, but not academically blessed. I’m bringing this up because if we’re saying, “Why don’t they just get a top job at a top firm” these guys – all multi-millionaires – wouldn’t get a look in. They wouldn’t get past the application stage for a top job, and they could never get into an MBA program or other high level qualification.

Now, these guys are all older than me, but two of them had their businesses before their “destined for MBA” peers would have been out of the education system.

One started as an apprentice at a building firm, one was a handyman who worked under a plumber.

As most entrepreneurs do, they started off getting some skills and taking side jobs. There was very little financial risk. In this day and age, there’s even less of a financial risk because it’s so easy to start up doing whatever you like, wherever you like and sell to whoever you like.

Apples and Oranges

We’re getting on with this article, so I’ll try and get to the point.

Traditional career and a high-paying job: You need a good education or extreme academic smarts; you can’t just “get a job” at Google or in Canary Wharf, Wall Street or whatever. Mostly, you’ll need to have some decent education (read: Good degree from a top uni) and/or a portfolio of internships, aptitude and trips where you feed African kids and help build a hut for Instagram photos and stuff.

This costs years and lots of money/debt.

Then you have to do the career ladder hop scotch, hope you don’t annoy your boss and hope that the economy doesn’t significantly change in the meantime. (Hint: It’s going to.)

Needless to say: This is risky.

There’s no guarantee you’ll get the top job or even a job in your industry at all. Can you do it? Yes. Is it likely? Not really. Is it guaranteed? Not at all.

If everyone could be a top CEO in a multi-national, then everyone would do it. In reality, competition is fierce and there are a myriad of issues which stop this from happening.

Essentially, you’ve got an illusion of stability because companies are monolithic; the jobs within them and the career paths aren’t.

I saw one hubristic kid on Twitter who was arguing with a guy with an actual job (he drove trucks.) Now, this kid was nineteen and still in school, and so I won’t judge him too harshly, but his comments were basically:

“Haha. You’re a truck driver who only earns $100k a year. I’m going to go to med-school and I’m going to be a specialist and I’ll earn five times what you earn straight out of college.”

…This guy had completely unrealistic expectations of the job market and his potential place in it.

The reality for anyone who says, “I’m going to be a baller and get a high paying job” is this:

• You haven’t got that job
• It probably doesn’t pay as well as you think it does
• You’re going to have to deal with a lot of horrid stuff that comes with it
• There’s no guarantee you’ll ever be top dog

To move on, this expectation is as unrealistic as the entrepreneur guy who thinks he’s going to be a big baller making millions from his dropship store.

Why Be An Entrepreneur?

Let’s get to the topic at hand. Why would you be an entrepreneur?

The article to this point has basically served to demonstrate that the “traditional career” is more risky than it appears, and the entrepreneurial side is less risky than it appears, assuming you’re being sensible and not trying to make millions in the ethereal VC market place.

That said entrepreneurship has its risks.

• You can build a business that goes bust.
• You might build a business that stuffs you into a corner or works you to the end of your tether.
• Mostly, you can waste a lot of time on business ideas and things that’ll pan out and finally
• You have to accept the emotional rollercoaster that comes with entrepreneurship

The last one is where people’s primal risk tolerance is shown. Entrepreneurship is risky in terms of people’s psychological makeup; nobody wants to fail, nobody wants to be the guy selling sex toys and nobody wants to admit their business idea from last month was a total non-starter.

Really though, those risks aren’t tangible. Weigh them up though against these benefits:

• Entrepreneurship gives you control over how you spend your time, money and life-direction
• Entrepreneurship has the potential to make you more money for the same job (while we’re all doing it when you boil it down, really)
• There are emotional benefits to creating stuff and solving problems
• Anyone can do something entrepreneurial
• You can do it starting today – no ten year medical degree requirement

Your decision as to whether to try entrepreneurial things will depend on weighing up the benefits versus risks.

Final Thoughts

Not everyone is going to be a high-powered lawyer and not everyone is going to be an entrepreneur, but if you weight up the advantages versus disadvantages and find you have the risk tolerance to try and the skills or means to provide something useful, then you might find entrepreneurship is something you’re interested in.

Most of the risks with entrepreneurship can be mitigated:

1. Not having anything to sell = market research and product development
2. Marketing and sales = finding that same market and presenting the solution to them
3. Low capital = bootstrapping
4. Expansion = bootstrap and then expand slowly and sustainably
5. Boring business stuff = take free courses and then when the time comes, farm it out
6. Your mum thinking you’re an idiot = keep it as a hobby until you’re making money from it

So on and so forth.  Let’s conclude.

Entrepreneurship is less risky than is portrayed.

Reaching the top of the career ladder in any industry is more risky than is portrayed.

If you can provide a strong solution to a market’s problems, then there are few barriers to entry in any bureaucratic sense. Sure, you might need funding depending on how expensive the product is or you might need some skills that you don’t have… but most entrepreneurs literally start with a simple service or product and then refine as time goes on.

If you are willing to do that, you can be an entrepreneur. While there’s responsibility in managing that creation, there are also numerous upsides: money, freedom and more options.