Which option is more profitable?
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The decision to start your own business or get a day job is one that will affect you for the rest of your life. It’s not an easy choice, but it doesn’t have to be that difficult either. You just need to ask yourself some key questions and then do some research before making such an important decision. In this blog post, we’ll compare the two career options side-by-side -side, and offer insightful questions to help you decide if owning a business or getting a job is right for you!
Entrepreneur: if your passion aligns with a need in society that is marketable, then this may be the right route. You’ll have to work harder as an entrepreneur and there is more risk involved than being employed by someone else.
Employee: if you want to be guaranteed a paycheck or are someone who values stability, then this may be the route for you. You’ll have more leisure time as an employee and there will be less risk involved than being an entrepreneur.
Keep reading to learn about vital differences between starting a business and getting a job…
Side by side comparison table of becoming an entrepreneur or an employee to help you decide which is the best choice for you today.
|Consideration Factors||Start a Business||Get a Job|
|Money – Salary||Higher||Lower|
|Work Schedule||Above-average hours||Average hours|
|Read: Pros & Cons: Starting a business||Read: Pros & Cons: Getting a job|
We’ll starting by reviewing the advantages of starting a business:
Owning your own business, you are the boss and can create a schedule that works best for you. The work-life balance of running your own business is what you make it to be. The hours are much more flexible – even if you’re self-employed, it is possible to set your own hours so that they fit well with everything else going on in your life
You’ll be able to work from home, which means you can spend more time with family and friends. Or, you could choose to set up shop in your dream town or country. You’re the boss. It’s all up to you!
Starting your own business is an exciting challenge that will allow you to learn new skills and explore different interests. There are many benefits of being self-employed or a business owner, such as not having a boss or answering to anyone else but yourself.
You can do work that you love and be passionate about your company’s mission. Working for yourself is rewarding because you’re in control of what happens next. Entrepreneurship offers an opportunity for self-expression and creativity
Owning a business will teach you many valuable and marketable sales, finance, and employee supervision skills. Entrepreneurship will make you a better problem solver and also improve your communication skills. Launching your own firm is an excellent way to gain experience when you apply for jobs in the future and build your skillset.
It’s a chance to meet new people, learn new skills, and make connections with others who share similar interests or goals. It offers an opportunity for self-expression and creativity in your work life. You might find yourself making new friends in the process.
Businesses come with many opportunities for growth and profit. Setting up your own firm provides opportunities for career advancement and increased salary that may not be available at other day jobs. You have the opportunity for endless growth potential to expand your company. Who knows, your product or service may grow to be something massive, like Facebook or Google!
Now let’s review the disadvantages of starting a business:
As a business owner, you need to raise money for your startup, which can be difficult and take longer than you planned to delay your salary. When starting a company from scratch, there is usually an upfront investment required for equipment or other capital goods
Many responsibilities come with starting a product line, including administrative tasks like filing taxes and handling finances such as payroll or budgeting. You may also be responsible for creating marketing campaigns or learning how to make presentations to attract new clients beyond your skillset.
Starting your own company means that you’ll be working all the time. The typical startup entrepreneur works 60+ hours a week. And those hours are not confined to business hours. Often client meetings, emergency production, and overnight travel are on nights and weekends – stealing precious family and personal time.
It can take years before you see any profits from your new company. There are no guarantees that you will succeed or even make any money at all.
There are risks involved with founding your own company, such as not paying employees (and yourself!) or suppliers on time if there is a cash-flow problem.
The risk of failure is high and could have devastating consequences for your finances, mental health, and relationships with family members or friends
Greater financial security because you can plan your budget with your guaranteed annual salary.
Working for someone else means having the security of knowing what your paycheck will look like every month, which can be comforting if you don’t want any surprises!
A job provides financial stability, which is an essential factor in many aspects of life. First, your earned money can be towards other things like paying off debt or saving up for retirement.
Your employer will provide you with benefits such as health insurance and retirement savings plans. Additionally, often you will get paid vacation, sick days, and personal time included in your salary package.
You’ll be able to take advantage of opportunities f and or promotion within the company, which will lead to greater responsibility and a higher salary. It will look good on your resume when applying for jobs in the future because it’s experience
If you are working for someone, they may be able to teach you new skills. Also, many companies fund continuing education for their workers, teaching them specific skills to advance the company.
A job is a great way to meet new people and establish connections with others who share similar interests or backgrounds as you do. Getting a job is an easy way to make friends because coworkers often spend time outside of work together socializing and having fun.
Now consider these disadvantages of working for someone else:
You will have little to no control over when you have to start or stop working.
Often the company expects you to work long hours, even if it means sacrificing your time with family or friends. You may also have to travel out of town that typically doesn’t coincide with regular business hours.
There are no opportunities for advancement or growth within the company because they only hire from inside
Many jobs are in workplaces that don’t offer stability or security. If your company re-structures and downsizes, there’s a chance that you could lose your job too
You may not be able to make as much money as you would working for yourself. Plus there is often not much chance for salary growth – once again it’s all about how much experience and time you have accrued at the firm. Also, your personal paycheck is dependent on the company’s success of which you have little control.
You don’t get to choose what type of work you do or where in the company to work. Usually, you will not have any say in what projects get assigned to you or when they’ll be completed. This often leads to low job satisfaction.
The culture of the workplace can be difficult to adjust to and may not suit your personality or work style well. It’s difficult to find a job that has good benefits and is in line with your interests.
To make your best decision between employment and entrepreneurship, ask yourself these questions regarding whether or not you should start a business or get a job.
Do you make more money owning your own business?
It can be more profitable owning your own business, but it also has a higher risk. The average business owner’s salaries of $65,302 is 18% higher than comparable managerial positions average annual salary of $55,342. The business owner’s higher salary also has increased risk, income uncertainty, additional work hours, and stressful responsibilities that entrepreneurs must deal with successfully to stay in business and continue to make money.
Should I get a job while I start a business?
You might find it easier to get a job while starting your own business. Working as an employee provides stability and the security of steady income, but with less risk than owning your own business.
Having a job to support your basic needs as you launch into entrepreneurship can be a smart move. You will greatly reduce the financial strain on your fledgling company if you can forgo taking a salary. Then instead reinvest profits to build a stronger business for long-term survival and growth.
Is it worth it to start your own business?
Business owners are much happier with their work-life than employees. Based on recent reports, Entrepreneurs and self-employed individuals report a substantially higher level of job satisfaction (78%) versus employees who are less satisfied with their work-life (53.7%). See the chart below comparing salary, revenue, and career satisfaction from the experts at Freshbooks.
Starting a new business is hard but could it be worth it? Check out my article about the hardest parts of launching and how to make it a bit easier and more successful for your new venture.
What is the best way to pay yourself as a business owner?
The most advantageous way to pay yourself from your small business will be determined by your business entity – either DBA sole proprietorship, LLC, or Corporation – because there are different laws governing each legal business structure.
If your company is set up as an LLC, Sole Proprietor, or partnership legally you are considered self-employed and would be best served by paying yourself with an Owners Draw. These monies will not be taxed when taken but tax will be due when the owners file their personal tax return.
For S corporations they can elect to pay the owner with both an owner’s draw and a regular salary. In fact, if you are running the business every day the IRS recommends that you get paid with a salary and not an owner’s draw. You are fulfilling the role of business manager and that position is typically a salaried job.
Get more detailed information about the best way to pay yourself as a business owner from the financial experts at Freshbooks here
It might not be easy to decide whether you should start your own business or get a job, but we hope that this blog post has provided some insight into the advantages and disadvantages of each. Hopefully, these pros and cons will help you make an informed decision for yourself about how to reach your goals in life.