Are there reasons not to start a business?What do people regret about starting a business?What are the biggest drawbacks of working from home or being self employed?Lets talk about what I see as 4 major drawbacks to entrepreneurship.
The remarkable benefits and drawbacks of entrepreneurship need some talking about.
I’m sitting in my underwear right now, typing in my home office at 5 in the morning.
I’m not going to commute anywhere today, I’m going to work my tail off periodically throughout the day, drink lots of Dunkin Donuts home-brewed coffee, make a bunch of sales calls, and then spend some time with my spouse and three kids, all because I’m an entrepreneur.
But entrepreneurship has its drawbacks – major ones at that. I believe that small business and the beautiful creations of entrepreneurs, will eventually provide a new wave revolution in America.
This last week I’ve spent lots of time working with one of our clients who’s in the construction business. He had worked for an experienced contractor for about 15 years before making the decision to branch out with a business partner and hang his own shingle, about 5 years ago. Things have been more sparse and difficult than he would have liked.
Just last week, we had a long discussion about all the things that they have to wrestle with, trying to not only execute their job, but find great team members, price competitively, deliver value, execute, manage projects, improve competency, cast vision to new clients, pay massive taxes, and memorize 25 passwords for the different emails and software they use
When you step back and look at the big picture, you see that when He decided to be an entrepreneur, he created economic growth for our country and the community in the south metro region of Minneapolis.
When he branched out, that meant that there would be a net increase of economic activity and work output, producing more jobs and wealth. To analogize with the forestry business, he went out and planted a whole new set of trees instead of simply tending to the existing growth that his old employer provided.
The reason is because it is true creation, stimulating economic activity, jobs, and tax revenue, where there was once nothing.
Sure, our friends that work in w-2 jobs do some tremendous things, and large businesses can move the GDP needle in great magnitude, but that activity is simply the growth of existing “trees in a forest.”
Entrepreneurship is like planting new trees where there was once nothing, some will grow into new foundational forest cover, while many new sprouts die out in the beauty of the free market enterprise.
As you can tell, entrepreneurship is something that we’re passionate about here at Foreword and Feedbackwrench, and that’s because we get to come alongside these entrepreneurs, and help maximize their efforts with branding, video, and digital marketing.
We get the pleasure of meeting with so many entrepreneurs throughout our work week, which provides us with amazing insight and understanding, of the things that they face.
Not only do I sit down with at least half a dozen entrepreneurs each week, but we ourselves are entrepreneurs and business owners.
I’m going to dive into the four drawbacks of entrepreneurship in a minute here, but first I want to talk about why I feel the need to document the drawbacks.
A couple of weeks ago, our friends had a birthday party for their son who’s the same age as my daughter. The birthday party was at Lifetime Fitness in Lakeville, and we had a ball. Our friends had invited their group of friends, which included about 10-20 different kids and their parents, which meant I got the opportunity to meet people I didn’t know before, which is right up my alley.
I started talking to a great young set of parents, one of whom was working in a daycare. She described the frustration that she has around working in the daycare facility. She likes what she does, but the pay is very limited and it seemed very silly for her to be spending portions of her paycheck to provide daycare for her own son, while she herself is providing daycare for other people’s children.
I jumped right in and started trying to cast vision for a better way – the entrepreneurship route. I asked her “have you ever thought of starting your own daycare?” She rolled her eyes “I wish! But it’s too hard, too expensive, and you have to get licensed.” I paused and thought “that’s it? you’re going to stay stuck and financially plateaued because of those little barriers?” I inquired a bit more and started to encourage her that she could do it, and that the payoffs could be huge.
Starting your own small business is hard, but there’s no reason why this gal should be sitting there thinking that there’s no way to start her own in-home-daycare. She’d been there for a number of years, was one of the best employees, and had already started acting like an owner.
I hope she dreams – and I hope she pursues that dream.
But she’s right – entrepreneurship has drawbacks. And here’s four major ones that come to mind as I’m sitting in my underwear...
No kidding right….
In the case of my friend who works at a daycare facility, she knows for certain that she would be able to put in the time at her job, and it would equate to the financial benefits detailed in her employment agreement. It’s a pretty simple equation when it comes to working in a salary or hourly job in America – you get paid for the time you put in.
Entrepreneurship is like working a commission job, with no base salary, but with the added problem in that you’ll incur tremendous expenses as you do the work.
A commission job would be easier than entrepreneurship, because at least in a commission job you don’t have to pay for all the basic operating costs of the business.
In entrepreneurship, you’ll be faced with the necessity of capital investments and the need to acquire the necessary tools for your business. While it might not require huge initial investments, it almost always requires something – which means that you’ll be investing in your business and there will be a cost on top of all that risk.
For the most part, an entrepreneur gets to deduct those investments, but those investments could end up going belly up, if things crash and burn. Being a business owner is tough because it usually “takes money to make money”, all while you need to keep paying your own personal mortgage and bills.
You have to make the sale, and execute, in order to drive revenues (let alone a profit).
Entrepreneurs have the risk of working like a “commission only” job, but also have the risks associated with fulfilling and executing. If they make a sale, and botch on the execution, they’ll be on the hook for a customer refund, lawsuit, or a reputation crippling event on Google Reviews.
If you’re thinking of becoming an entrepreneur, you probably already know it’s risky, but I’d want you to know that the risk is because you have to get results like a sales person, and deliver a product, and execute in order to fulfill your requirements. These are the two major risks you’ll face. All you really have to do, is make sales and deliver results.
So yeah, the first drawback is that it’s risky.
I really miss the team of people I worked alongside at Eagle Brook Church and Best Buy.
About your second week in you start to discover that entrepreneurship can be really lonely. Eventually, you might have a team of people that you can lead and develop in your business, but chances are that anything you’re working on will take some time before it has lots of employees. If you don’t have a business partner or an employee, it can quickly become a lonely endeavor.
When you’re working at a “regular job,” you forget how often you’re benefiting from the counsel of others. You forget how much you benefit from the actions and work of others, especially in the small things. When you get to your job, usually someone would have opened the doors, cleaned the floors, and made sure the lightbulbs work. You would use an email system that someone setup for you, and worked under the branding and systems established for you by other people. In a regular job, you have the benefit of working with other people, and working upon the foundation laid by the efforts of those who went before you.
It can be lonely – so I recommend finding a mentor.
Entrepreneurs have the challenge of working alone on so many parts of their business, and it can be crippling if you’re not careful. That’s why it’s incredibly important to fill your week with intentional mentorship relationships. It will be so helpful if you can have coffee with another business owner once a month so you can have some camaraderie, wisdom, friendship, and perspective. Make this coffee time all about being together, and learning from each other. Don’t make it about finding more prospects, sales, or other utility functions. Just meet with this person and enjoy their company and common struggles.
Your “normal” friends won’t be struggling or working on the types of things that you do, so it can be really enjoyable to find this person that you can build a friendship with.
One of the strangest things about entrepreneurship, is that the need for continuous marketing and prospecting, can cause you to start seeing each person with a dollar sign on their forehead. Business owners all struggle with some sort of balancing act around this, because if they don’t prospect or market their business, they will fail.
This is really hard because nobody likes to get schmucked and pressured into some sort of sale by someone they care about. People love you, and are friends with you, because of who you are, and you don’t want to start thinking about the utility your business can receive from them – and yet it’s a reality.
It’s also hard because a business owner really needs their friends and family to support them and their reputation.
So one strange drawback of entrepreneurship is that you might find yourself wrestling with the tensions of prospecting and relationships. You don’t want to see people with a dollar sign on their head, but it’s really hard when they actually DO present a potential financial reward from eating at your restaurant, coming to your gymnastics school, hiring you as their portrait photographer, buying life insurance from you, hiring you for a renovation, or getting their driveway apron repaired by you.
When you start your own business, you’ll suddenly realize that you’ll have to solve a myriad of problems. Every day you’ll be faced with situations and problems that you simply have no idea how to fix, or you might not be able to define the problem itself.
My google inquiries and results could provide someone with a masters in entrepreneurship.
You don’t know what you don’t know, and most of the time, you don’t even know that something is a “thing” until it shows up right at your door.
I could go on and on with the list above, but the bottom line is that you’ll be constantly perplexed as an entrepreneur.
One problem with the american government growing so large, is that government power is often for sale to the highest bidder, and it’s usually big unions, big crony industry associations, crony higher education, and mega-corporations that are working diligently to create sweetheart laws to protect themselves from the upcoming competition of entrepreneurs and new market entrants.
Whether it’s big education syphoning off trillions in government funded student loans requiring accreditation, the baby boomers financing elderly health care on the backs of young people’s insurance premiums, or massive new licensure and human resource protocols, big business and big government is making it hard for us startups and entrepreneurs.
Business owners can get rich. They can build more wealth than just about any other career. Anyone can become an entrepreneur, whether you’re a college graduate or someone that’s struggled with addiction and felonies.
Entrepreneurship is a ladder that anyone can climb to become wealthy, but there’s a concerning trend in America that believes that collective bureaucrats, rather than individuals, are best at taking on tough challenges. What this means is that there's a huge influx in the number of government agencies, bureaucrats, and laws laid, down to control people. And every entrepreneur will tell you that whoever has the government crony relationship, will have an unfair advantage.
Big business, unions, associations and government are handing themselves more power, while the small entrepreneur is under represented at the major legislative conversations.
Look at how the new york government, who had been living fat off of taxi cab medallions, joined together to fight the little uber driver down the street! How unfair is it that they used the government’s power of licensure to shut out competition!
Another example could be how the hospitality and lodging associations, and subsequent government cronies spending lodging tax money and fees, are now fighting tooth and nail to keep air bnb and short term rental competitors down! How is it fair that government and the lodging industry, can wield the power of licensure and permits to shut out a lower cost, better solution for lodging! You think about it, it’s insanity!
Health insurance companies made sure to work with regulators and law makers to prevent allowing associations outside of employers for GROUP health insurance association. The result is that unions can group up for health care, large corporations can as well, but individuals still can’t easily come together at the table to associate more freely to get group health insurance plans. Not only that, but health care plans are kept from competition by reducing the ability to compete nationally WHich makes them more expensive, especially when you’re buying for a group! The results is that health care isn’t that hard for a mega-corporation to buy, but it’s super hard for a small family business.
Amazon is out there advocating for a national $15 minimum wage, forgetting what it’s like to be a restaurant with razor thin margins, a daycare with low-skill help, a farmer needing help in the crops, or a family camp that wants to hire part time, inexperienced young people; Amazon doesn’t care about all of us little businesses, they just want to shut out Walmart in the race for dominance, and Bezos is showing us he’s perfectly find wielding government bureaucracy as his weapon - regardless how it impacts small startups.
Even our doctors! Sure we all want our doctors to be certified and licensed, but why the heck are we in a position where a host of easier procedures and checkups are forced through a licensed doctor when it’s not necessary.
Or how about when the agency that regulates beauty salons attacked the string eyebrow plucking services, and forced them to get beautician licensing and schooling” THe established cronies fought the new awesome companies together!
Even Tim Cook of apple is out there telling governments to pass sweeping privacy laws and protocols to be like the GDPR, forgetting how difficult all that nonsense is to implement when you’re a small masonry contractor hustling out of the midwest.
Think of the right to repair laws, where large corporations are trying to make it ILLEGAL, as a point of copyright law and other laws, to repair, modify, or enhance the products they’ve produced and you’ve purchased. They’re ttying to keep an unfair advantage, by wielding laws that shouldn’t be applicable. Apple has made it impossible for a for small shop to import chinese manufactured replacement screens for apple products, so that repair shops are unable to actually repair their products. Look into it, it’s a nasty case of big government laws being used by mega corporations to protect themselves and attack little repair shops across the world, fix cracked screens for a low cost!
Big business has the crony relationships with big powerful government agencies and regulators, they’re the ones who try to get sweetheart laws to protect themselves.
And don’t get me wrong, it’s not the company’s fault! If they don’t step and in buy the government crony relationship, their competitors will! It would be much better if we started eliminating each seat of government power, bureaucracy, and agency, and start paving the way for real ORGANIC innovation, rather than creating bubbles and monopolies with requirements and licensure.
I could list out hundreds of examples of bureaucrats and their big business cronies creating sweetheart laws that keep new businesses down and competitors out - but that’s for another video!
Sure, entrepreneurship is hard, lonely, risky, and fraught with impediments, but it’s the clearest, fairest, and most accessible ladder to the highest economic levels in society, and it can be some of the most purposeful and excited work you’ll ever do!