Advantages of Being An Employee Versus Being an Entrepreneur

Being an entrepreneur and employee, both have their advantages and disadvantages. The majority of people have the impression that running a business is better than being in a job, while there’s much about employment that’s not being appreciated.

Being employed is often projected as modern slavery, while entrepreneurs are portrayed as happy, independent, and free people. Though they both have their limitations, an entrepreneur’s life is not as star-studded as it may seem.

There are several advantages of being an employee rather than an entrepreneur, and vice versa, as discussed in this article.

Advantages of Being an Employee

I. A guaranteed source of income

One of the most significant advantages of being an employee to being an entrepreneur has got to be a stable income source. Every month, an employee expects a certain amount of money deposited into their accounts.

Unlike entrepreneurs, employees have financial security and do not have to worry about money to settle their bills each month.

An employee and their family enjoy health plans, benefits, insurance contributions, and even a retirement plan. These perks give a sense of security, and they need not worry much about tomorrow.

Check out, 10 Characteristics of Successful Entrepreneurs.

employee vs entrepreneur
employee vs entrepreneur

II. Leave benefits

Legally, employees are entitled to annual leave and leave benefits like bereavement leave and maternity/paternity leave. The different leave opportunities give employees a chance for time out, returning to their work stations energized and refreshed.

They are also able to spend time on personal matters and relieve the stress associated with work. The best part of it all is that the employer still pays your salary in full, even on leave.

III. They have fixed working hours

Employees working hours are stipulated in their employment contract. While there may be flexibility with the employee needed to work extra hours, an employer cannot force them to do so. They would also be compensated for working overtime and contributing more hours to the company.

The fixed working hours and a weekly day off allows the employee to plan for their personal life around them.

Also read, 13 Best Business Startup Ideas in 2021.

IV. A healthy work-life balance

Another pro for being an employee rather than an entrepreneur is the balance between work and personal life. As an employee, work is 9 hours a day, leaving time to enjoy with family and attend individual tasks.

V. Fewer responsibilities

Often in employment, an employee is responsible for performing a specific task that they are assigned. They do not have to be concerned bout what is happening in other departments and focus on the tasks outlined for their position.

There is a periodic appraisal for this role which affects chances of promotion for an employee. These appraisals are a great way or an employee to discover their strengths and weaknesses in their profession.

VI. Easy withdrawal

If an employee is unhappy with their current job and cannot stand the stress, it is comparatively more manageable to move on to a new company. The contract that binds an employee to their company has provisions for exiting if they so wish.

It may not be a walk in the park landing a new job. Still, this font offers a good level of flexibility than entrepreneurship, where one has invested so much financially and emotionally.

Also, read, How Does Google Support Entrepreneurship in the USA?

VII. Less effect from mistakes external factors

Another advantage of being an employee than an entrepreneur is that any employee’s mistakes directly affect the company and a delayed or indirect effect on them.

The worst-case scenario is the employee’s termination. However, they still walk away with their skills set onto another company while their previous employer still feels the effect of their mess up.

Advantages of being an entrepreneur

advantages of being an employee vs entrepreneur
advantages of being an employee vs entrepreneur

I. Independence

To be an entrepreneur is to be your own boss. It means that one is free to make their own decisions regarding their profession and enterprise.

An entrepreneur, unlike an employee, can decide to work whenever they want for the number of hours they are comfortable with from whichever location they choose.

They have the freedom to direct employees on what to do and have people implement the vision and help achieve their goals. By setting standards and responsibility for their employees, entrepreneurs are free to lead their lives peacefully as they take care of everything.

II. Career growth and progression

Entrepreneurship offers an individual to fulfill individual dreams and aspirations. Without a boss to question the decisions an entrepreneur makes, the amount of risks to be taken is solely their choice.

Depending on the business preference and market demand of the same, an entrepreneur has the chance to dominate the business world.

By choosing a career of their choice, entrepreneurs stand a chance of upward trajectory depending on their determination and drive.

III. Flexible working hours

An entrepreneur ultimately decides the working hours that suit them. Without a boss to supervise them, they could work from anywhere, home, their car, or even a restaurant.

While others choose to work overtime and contribute numerous hours to their business, others will delegate people and resources as they do the bare minimum.

They have complete control of their time and enjoy the luxury of structuring the business around their personal life, for example, attend to a family need first and catch up on work in the afternoon.

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IV. Potential to earn

Being an employee and pursuing a professional career grows you financially while entrepreneurship grows one economically.

With the proper strategy in place and an increase in demand for their business, entrepreneurs will significantly increase their revenue and ultimately have a significant share of profits.

There is no limit to how big the business grows and subsequently no limit to the entrepreneur’s potential income.

Therefore, the financial returns for hard work are much higher for an entrepreneur than an employee with the possibility of making a passive income depending on their business’s nature.

V. A chance to explore and change

Entrepreneurs have the luxury of meeting and networking with well-established and successful business people. If they spot a chance to restructure and make more money, they have the freedom to do so.

By networking and creating numerous business contacts, entrepreneurs have a chance to explore and partner in new ventures.

Check out, How to Overcome Entrepreneurship Failure? and What to Do If You Want to Get Out of A Failing Business.

Disadvantages of Being an Employee Vs. Entrepreneur

Cons of Being an Employee

Job insecurity

Being an employee means that one has no control over the managerial and financial decisions of the business. Reduced revenue to the company would mean losing the job leaving them financially unstable.

Finding a new job may be a struggle with chances of moving to a new area straining the finances even more.

Besides losing the job, employees are also not guaranteed a salary increment or promotions as this decision solely lies with the management.

Dependency

An employee does not have the freedom to make and implement their own decisions without the bosses approval in a workplace. They have to follow the boss’s instruction without opposition, sometimes having to perform tasks they don’t like.

They also have to abide by the human resource rules and only work during the stipulated time and not as per their convenience. Failure to follow the structure provided could lead to termination or disciplinary action according to the company policies.

Also, read, How to Be an Entrepreneur without an Idea?

Limited income

Without the effect of a pay rise or overtime compensation, an employee is often limited to a fixed income as agreed during employment.

Good performance may result in incentives for that period, but the overall pay does not increase. With a fixed annual income, other parts of their life remain stagnant with minimal progression in their quality of life.

Limited exploration and development

An employee has very limited scope to exploring new ventures other than what they are assigned to do at the place of work. They do not have the freedom to be creative and engage in different tasks and responsibilities in their place of work.

Employees excel in one responsibility, which may kill and discourage their vision to learn new things. Workplace politics and competition does not help and hinders an employee from showing their talent and contribution to other areas other than their designation.

Boredom and discontent

Some employees may be stuck doing jobs they don’t enjoy because it is what’s available, and they are uncertain about leaving due to the fear of the unknown. They may be afraid of leaving a predictable job for a new one.

People in such a situation hate waking up to go to work, and the feeling of discontent does eventually spill over and affect their personal life. Most are unhappy and grumpy even towards family as they unconsciously project the frustrations from work.

Enriching others

Employees technically work towards realizing another person’s vision and dreams. They work hard to make entrepreneurs rich without necessarily getting a share of the enormous riches they help create.

A small percentage of salary increment does not compare with the considerable profit margins employees help accrue for the business.

Read, 18 Important ways of Bootstrapping to Achieve your Entrepreneurship Goals.

Cons of being an entrepreneur

entrepreneur vs employee
entrepreneur vs employee

Financial instability

As an entrepreneur, one is not guaranteed a stable monthly income. Getting a salary from commissions may be irregular, with some contractors paying upfront and others not.

With employee salaries, taxes, loan deductions, and other financial commitments, entrepreneurs income per month is variant.

When the market demand is great, the entrepreneur gets to enjoy profits but has to forgo payment with a shift in demand or supply.

An entrepreneur needs to pay their dependants and other utilities even when the business is at a loss hence the risk of economic instability.

Entrepreneurship is risky

An entrepreneur’s career is not guaranteed , despite how determined and ambitious they are while starting. A single decision and lousy planning can plunge the business into economic depletion and loss of the invested funds.

Entrepreneurship has a very high possibility of facing hiccups, and they always have to be ready with new strategies to stay relevant and cope with the competition. Failure to that will have another organization taking their place and sabotaging their career.

External factors such as economic downturns and market trends beyond an entrepreneur’s control could also be fatal to the business.

Also, read, 8 Reasons Why Entrepreneurship is Better in the United States.

Long working hours

An entrepreneur is solely responsible for growing and improving their business when starting up. They have to work extra hard to fetch new clients and capture the market while providing quality services.

Maintaining the clientele and creating a proper business structure is a time-intensive process that may see the entrepreneur forgoing personal life to build the business. Even with employees in the company, they still need to dedicate more time to achieve the intended results.

Being a good entrepreneur, therefore, means working long hours to establish a successful business.

Huge investments

Starting a business requires huge investments. An entrepreneur has to explore sources for investment, including taking loans from banks and approaching potential investors. They should therefore be capable of generating revenue and clearing debts to avoid shutting down.

Depending on customer satisfaction, they should anticipate future demand and invest in their products. Without customer approval of the products, the entrepreneur may end up with huge losses to recover.

Pressure and stress

Entrepreneurship is stressful to handle. Entrepreneurs are responsible for the whole business, and decisions made affect both their career and their employees.

Until they establish a good team, sustaining the business in the market solely lies with the entrepreneur. They have to be aware of all aspects of the business for successful operations, avoiding any legal injunctions.

Failure is part of the process

With entrepreneurship, sadly, making plenty of mistakes before getting everything right is inevitable. Expect little to no returns from your business within the first months or even a year of starting up.

Entrepreneurs should be ready to make mistakes and be motivated enough to start over after a failure.

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Conclusion

The pros of being an employee versus being in entrepreneurship are numerous, and choosing between either side can be confusing.

Armed with the insight provided, a good plan, and your priorities right, weigh both options carefully to determine your next career move.