Entrepreneurship is defined as the activities required to set up a business. You are taking financial risks in this free enterprise practice in the hopes that you’ll earn a profit. Founders and leaders of this movement all have their own definition of what it means to be an entrepreneur too.
Tirath Kamdar, founder and Chief Executive Officer of TrueFacet, describes the process of entrepreneurship like this: “It is important to balance strong vision with a willingness to embrace change. The ability to listen, whether it be to the opinions of customers or employees, is also integral to success. While you must have the confidence to make your own choices, it is still incredibly important not to become detached from the people whose needs you are trying to meet.”
Anyone can become an entrepreneur. It is possible to follow your dream job while still working full-time somewhere else thanks to today’s technology access.
That’s why a closer examination of the advantages and disadvantages of entrepreneurship and free enterprise is prudent today. You’ll be able to understand more about who you are and what your passions are as you pursue the next career goal.
List of the Advantages of Entrepreneurship and Free Enterprise
1. You have an opportunity to find genuine growth.
When pursuing entrepreneurship, the only roadblocks in your way are the ones you allow to be there. If you work hard enough, have a passionate drive, and a talent or skill which solves pain points for a customer demographic, then you have the foundation of a business. There are no bosses or procedures to interfere with your pursuit of a creative idea. When you work in the world of free enterprise, your life is always your own. The amount of risk you decide to take will always be your choice to make.
2. You get to decide which business sector to pursue.
Let’s take the example of a writer who pursues entrepreneurship for this example. Writers could build their own marketing agency with sales content. They could produce blog content for several clients simultaneously. This free enterprise pursuit could ghostwrite novels, textbooks, or other published material.
A writer could pursue novels or works in their own name too. They could provide technical writing skills, how-to guides, or instructions for customers to follow when assembling an item they’ve purchased. Some writers create movies or television shows, while others create product descriptions. Every career option offers varied opportunities like this, which means you can always work in an area you’re passionate about when entrepreneurship is your focus.
3. You have more independence when working as an entrepreneur.
When you’re active in the world of entrepreneurship, then you get to be your own boss. You have the freedom to make your own decisions each day. This structure makes it easier to balance your personal and professional life. You get to work when you want, how you want, and the number of hours that you want each day – to some extent, that is. Some entrepreneurs can even work from different locations. You get to direct your employees, help others earn an income, while everyone makes progress toward the goals they wish to achieve.
4. You have an ability to earn as an entrepreneur.
Employees are locked into a salary schedule when they begin working in the traditional sense. Hourly workers can earn more if they get a chance to earn overtime or holiday pay. Salaried workers don’t have that luxury at all. When you’re in the world of entrepreneurship, you dictate how much you earn. If you start a company, then you own it outright. You gain the largest share of the profits earned. That means the potential for success is unlimited if you’re willing to put in the hours.
5. You have opportunities to pursue change in free enterprise pursuits.
If you see new opportunities to make money when you’re pursuing entrepreneurship, then you have the option to take it. You always have a choice to earn more when a good idea strikes. Through networking opportunities, business contacts, and creative brainstorming sessions, you are always the author of your own destiny when working this way. If you get tired of what you’re doing, then you can shift your perspective to go explore a different path.
6. You have access to helpful platforms which can get you started.
Entrepreneurs have more tools available to them today than arguably ever before in history. If you want to fund a start-up business, crowdfunding platforms like Kickstarter and Indiegogo give you a chance to make that happen. When you want to work as a freelancer, a company like Fiverr offers you training, tools, and a sales platform which can help launch your self-employment journey. Podcasts, books, and even college classes give you a chance to learn more about your chosen career niche.
If you take some time to plan your adventure into entrepreneurship, you will discover that many opportunities require little – if any – initial investment to help you take those first few steps.
7. You have more excitement in your life.
It is true that many entrepreneurs typically work longer hours than the average employee. Many work harder hours too. There’s no slacking off when you’re responsible for your livelihood. At the same time, however, there is more excitement to find in each work day. No two days are ever the same when you’re actively engaged in entrepreneurship and free enterprise pursuits. Even with an established business and a daily routine, there are always new challenges to face. That is why being an entrepreneur is such a rewarding experience on so many different levels.
8. You get the opportunity to be first to the market.
When a great idea strikes, nothing feels better as an entrepreneur when you are first to the market. That gives you the chance to have a head start in every phase of the project. The competition always lags behind when you take the lead, which means your revenues and business gains become exception. You’ll need to perform research and get your marketing messages correct first, but if the puzzle pieces fit together well, it only takes one great opportunity to earn like never before.
9. You gain an opportunity to develop your community.
Being an active entrepreneur in your community is a wonderful think. When success happens, you have new opportunities to finance good causes. Whether you sponsor a Little League team, develop new educational opportunities, or support public health, entrepreneurship gives you a chance to change the lives of everyone around you as you change too. You’ll discover that the qualities which drove you into the world of free enterprise in the first place will also create an urge to pay it forward when you see success.
10. You get to leave the commute behind.
One of the best perks that comes with a pursuit of entrepreneurship involves working from home. Depending on your industry and what you choose to pursue, it is possible to establish an office in your home. Even if you rent an apartment, digital business opportunities only require a decent computer and a strong internet connection. Numerous first-time entrepreneurs create digital opportunities for themselves thanks to a little space and some tech, giving them more time to be around their families, even when they’re working.
Having a home office means you get to leave the commute and its costs behind too. According to the Citi Thank You Premier Commuter index, the average cost of an American commute is $2,600 per year and 26 minutes per day. Both issues go away if you establish a home office.
11. You can take that vacation you’ve always wanted to have.
One of the best perks about entrepreneurship are the vacations. Seriously. Here’s why.
If you’re self-employed, you can take some work with you while taking the family on vacation. For the entrepreneurs who are still single, you can travel and work simultaneously. Although you don’t get the benefit of paid-time off, you can budget for a trip pretty easily once the money starts flowing into your account. There is always the possibility of working early, then relaxing the rest of the day wherever you happen to go too.
List of the Disadvantages of Entrepreneurship and Free Enterprise
1. You must be a natural leader to find success in this field.
Because there is no one directing your every move in the world of entrepreneurship, it is up to you to ensure the quality and quantity of work meets your income expectations. You must be a self-starter as an entrepreneur, willing to go the extra mile (or kilometer) to meet the needs of your family, yourself, your employees, and your customers.
There must be a natural leadership drive present at some level to direct traffic throughout each day. You must know when to roll up your sleeves to work, but this work also requires you to know when to delegate or outsource.
2. You won’t have flexible hours all the time.
There are a handful of entrepreneurs who found success despite putting in a handful of working hours each week because their idea was so good. Most people who find success in the world of entrepreneurship are working longer, harder days than the average “traditional” employee. You do have some flexibility when putting in those hours, so you can structure medical appointments, school visits, and other family needs within your day. You do not have the luxury of cutting back on your hours most days.
Gary Vaynerchuk says start-up founders should expect to work 18-hour days for at least the first year if they want to make it. Grant Cardone says that instead of working 9-to-5 workdays, he puts in 95 hours per week, which is an average of 14 hours per day.
3. You won’t earn much in the first year (or more) of your efforts.
Sokanu reports that the average yearly salary for an entrepreneur in the United States is $57,360. Some report earnings in excess of $120,000 per year. There are plenty of self-made millionaires who entered the world of entrepreneurship and found immediate success. The average person will not reach any of these figures during their first year pursuing their own definition of free enterprise.
The average earnings for a first-year entrepreneur can be as low as $10,000, depending on your industry and niche.
4. You will experience more stress than you can ever remember.
There are several benefits to consider when pursuing entrepreneurship, but it all starts with a foundation of stress. You do not have a guaranteed income when working as an entrepreneur. No one is available to you within the chain of command to provide you with guidance or advice. Most entrepreneurs don’t even have colleagues around to give them support. These stressors can take an emotional toll, sometimes even creating isolation and loneliness.
According to the Gallup Wellbeing Index, 45% of entrepreneurs report being stressed, compared to 42% of other workers. 34% of entrepreneurs say they worry “a lot,” compared to 30% of traditional employees. 30% of respondents to a self-employment review conducted by Julie Deane of Cambridge Satchel Company said that isolation was either a “big” problem or “something of a” problem for them.
5. You may need to find investors to help you take those first steps.
Some businesses require a lot of money to get started. Many entrepreneurs begin their adventure in the world of free enterprise in debt because they must borrow their initial start-up costs. These first investments sometimes have an enormous impact on the performance of the opportunity being pursued, which may lead to long-term debt for some people.
6. You are always scrutinized by your customers and employees.
When you pursue entrepreneurship, then the business opportunities you create are directly tied to your personal reputation. Any slip-up of service or quality reflects poorly on your company and you. If enough people feel like you’re not meeting their expectations, the poor reputation which develops from that perspective can lead to earnings loss, additional debt, and even the complete failure of your entrepreneurship pursuits.
7. You may discover financial instability in your future.
Many entrepreneurs find that their disposable income levels decrease for the first few years they pursue this adventure. Without available income, entrepreneurship can lead to a lower credit score, higher lending rates for loans, and less credit availability. Being self-employed makes it more difficult to secure a mortgage because you must prove a history of financial success for a lender. Lending products for vehicles and even smartphones become more expensive and less available.
8. You may encounter industry backlash with some ideas.
Up to 90% of consumers make their purchasing decisions from public reviews that are left on products and services. About 75% of consumers treat this information as if it were a referral from their family or a close friend. That means customers won’t try your product because there aren’t any reviews for it. Once everyone sees how good your stuff is, combined with positive reviews from early adopters, the idea will eventually take off.
There is always the risk, however, that some ideas won’t take off at all, even if the people who use your products or services think they’re great.
9. You may have encounters with the government which are not so friendly.
Pursuing entrepreneurship involves a lot of administrative work which goes on behind the scenes. There may be licensing requirements, permits, and other regulations your new business venture must follow. Even if you are a one-man or one-woman show, some states in the U.S. require business licenses, sales tax collection, and business and occupation taxes as part of your sole proprietorship. If you don’t realize these issues, then penalties, fines, and even criminal charges become possible.
10. You have days when it feels like you never leave work.
There are rewards to consider if you work at home when pursuing entrepreneurship. You must also take into account that you’re never leaving work if you stay at home all the time. It always seems like you’re either on-call, checking e-mail, or following up on something to make your life a little easier. Even when you’re on vacation, there are messages that come through asking you for work or wondering why you can’t take on a project at that exact moment. Then there’s the fact that if you take a vacation, you won’t get paid like an employee would. You must budget for that trip in advance.
11. You can fall flat on your face at any time.
Some startups succeed each year, but it is a known truth that most will fail. Three out of every four venture-backed companies fail each year, according to information published by the Harvard Business School. Even after 10 years, the failure rate of companies in the U.S. is 70%. That means you can experience success year after year, then lose your focus on an economy or demographic shift and lose everything. Most entrepreneurs fall flat at least once in their lives. Many experience multiple failures. If you’re not willing to pick yourself up from the dust to keep pressing forward, then the world of free enterprise may not be right for you.
The advantages and disadvantages of entrepreneurship and free enterprise involve new paths to achieve your full potential. Instead of chasing a promotion or partnership, you get to pursue your dreams every day. Even though that experience is stressful for many and lonely for some, most entrepreneurs also say that their jobs are extremely rewarding. If you’re thinking about a change in life, then give entrepreneurship a closer look. You might like what you discover.