 | Washington State |  |
|
| ||
Risks in Self-Employment
Quick Statistics*
Americans who are self-employed…
…Are declining slightly in number.
From 1994 to 1999, the percentage of self-employed Americans in the nonagricultural workforce fell 1%.
…Increasingly must compete with faster-growing big businesses.
Of all American businesses, those with 1000+ employees have grown the fastest since 1994.
…Face higher health-care cost over employees of big companies.
*Based on article by Langdon
Even the most prepared entrepreneurs must take risks. The question, then, is not whether or not there are risks involved, but whether or not the foreseeable risks are acceptable. This is a complicated question. What people consider acceptable risk will vary substantially; and, oftentimes, more than money may be at stake.
Professional Risks
The professional risks are straightforward. Those pursuing self-employment may lose the opportunity to advance in their previous careers. In some cases, the time and effort they spend to get a small business up and running might instead be better invested in promoting themselves as employees, especially if they work for large companies.
Even more worrisome, failed self-employment can lead to unemployment. However, this risk is offset by the employability of business owners. That is, personnel recruiters may acknowledge that business owners possess extensive contacts and a broad work experience. Thus even former business owners may have a competitive advantage that makes reentering the job market easier for them.
Personal Risks
The tremendous amount of time and effort, which accompany the birth of a new business, can strain any relationship. As may be required of them, many successful entrepreneurs immerse themselves in their business. They think constantly about business-related issues and problems, taking their business home with them and even dreaming about their business at night.
This level of commitment can cause all sorts of domestic difficulties. Spending every waking hour solving business problems does not leave much time or emotional energy for solving family problems. Thus, many times, family members may feel ignored, neglected, or secondary next the new business.
Additionally, new entrepreneurs may find that the demands of their business usurp time and energy from their recreational life. Thus, they risk having less free time to devote towards vacations, hobbies, sports, civic and social affairs, and religious practices.
Individuals that work for other people have a fair idea of what time belongs to them and what time belongs to their employers. This distinction affords them the ability to quit their professional duties, without fear of punishment. Thus, they can look forward to and take full advantage of relaxation time away from work. Also, in most cases, their professional duties are dictated to them. In a sense, their on-the-job priorities come pre-made.
This is not the case for the self-employed, who must decide for themselves not only what to do and how to do it, but also how much time and energy to devote to it. Then, they must follow through. Many times the risks in self-employment are created and exacerbated by poor time management skills and an unreasonable understanding of priorities.
For example, beginning entrepreneurs may find that taking clients out to dinner every night is beneficial to their business. Thus, they place the action towards the top of their priority list. But, if the action greatly compromises their relationships with their spouses, which threatens the longevity of their marriages, then they have incurred more personal risk. Therefore, setting reasonable and honest priorities and abiding by them is not only crucial to the success of a new business; it is crucial to the health and happiness of a new business owner.
Return to Self Employment Handbook Table of Contents