Find out if you are truly ready for the lifestyle changes that come with being an entrepreneur.
5 min read
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According to recent research, 24 million Americans want to become their own boss by 2021, but they may not really know what they’re getting themselves into. Freshbooks collected data from more than 3,700 full-time American workers for it’s 2019 Self-Employment in America report. Many of them had recently become small-business owners or wanted to become one. It turns out many budding entrepreneurs have high expectations, but they aren’t being realistic.
The data shows people anticipate better work-life balance once they start a business. They think they’ll be healthier and less stressed. At the same time, they expect to earn more money and have more career certainty. This doesn’t always happen of course. If you plan to start a business, be cautious and prepare for the reality that you may need to work harder without getting everything you thought you would.
Here are some of the key ways that entrepreneurial expectations don’t always live up to reality.
It may seem intuitive that when you’re not answering to a boss, you’ll have more control over day-to-day activities and less stress. The research shows that’s not the case though. According to the study, 64 percent of workers expected to be less stressed after starting their own business. However, only 55 percent actually ended up that way.
Building a business from the ground up is a lot of work. You’re likely going to be more invested in its success than you would working for somebody else. You also might not have as much time for your personal life as you’d like. Most entrepreneurs I meet say they’re almost always on the clock, because there’s so often something to do. Many founders never had experience managing their own hours, much less those of others in prior jobs, so they struggle to do it as they run a company for the first time.
You also run into problems far from your field of expertise that you never had to consider while working for somebody else. In fact, 44 percent of self-employed people said they performed a much wider variety of tasks on a daily basis than they did working for somebody else. You can expect that you may need to become CEO, Marketing, HR and Graphic Designer extraordinaire.
One of the biggest fears people have before starting their own business is financial risk. Out of those who hope to start businesses, 35 percent said they’re worried about inconsistent income, and 27 percent are worried about earning less money. Seventy-two percent expect to earn more money than they did when traditionally employed. They’re in for a rude awakening. According to the data, only 55 percent actually did earn more. Keep your financial expectations in check when starting a new business. Not only is there a very real possibility that it may not be lucrative, but you’ll probably lose money, especially in the beginning.
Only about half of small businesses, 45-51 percent according to the Small Business Association, survive the first five years. For entrepreneurs who do make it, only half reported experiencing more career certainty. The data shows that median small-business revenue declined more than 13 percent over the past two years. This certainly points to a general lack of stability for new businesses.
Amidst all this uncertainty, you have to think carefully about money before you start a business. Budgeting and saving more can help, but you also may have to rely on outside support systems like your spouse or alternative sources of income like ride sharing or TaskRabbit.
With the ability to connect to your business from anywhere using a mobile device, new entrepreneurs believe they will be able to travel more and spend more time outside. While more travel and time in nature are common desires for entrepreneurs, less than 30 percent end up making this a reality of their day-to-day lives. Seventy percent of entrepreneurs said they expected to be healthier, but only 54 percent actually said they were once they started a business.
The hard truth is that your lifestyle will change when you work for yourself, but it’s hard to know exactly how those changes will manifest. You might expect that not reporting to an office could make you feel lonelier at work, but the ability to work from home or remotely from a mobile device might actually give you more time with family and friends. This flexibility also lets you take advantage of communal work spaces or cafes. Only 20 percent of self-employed people actually ended up feeling more lonely at work than they did while traditionally employed.
Related: How to Research Your Business Idea
Many who dream of working for themselves do so because they want to improve their overall quality of life. They want to work on their terms and build a job around what they enjoy doing. The harsh reality is that working for yourself isn’t a golden ticket to freedom, money or fulfillment.
Don’t be one of the entrepreneurs who becomes disappointed or disillusioned because everything didn’t go your way. Instead, stay driven, passionate and consciously prepared for all possibilities. You may just be ready to make your small business a reality and succeed in the long term.