There are many different statistics that cite new business failure rates. Some claim 5 out of 10, some 8 out of 10, and some say that 9 out of 10 new businesses fail within 5 years.
For those that do survive there is also the question of the quality of life vs the sacrifices required to become an entrepreneur and start a new business.
As for how much you can earn as an entrepreneur, again the statistics vary between sources. One statistic claims that only 6% of entrepreneurs ever hit a 6 figure income.
Some claim the average salary is around $60,000 and some $178,400.
The one true thing is that being an entrepreneur means your earning potential is determined solely by the amount of value you bring to the marketplace. If you bring enough value, your earning potential is unlimited.
One thing many new entrepreneurs are unprepared for initially however are the financial commitments and expenses that come with starting a new business.
These are things like:
- Social security
- Accountants
- Bookkeepers
- Insurance
- Office expenses
- Marketing
- Taxes
- Living (while waiting for the business to generate revenue)
And a few other items that don’t exist or are taken care of when you’re working as an employee.
This is why keeping your present day job if you have one is a great idea, as is building up a reserve fund to last at least 6 months while your business is getting up and running.
What Does It Take To Be An Entrepreneur
I wrote about The Top 10 Principles Of Successful Entrepreneurs which covers the fundamentals that all successful entrepreneurs seem to have. If you have, or can obtain these traits then you’re off to a good start.
But how do you know if becoming an entrepreneur just isn’t the right decision for you?
Here are 7 reasons to NOT become an entrepreneur:
1. You’re not passionate about your product/service
You’re going to need passion, and you’re going to need to really, truly, genuinely believe in what you’re offering to survive, and thrive longterm.
2. You don’t enjoy dealing with people
Even if you’re planning on starting an internet based business you’re still going to need to deal and interact with other people. The only way to make money is to provide value to people. The more value you provide, the greater the rewards, but you’re going to need customers.
3. You’re not fully committed to doing ‘whatever it takes’
There are going to be some sacrifices required, and some points of serious discouragement that threaten your goals and test your motivation. You need to make the decision beforehand what you’re willing to work through and then prepare for the inevitable down periods and frustrations.
4. You are risk averse
This one is obvious, but you can’t go into business if you’re not willing to take on a little risk. I’m not advocating a reckless approach, but a certain degree of calculated risk is required to be completely dependant on yourself to earn a living.
5. You are stress averse
Entrepreneurship can be stressful, and at times, it can be very stressful. If you’re not good at dealing with stress you have two options; you can avoid it altogether, or you can find effective coping mechanisms. (I’d recommend the latter).
6. You don’t like long hours
There are going to be some long days and long hours, especially in the beginning. You need to be prepared for these as do your family and friends. If the thought of waking up at 5am and working a solid 12 hours is off-putting, then becoming an entrepreneur isn’t the right choice.
7. You let others dissuade you from following your dreams. (Including me in this article)
If you’re reading this post and thinking that becoming an entrepreneur is just not right for you, then either trust your gut and put it aside, or push past those feelings of disbelief and doubt.
There’s no shame in not being an entrepreneur just as there’s no shame in not being a doctor, lawyer, pilot, accountant, or any other career out there. We all have to decide for ourselves what’s best for us.
Can You Have It All?
Yes, you really can have it all – at least to start. If you’re somewhat on the fence about becoming an entrepreneur or starting a business the single best thing you can do is keep your day job, and start a side project or business.
This will allow you the financial security of your present employment and give you some room to experiment with a new concept or idea. There are many great ideas that you can start for under $100 to test the entrepreneurial waters and see where your strengths and skill sets stand.
You’ll also be preparing yourself for your future as an entrepreneur by working longer days, as you’ll have your regular job and then your new side business to work on after hours.
If you find you’re still passionate about your project after weeks or months of long hours, late nights, and early mornings, then you’ll know you may just have what it takes to make it.
In the end, you’ll never truly know unless you try.
