According to the U.S. Small Business Association, there are more small businesses in America than ever. This isn’t surprising. What is surprising is what a U.S. News and World Report article revealed:
“People who work for themselves are more likely than those who work for others to report that their jobs are stressful and exhausting and make them unhappy or depressed. Moreover, the typical American who works for himself or herself works 4.4 more hours per week than the typical person who is employed by someone else. And studies show that the typical entrepreneur earns less and has more variable income than the typical employee.”
The article left something out: Four in five new businesses fail in their first 18 months.
Not the same thing
“Entrepreneur” and “small-business owner” don’t mean the same thing. In fact, they have very different meanings.
In 1994, 30-year-old Jeff Bezos became the youngest-ever vice president at the Wall Street investment bank D.E. Shaw & Co. The World Wide Web was still new, but Jeff was sure there was a huge, untapped market for online commerce. He was so sure, he quit his job, moved to Seattle and started an online bookstore: Amazon.com.
Amazon has performed well, so well that it has made Jeff the fourth-richest person in America. He’s an entrepreneur but not because he’s rich: He’s an entrepreneur because of his innovation. An entrepreneur puts a creative twist on a traditional business model, so while Jeff Bezos didn’t create bookstores, he did create the first online bookstore.
A small-business owner, by comparison, operates a traditional business and tries to differentiate that business by providing a better product or service, a lower price or a unique feature. Being a small-business owner may not seem glamorous, and it may not land you on the cover of Forbes, but it’s no less important than being an entrepreneur.
Small-business owners create most of the new jobs in America, they employ nearly half of the American workforce, and they reflect our country’s diversity. So while entrepreneurship propels our economy forward, small-business ownership is the very foundation of our economy. One is no better than the other. They’re merely different.
Why do it?
If less money, longer hours, more stress and the likelihood of failure await people wanting to open their own businesses, why are people flocking to self-employment? Job satisfaction.
According to researchers, entrepreneurs and small-business owners derive more pleasure from work than people who have employers, and hundreds of small-business owners across the country have told me this is certainly true for them. Job satisfaction explains why entrepreneurs and small-business owners continue working for themselves, but what makes people want to start their own businesses?
Some small-business owners have said if they had stayed at the companies they were at, no matter how hard they worked or how much they accomplished, they doubt they would have gotten the promotions they deserved.
Some said they were tired of working jobs they were overqualified for, jobs they took to make ends meet until they found something better. Similarly, some opened their own businesses because they were having trouble finding work. Those people created a business to create an income.
Some had worked in corporate America for decades and had amassed expertise and a long list of contacts, and they left the corporate world because they wanted to do something on their own.
Finally, there were those who didn’t want to conform to the rules of corporate America. Going into business for themselves allowed them to wear jeans to work every day, set their own hours, and do things the way they wanted to do them.
Build a solid foundation
When I teach small-business owners how to be successful, I’m shocked at how many of them opened their doors for business before they were ready. They thought they were ready, but they weren’t. I say this because what they were doing was making and selling their product or service to make money. This may seem to be all a small-business owner needs to do, but it’s not. There’s lots more.
No matter how small your business, it needs five departments, and you need to spend time every day in each department:
▪ Accounting and finance
▪ Human resources
▪ Information technology
▪ Marketing and Sales
You may sell the best product or service the world has ever seen, but if you continue to devote 90% of your time to producing it, you won’t be in business long. I guarantee it. If you want your business to succeed, learn to multi-task because you will need to be well-versed in each department, and not just knowledgeable.
Owning your own business is harder than it looks, and nearly every small-business owner I’ve talked to has said some version of this: “I had no idea it would be this difficult.” Despite the stress and uneven paydays and long hours and overwhelming risk of failure, if you lay a solid foundation, owning your own business can be wonderfully rewarding.
Marvin Carolina Jr. is a vice president for JE Dunn Construction. He can be reached at email@example.com.