Entrepreneur or Corporate Paycheck

Would you rather be your own boss and work as an entrepreneur, or work for a large corporation? Most people prefer the idea of having autonomy and greater control over their destiny. Having been on both sides, I’ve come to realize that there are some significant benefits to the corporate life.

My friend Terry just closed on the sale of his business. He started an insurance agency nearly thirty years ago and spent his entire career as an entrepreneur. He was responsible for every aspect of his business, from human resources, to technology, to sales. Since his business was acquired, he is now part of a larger corporation and is finding the experience to be enlightening.

Focus on your strengths

As an entrepreneur, Terry was forced to take on tasks that he often didn’t enjoy and that did not represent the best use of his time. He now has tremendous support. Instead of handling HR issues himself, he has a team of experts. He has an IT department, an accounting department, and he now finds himself in a place where he can focus on his strengths.

The benefits of scale

Terry is particularly good at sales and marketing. He has great ideas on how to generate new business. As a small business owner, his ability to execute on those ideas was governed by the time he had personally, and by the limited number of employees he had at his disposal. By having an entire sales and marketing department he can now implement ideas on a grander scale. He can share his vision with the department, train them, and then monitor their execution.

Drawbacks of corporate

In the corporate world you have less control than the self-employed. Everyone has to answer to a boss. Even the CEO answers to shareholders or owners. There is typically less autonomy. Most organizations have expectations that are either mandated, or driven through corporate culture. This includes things like hours worked, vacation taken, and sales quotas. In the end, the corporate gig may offer less control, fewer tax benefits, and a more limited upside.

Drawbacks of the entrepreneur

The entrepreneur typically carries tremendous responsibility. They are responsible to their employees, their clients, and the business itself. If the copier breaks the small business owner ends up dealing with it. If employees have a conflict it typically falls to the entrepreneur to settle things. If the business fails the entrepreneur handles bankruptcy at the corporate level and may even be affected personally. If things don’t work out in the corporate world, you get fired. Assuming a decent job market, you simply dust yourself off and seek employment elsewhere.

Getting paid

One thing that most employees take for granted is a steady paycheck. The paycheck allows you to easily determine your lifestyle. When you create a budget with dependable numbers, it becomes clear what you can spend on things like houses and cars. Small business owners need to take care of their employees, their suppliers, and their overhead before they can even pay themselves. Inflows of cash are often seen as a relief as opposed to a reward. They need to have reserves for unforeseen business challenges. In the end, the entrepreneur will typically have a more erratic personal income stream. They take what they need for themselves and leave the excess in the business. The employee has the luxury of simply taking what they earn.

In business and in life we often have to be careful of what we wish for. While the glamour of entrepreneurship certainly has its benefits, for those of us in the corporate world, there’s something to be said for a narrower range of responsibilities and a dependable paycheck.