The New Economy: Entrepreneurship, Part Four
So let’s move on to question #2: In this new economy, is it better to become an entrepreneur, or is it really safer to work for someone else?
The average household income in the United States is approximately $50,000 a year. If you wanted to be part of the top 25% of income earners, you would need to earn at least $90,000.
To reach the top 10% would be a household income of $140,000, the top 5% $190,000, and to be in the top 1% you would need a combined household income of at least $380,000 a year.
So here’s the question–if you wanted to move up to the top 25% or 10% or even the top 5% of income earners (and who wouldn’t want to?), can you see yourself moving up to these levels with your current means of income?
Most of us have been taught to not even dream that high, but why? In today’s new economy, it is more and more feasible to be a top income earner if you are on the right path. What do you think would give you the best chance to move up to these top levels of income? In my opinion and in the opinion of many experts, the answer is to become an entrepreneur.
The concept of entrepreneurship has been around for millennia. The great explorers, the crusaders, the pilgrims, and the American west pioneers. The founding of this country was very entrepreneurial. Breaking away from Great Britain to be able to live as we choose, work as we choose, worship as we choose. It was the essence of being an entrepreneur.
Here is what a few entrepreneurs have to say about this life path:
Paul Zane Pilzer – “Why in America where anyone could have anything, would people want to give up their freedom and become effectively a modern day slave, show up every morning at 7:30am leave at 5:30pm, sit down, shut up and do what your told.”
Susan Sly – “Think about the great entrepreneurs, they are visionaries, they have heart. They are willing to do today what others won’t, so they can do tomorrow what others can’t.”
Kim Kiyosaki – “In the world of entrepreneurship, there are no limits. You can make as much as you want depending on how much you want to work and how smart you are and how great a team you put together.”
But there are reasons people shy away from entrepreneurship, for one, it’s not easy. When people decide to become entrepreneurs and work for themselves, they have to make lots of decisions, but they are riskier than you might think.
Kevin Harrington best known as an investor on “Shark Tank” shared this, “Any kind of a retail business with build outs, is extremely expensive. Even a small store such as the popular yogurt shops today can run $300,000 or $400,000 to setup.”
The typical business start-up story is the same, small or large, new or experienced, you are taking a risk and can win big or lose it all, and most entrepreneurs lose it all two or three times before they make it.
Richard Branson is a great example of this. As a very wealthy English Business owner and investor, he has lost at least 15 businesses over the years. 80% of all new U.S. businesses crash and burn within their first 5 years, many in the first 18 months.
Meanwhile, 72% of Americans would love to be their own boss, according to a current Gallup poll, but they don’t know how to get there. There are actually only four options for the average new Entrepreneur:
- You can buy an existing business – The first question to ask is why are the owners selling? What’s wrong with it? Commonly it’s because they are tired, it is hard, or maybe they are not making the money they had hoped for.
- You could buy a franchise. Here there is less risk and it is a proven system, but it is very expensive any where from $100,000 to $1 million.
- You could start something from scratch, a completely new business, but most people don’t have the confidence that their product or service idea would really go big, or they are afraid to borrow that much money, or they don’t feel they have the skill set to start a new venture, especially in our regulation ridden and litigious society.
- They could become an investor in other people’s ideas and start-ups, but that can prove to be very risky indeed. Harry Dent says, “Venture capitalists, who are the very best and the most sophisticated at investing in new break-through businesses make it on 1 out of 11. That means 10 out of 11 are mediocre or fail, with most of the 10 failing. And Angel investors are lucky to get 1 out of 15 or 20.”
Robert Kiyosaki relates, “A business is a team sport. Like I have to have accountants, I have to have engineers, I have to have system designers, I have to have office staff and management, I have to have maintenance and sales and marketing, I have to have mission statements, I have to have legal, and all that.
The average joe-smo, even me, I go out there, I don’t have the skills to put a business together on my own.”
The food and hospitality industry has even a greater risk of failure. Authorities say that 90% of all first year non-franchise restaurants fail.
Even though 72% of Americans say they want to be entrepreneurs and be their own boss, the bottom line for the four traditional options is that each takes money, sometimes a lot of it, they take expertise and they take time. All of that adds up to just too much risk for most people.
But what if there was a way that you could have all of the proven aspects of business ownership and still control your own life? What if you had the proven product, the proven systems already in place, proven training, and you were in charge. And you didn’t have to risk a ton of money.
What if you had all of these good aspects of business minus the employer? Do you think more people would be open to working for themselves in that environment?