Is Entrepreneurship Risky?

Entrepreneurship is perceived as a risky endeavor, where you have to bet everything while fighting tooth and nail to start a successful company; to quote Ray Kroc, founder of McDonalds, “…if you’re not a risk taker, you should get the hell out of business.”  Does this still hold true, however?  Is entrepreneurship still a risky career path with low job security?  Over the past couple decades, the classic entrepreneur-employee, high risk-low risk paradigm has reversed.  It used to be that employers had large benefits packages, offered pension plans, or valued seniority and tenure.  These qualities are increasingly rare, and we find that entrepreneurs consistently have more independence and financial security.

Job Security as an Employee

The economy is undergoing a lot of changes as the marketplace becomes more volatile and digital technology disrupts classic business models.  According to the Bureau of Labor, the median number of years a worker has been with their current employer was only 4.6 years in 2014.  When you partition that statistic by age, you find that for 25-34 year olds, their median job tenure was 3 years, nearly three times less than 55-64 year olds, who generally stay 10.4 years at their jobs.  As an employee you can lack agency and are not always in control of your career path.  Who hasn’t seen stories of layoffs and downsizings in the news these days? Companies no longer expect life-long employees, so why don’t you take the opportunity to start your own.

Entrepreneurship Isn’t that Risky

Starting a business has never been easier, cheaper, or more popular than now.  Take this opportunity to decide how you want to spend your time and create value.  Successfully creating a company depends on a lot of factors, but the most important is hard work and effective planning.  Why do startups fail?  The number one reason found by CB Insights was that there was no market need for their product (42% of startup deaths were for this reason).  This could be avoided by applying lean startup strategies: immediately begin doing market research with your prototype product or service.  It doesn’t have to be perfect!  The intent of a minimum viable project, or MVP, is to test and iterate on your idea, incorporating feedback into a continual design process.  From this process you’ll get a much better idea of who uses your product and how.

For entrepreneurs looking to bootstrap their idea, the rise of computer and internet based tools have markedly decreased the costs for developing a business, giving you powerful tools from the very start.  The community of entrepreneurs in your area is also a great resource, providing networking opportunities, advice and expertise, and a support system as you develop your idea.  There’s no more argument—entrepreneurship is a safe bet for most.  All you need is an idea, hard work, and a willingness to fail and try again.

The Middle Ground

Starting a venture from the ground up can be intimidating, but there are often more structured opportunities, such as franchising.  Franchising is generally thought of in the context of food chains such as McDonald’s, but it is much more than that.  Instead of creating a completely new business model, you can purchase the right to use and improve an existing business model, giving you the security in knowing the process works, but freedom and flexibility to choose the work environment you’ve always wanted.  Franchises come in all shapes and sizes—everyone can find a fit, from Hampton Hotels to Jimmy John’s to Liberty Tax Service and many you probably did not know even existed!  The main benefits of franchising include: