The Downside of Entrepreneurship – 3 Things to Consider

entrepreneurship pitfallsThere’s no doubt about it – becoming an entrepreneur has some serious advantages. As an entrepreneur you can set your own hours, choose work you love, and be your own boss.

But with all the great advantages of entrepreneurship there are also less desirable traits.

While entrepreneurship can seem glamorous from the outside it’s important that you know the downsides before quitting your day job.

Here are three downfalls of entrepreneurship.

Unstable Pay and No Benefits

When you work for yourself there is no stable paycheck coming in. Payments slowly drip in and sometimes you may go weeks without seeing a dime.

The longer you work on your business the more of a safety net you’ll be able to save up. But for the first year you better get used to budgeting on a shoestring. And before you make the transition to entrepreneurship it’s a good idea to save money for an emergency fund.

In addition you’ll also be responsible for your own benefits. You’ll need to create retirement plans and contribute to them when you get paid. You’ll also be responsible for paying for your own health insurance. These can be huge costs.

You Have to Work Harder than Others

When you strike out on your own you’ll wear many different hats. You’ll be the accountant, marketer, service provider, and customer service rep.

You only get paid for the work you provide but you’ll have to put in a ton of time beyond your “billable hours” just to land clients.

Plan on working 2-3 times harder as an entrepreneur verses an employee.

You’ll Have a Hard Time Getting Loans

Want to buy a new house? A new car? Need a personal line of credit?

Good luck!

When you become an entrepreneur you’ll have a much harder time getting a loan than when you were an employee. For instance, if you want to take out a mortgage you’ll generally need two or more years’ worth of self-employment taxes. Advice is recommended sometimes from banks or financial advisors on how to take out a mortgage, so you’ll have to do your homework.

Conclusion

Being an entrepreneur is amazing. When you make the switch from an employee to a business owner you’ll be presented with a ton of opportunities and also a ton of challenges.

If you’re up for a challenge and ready to take new opportunities that come your way you’ll be able to shine as an entrepreneur.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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