What are the advantages and disadvantages of entrepreneurship?
The basic trade-off in entrepreneurship is the trade-off of risk against reward.
The disadvantages of being an entrepreneur come in its risks. A person who becomes an entrepreneur is basically gambling. They are trying to do something that has not been done before and they are using their own money (or money they can raise from others) to try to accomplish that goal. They have little security and can lose the money and can put themselves under a great deal of stress as they try to avoid that outcome.
Put against these disadvantages are the possible rewards. People who become successful entrepreneurs can make a great deal of money. They can make themselves successful and can have the satisfaction of knowing that they put themselves and their ideas "on the line" and emerged victorious. This can be both economically beneficial and emotionally gratifying since they can become rich and can know they had the guts and the ability to make that happen.
Entrepreneurship involves the development of a business around an innovative idea, with the aim of regional or international growth. The entrepreneur in this case will need to find avenues to increase the capital base in order to realize the objective. The entrepreneur is also charged with the responsibility of protecting the idea through measures such as patents in order to capitalize on the venture.
The advantages of entrepreneurship include:
The entrepreneur gets the chance to participate in a venture that they enjoy. This increases the chances of success in the venture since the individual is passionate and dedicated to work for the venture.
Entrepreneurship offers flexibility to the entrepreneur allowing them to participate in family and social activities.
An entrepreneur has the capacity to set a salary that they believe is commensurate to their input and this helps improve the level of motivation to achieve more.
The disadvantages of entrepreneurship include:
Entrepreneurship offers no guarantees with regards to a regular paycheck especially when the business is at its formative stage.
Schedules are highly unpredictable and the entrepreneur will be required to respond to changes in the market or customer requests almost immediately. This may at times force one to work longer hours.
Entrepreneurship has its share of advantages and disadvantages.
- Freedom: Being your own boss offers unparalleled freedom in terms of the type of work and the amount of work. As an employee, one has to fulfill the requirements of the employer and work according to the rules set by the employer.
- Compensation/Salary: An employee works for a certain salary or remuneration package and even if the company is making big profits, only a small portion is transferred to the employees. Entrepreneurs, on the other hand, have a much bigger stake in the success of their company. If the venture is successful, the sky is the limit for them. Some examples are the founders of Google or Facebook or Whatsapp. However, if the venture fails, entrepreneurs lose everything and being an entrepreneur means not having a regular salary. Thus, entrepreneurship is a high-risk, high reward venture.
- Time: An employee works for a set number of hours. An entrepreneur sets his/her own hours and location. However, entrepreneurs (generally) spend much more time on their ventures as compared to regular employees.
- Job satisfaction: Many employees suffer from job dissatisfaction because of low rewards, boring work profile, etc. Entrepreneurs work on ideas they care about and have high job satisfaction.
The advantages of being entrepeneur are many, as well as there are many disadvantages.
For instance, the decision on how much working time must be allocate to the business is entrepeneur's. Also, other great advantage can be considered the freedom the entrepeneur has to implement his business ideas.
But the freedom of making decision of entrepeneur's own can become a great disadvantage if the idea does not represent a success, since there exists no chance to share opinions with other employees.
Other great disadvantage is represented by the lack of health insurance. All the health problems are paid by the entrepeneur. Also, the pension is no longer the contribution of employers, but the entrepeneur's, this fact becoming a great problem since not all the ideas are a real success and paid accordingly.
If the business is not quite well marketed, the lack of information about business can mean the lack of clients and a business without clients fails.
Other important disadvantage can be the cash flow which can become a hugeproblem when the business finance is not well uinderstood and administered.