Entrepreneurship vs. Employment: Which Path is Right For New Graduates?
Publié le 26 July 2023
Explore the benefits and drawbacks of entrepreneurship vs. employment to learn which path is right for new graduates.
So you’ve worked hard and finally got your degree. Congratulations! The next natural step is using the knowledge you’ve gained from your education to enter the job market and find a career that will be fulfilling and rewarding. Before you start sending out your next resume, cover letter and job application, you do have to make an important decision when it comes to entrepreneurship vs. employment.
Will you choose the lonely but highly-rewarding entrepreneurship path or the traditional and safe employment path?
This might be an easy question to answer if you’ve known the career path that’s right for you all along. But if you have yet to figure out your long-term professional goals, then this question might present a bit of a puzzle.
Worry not. In this article, we’ll share with you the factors to consider when choosing between starting your own business vs finding a job with an employer. We’ll also give you some case studies to help you decide which path is best for you.
Let’s get started!
Entrepreneurship: Path for New Graduates
Entrepreneurship is the act of identifying and pursuing opportunities to build a new business venture. An entrepreneur is, of course, the business owner who turns a business idea into a product or service. Some of the key qualities successful business owners have are creativity, adaptability, resilience, and a strong sense of initiative.
There are currently over 500 million entrepreneurs globally.
Entrepreneurship may come naturally to some, who always have had an abundance of initiative and determination. Others may have a harder time learning the ins and outs of entrepreneurship and being a business leader.
Either way, entrepreneurs must be willing to invest almost all of their time and resources. These long work hours can really wreak havoc on your ability to maintain any semblance of a work-life balance. Many entrepreneurs also invest their own money into their companies, meaning that they risk serious financial problems if the business does not work out. These are all important factors to consider when deciding between entrepreneurship vs employment.
There is also a tremendous amount of paperwork. If you want to put up a limited liability company in DC, for example, unless you seek the assistance of LLC services in Washington, you’ll have to do all the work of securing the required operating agreement, banking resolution, federal tax ID, among others. These are on top of the other aspects of starting a business you have to personally tend to like hiring management and employees, developing and troubleshooting your product or service, marketing to prospective customers and upscaling to meet demand.
However, it’s important for entrepreneurs to consider setting up a Limited Liability Company (LLC). An LLC not only provides legal protection for your personal assets but also offers flexibility in terms of taxation. This structure can offer a safety net, allowing you to pursue your entrepreneurial dreams while safeguarding your personal finances. Even though LLC laws differ by state and other jurisdictions, when you know that you are legally and financially safe it makes all the hours of work totally worth it.
Employment: Path for New Graduates
Employment is when you’re hired by an organization or individual in exchange for financial compensation. Employees use their job skills, time, and knowledge to perform certain tasks for a company based on the employer’s policies.
In return, employees receive a regular paycheck, whether as a salary or hourly wage, which depends on the employment agreement. You can have a part-time, temporary, or contractual, or full-time job arrangement.
In addition, employment comes with benefits and perks, such as health insurance, retirement plans, paid time off, and opportunities for growth or professional development. Employees are also entitled to certain rights and protections outlined by labor laws, including workplace safety, fair compensation, and protection against discrimination or unfair treatment.
A great employment opportunity will offer individuals financial security, increased stability and peace of mind.
Considerations for New Graduates
Now that you understand the two career options, let’s look at some of the considerations when starting a business vs getting a job.
Entrepreneurship
First, with entrepreneurship, you have no cap on your ideas and income potential since you make all the decisions. You can set your working hours, explore all the wild business ideas, and get big payoffs for them.
It has also grown easier to run a business solo or with a small team, thanks to technologies like generative AI and smart automation.
On the flip side, you carry the burden of making decisions on internal factors alone.
In the beginning, you may need to work more than the average 40 hours per week without receiving a regular salary.
Around 70% of entrepreneurs work 40+ hours weekly, with 19% working more than 60 hours while making less money compared to what they’d make if they were employed. This will lead to a poor work/life balance since you have no time and might not even afford to entertain friends and family.
Employment
For employment, you will have a steady income source and a benefits package that allows you to maintain a healthier personal life.
You also don’t have to suffer from decision fatigue since it’s the employer’s responsibility to deal with any issues that arise in the organization.
However, as an employee, your pay is capped based on factors like your position in the company and your experience level. You must also follow your employee contract, which will limit how you work and your ability to immediately execute any ideas. Additionally, there traditionally has not been a lot of freedom in your working hours, although more organizations are learning the benefits of flexible work schedules.
This is one of the key reasons people prefer entrepreneurship vs. employment. A survey by Guidant Financial showed that 28% of business owners mainly went into entrepreneurship to be their own boss.
Case Studies: Successful Entrepreneurs and Employed Professionals
Here are a few case studies of widely popular entrepreneurs and employed professionals to provide valuable insights into each path of entrepreneurship vs. employment.
Brian Chesky, Joe Gebbia, and Nathan Blecharczyk – Airbnb
The co-founders of Airbnb, Brian Chesky, Joe Gebbia, and Nathan Blecharczyk, disrupted the travel and hospitality industry with their platform.
They started renting out air mattresses in their apartment. However, with time, they transformed Airbnb into a trusted global marketplace connecting hosts with travelers.
Despite encountering challenges and skepticism, their innovative concept resonated with people seeking more personal and affordable accommodations. Today, Airbnb operates in over 220 countries and has completely transformed the way many people travel.
Elon Musk – Tesla, SpaceX, Open AI, and more
Elon Musk is a serial entrepreneur globally recognized for ventures like Tesla, SpaceX, Neuralink, Open AI, and The Boring Company. Elon also owns Twitter, which he officially bought in October 2022.
Musk’s entrepreneurial journey has been greatly defined by his ambition to revolutionize industries and tackle complex global challenges. Despite facing numerous setbacks and struggles, Musk has successfully brought many of his ideas to life and is currently worth over $200 billion.
Tim Cook – CEO of Apple
Tim Cook is a great example of a successfully employed individual. He joined Apple in 1998, initially serving as the Chief Operating Officer (COO), contributing significantly to the company’s profitability and efficiency.
Following the passing of the founder Steve Jobs, Cook took over as CEO in 2011. Under his leadership, Apple has launched groundbreaking products such as the iPhone, iPad, and Apple Watch.
Cook’s success shows the growth, influence, and career advancement one can gain on the employment path.
Sundar Pichai – CEO of Google and Alphabet Inc.
Sundar is another notable example of a successful full-time employee. Pichai joined Google in 2004 and helped develop key products like Google Chrome, Drive, Gmail, and Android OS.
He held various senior positions before becoming the CEO of Google in 2015, and Alphabet Inc. in 2019. Under Pichai’s leadership, Google has continued to dominate the search engine market with great innovations.
These case studies highlight that both entrepreneurship and employment can lead to remarkable achievements and success.
Making the Decision: Factors to Consider
When faced with the choice of entrepreneurship vs employment, there are key factors new graduates must consider to make an informed decision.
- Passion
We are past the age where people need to take just any career path, as long as it earns them money. Today, it’s become crucial to choose a career you’re passionate about.
For entrepreneurship, that passion will be translated into a viable and sustainable business venture. If you opt for employment, ensure the job opportunity you settle for aligns with your interests and long-term career goals. If you are not passionate about your job, you will very quickly become bored and unengaged. This could have negative repercussions for your career, and it’s also just not a very pleasant way to spend your day.
- Long-term goals and aspirations
Your long-term personal and business goals are crucial since they shape your desired lifestyle, professional path, and financial objectives. This then guides your decision-making process on starting a business vs getting a job.
Entrepreneurship, as we discussed earlier, offers autonomy and unlimited earning potential with much increased risk. Employment, depending on the type of business, provides a stable income, career advancement, and a clear growth trajectory but you must be comfortable playing a role in a large entity where you do not make final decisions..
- Personal values and work-life balance
New graduates must also consider their personal values and work-life balance preferences when deciding between entrepreneurship vs. employment. These two factors must align with the lifestyle you wish to lead within and beyond your career.
Entrepreneurship, especially in the early stages, often requires long hours and intense dedication. However, once the business takes off, your involvement may lower considerably as you can hire qualified team members who will work to ensure continued growth and success.
Employment offers regular business hours and structured benefits, allowing you to maintain a healthy work-life balance. However, in some sectors, like healthcare, you might have to work beyond your stipulated office hours due to emergencies and be locked into certain wage and pay rates.
- Networking and mentorship opportunities
Networking and mentorship play a pivotal role in professional growth. New graduates should consider these when choosing between entrepreneurship or employment. They should determine the path that offers the most valuable connections and guidance that will help them achieve their own career goals.
Entrepreneurs have the opportunity to build their own network and seek guidance from experienced individuals in their industry. Employees, on the other hand, have access to an established network of in-house or outsourced experienced professionals, and can also take part in company networking events.
- Adaptability and willingness to embrace change
New graduates should also consider their willingness to change, take risks, and embrace new opportunities before making a decision.
Graduates thinking of entrepreneurship vs. employment must be comfortable with uncertainty, constantly pivoting their business plans and strategies, and making quick decisions alone. Those on the employment path may experience a more defined and stable environment within an organization but may not fully embrace their biggest ambitions..
Conclusion
The choice between entrepreneurship vs. employment is a crucial decision for new graduates since it determines their entire career trajectory.
To make the perfect choice, weigh the core factors discussed above: Passion and practicality, your long-term personal goals and aspirations, values and work-life balance, networking, and mentorship opportunities. Also, consider your ability and willingness to embrace change.
Remember each path has its pros and cons. The key is to choose the option that’ll help you achieve a fulfilling professional journey.
