By Karen E. Klein Q: I am thinking about starting a small business and would like to know the pros and cons of entrepreneurship vs. employment -- from the major pros and cons to the smallest. -- M.L.P., Allendale, Mich.
A: Rather than examine entrepreneurship, it may be a better idea to take the opposite approach: Are you cut out to be an entrepreneur?
According to experts who have studied the entrepreneurial mind, most small-business owners who succeed share some common traits. For instance, a person who thrives on risk and is driven to succeed is better suited for an entrepreneurial career than someone who is naturally cautious and laid back.
To a risk-taker, the daily challenge and excitement of turning a profit by selling a product or service is a definite plus. On the other hand, to a person who prefers a steady paycheck and a predictable lifestyle, such pressure would be a definite "minus." To get a better idea of your aptitude, you might want to take a personality quiz available on the U.S. Small Business Administration's Web site.
PLUSES AND MINUSES. Entrepreneurship's two biggest benefits are being your own boss and the financial rewards you will enjoy if your business takes off. Equally obvious is the need for a huge investment of hours and sacrifice if a startup is to thrive. Never forget that a high percentage of small businesses fail, so there is a considerable risk that needs to be considered before making the decision to invest your time and capital.
"Bottom line? Being employed is a much safer avenue," says Jack Philbin, a Carlsbad (Calif.)-based small-business counselor who works with SCORE (Service Corps of Retired Executives). "In small business, you typically put in much longer hours and have more responsibility for yourself and others. You're out there by yourself, with few mentors.
"In a corporate environment you have colleagues and camaraderie," Philbin adds. "You move up the ladder. You get raises and pats on the back when you do a good job. You get continuing education. As an entrepreneur, your feedback is rougher. No one's telling you you're doing a good job: You're either making money or you're not. Those profits, however, can be a big incentive."
Gene Fairbrother, whose Coppell (Tex.)-based MBA Consulting has counseled tens of thousands of entrepreneurs through the National Association for the Self-Employed, says personal motivation is the key factor in building a successful small business. "Do you wait for your boss to come to you with an idea or an assignment?" he asks aspiring entrepreneurs. "Or do you go to them with ideas for improvements?"
THE HORSE'S MOUTH. For those unsure about going into business for themselves, Fairbrother suggests approaching 10 entrepreneurs, taking them to lunch, and asking the following questions: What they did you do to get started? How did you achieve success, and what you wish you had done differently? What do you like about the entrepreneurial life, and what do you hate about it?
Once you've gotten that feedback, you should have a good idea if entrepreneurship is for you. If you can't -- or won't -- invest the time and money to solicit those opinions, says Fairbrother, don't waste your time dreaming about a business of your own. "Right off the bat," he says, "I can tell you that you're not cut out to be in business for yourself."
A survey released this month by the National Federation of Independent Business and Wells Fargo shows most small-business owners report getting a great deal of satisfaction from their businesses, with 40% saying they are extremely satisfied. A majority say they spend most of their day doing what they like best, and 81% of small-business owners feel their companies are successful. If you have the right personality, those findings should come as encouraging news. Have a question about running your business? Ask our small-business experts. Send us an e-mail at email@example.com, or write to Smart Answers, BW Online, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.