Which is better: a job or a business?

Countless firms go out of business as the chart below shows:

The question is, what is the main reasons businesses fail? Lack of market need?

The economy? Or perhaps bad luck? No, one of the biggest reason is inexperience
from the owners.

Owners that have previously had jobs, and then created a job in that same
industry, are more likely to succeed, as are people who are guided by a
responsible mentor.

They have the skills, contacts and sometimes clients to start their own business.

Starting a new business and a complete start up isn’t always the same thing.

So, for the vast majority of people, the best way to start a business is to get a job
in the area first.

That doesn’t mean that some people won’t succeed with zero experience in an
industry.

Some people can start successful businesses at 18, 19 and in their early 20s.
That doesn’t change the fact that these are exceptions to the rule.

But now let’s say you have had a job for 5–10 years and you have gotten good at
it.

You are paid comfortably. Is it good to start your own business? It depends on
many things, but the following people shouldn’t start their own business:

Those that can’t manage cashflow, marketing, sales or any other key function. A
business relies on money coming in being more than what is going out. If you
can’t control some of these processes yourself, you could get into trouble. That
doesn’t mean you have to be a world class accountant, marketeer or salesperson
to start your own business, but you ideally need to know the basics at least. In
general, I have noticed that people coming from the sales or accounting side of
businesses fail less often if they start their own business. People who feel like they
can outsource the whole process often fail.

If you think it is all about the idea. It is all about the execution.

You are relying on trends, the good economy or politicians. These things come and
go. Remember the trend below in the early 2000s in many countries? Internet
cafes were huge. It came and went. Sure, some still exits - the best ones. But that’s
the point. In a good market, many providers can thrive. You need to be able to
thrive in a poor market.

4. You can’t manage risk. There are many risks of being a business owner. Those
include cash flow risks, country risks and one-off risks as the coronavirus has
shown. Owners need to diversify, be adaptable and/or move quick. Look at 2020.
Which businesses are doing the best? Those businesses that went online years
ago, when it was clear that the world was moving online. Yet many business
owners waited until the pandemic to pivot, even if they were in industries that can
work well online. That is often because people get into their comfort zones.

5. You only care about status. There are plenty of business owners that go around
with flashy cars, big offices and VC money. That is irrelevant if you can’t pay the
bills at the end of the month. I know a bunch of very profitable firms being run
out of homes and others fighting for their lives, despite having the appearance of
success.

6. You can’t be persistent, tough and focus on the long-term.

7. You are very risk-adverse or don’t take risks seriously at all. Calculated risk-
taking is needed.

For most people, being a salaried employee or working in an affiliate structure

(self employed capacity) can work better than running your own company.

If you can make 50%-80% of revenue without having the stresses of running the
whole show, you might be better off like that.

There is maybe 20% of people that can deal with being an owner.

For those that are willing to put in the work and learn long-term, the gains can be
immense.