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Monday, June 26, 2006

Entrepreneurs versus Employees

Are you considering being an entrepreneur? Are you considering starting a career? If so, it is good to know the pros and cons of each. The table below will help you learn the difference in roles and mindset between an entrepreneur and an employee.


  • Value wealth over job security
  • Can go months or years without payment
  • Long hours, especially during start-up
  • Potential for very large payoff
  • Build their own assets
  • Have a higer tolerance for risk
  • Own the company. Can only be fired by Board of Directors.
  • Sit behind the desk when interviewing
  • Are willing to take calculated and educated risks
  • Build systems for benefit of themselves
  • Pay taxes only on NET income
  • Build assets and then use them to purchase other assets
  • Build passive and portfolio income, taxed lowest
  • Invests from the inside
  • Can start other similar companies
  • Adapt quickly to change
  • Often have to dedicate yourself fully during start-up stages. Hard to raise a family and start a high-potential venture.
  • Have access through their businesses to much larger credit limits
  • Financial security once venture succeeds
  • Can become wealthy at young age
  • Have a bias toward action
  • Create the systems
  • Decides who to hire and who they work with
  • Have freedom to control direction of their company
  • Are able to use all of their skill sets
  • Rarely do the same thing two days in a row
  • Work on building assets so they’ll never need a 401(k) or pension
  • Make money when they sleep


  • Value job security over wealth
  • Receive consistent paycheck
  • Regular, consistent hours. Constant but relatively low payment
  • Work to build someone else’s asset
  • Do not like risk
  • Could be fired at any time
  • Sit in front of the desk when interviewing
  • Adverse to risk
  • Build systems for benefit of employers
  • Pay taxes on total income
  • Do not build assets
  • Build active income, taxed the highest
  • Invests from the outside
  • Restricted by non-disclosure and non-compete agreements
  • Often resist change
  • Have time to do other things besides work—such as raise a family or take up hobbies
  • Much harder to obtain significant credit
  • Will have to follow strict saving and investment plan to reach financial security by retirement
  • Will not become financially secure while still young
  • Often have a bias toward passing the bill
  • Have to deal with the bureaucracies created by intricate systems of the companies they work for
  • Have little say over who they work with
  • Have little say over the direction of their company
  • Use only a small portion of their abilities
  • Often have repetitive jobs
  • Work on building 401(k) or pension
  • Make money only when they are working

Hopefully the table above has given you some insight into the different characteristics of business entrepreneurs and employees. It is a difficult choice to make for many. Many aspiring entrepreneurs choose to work for someone else for a few years to gain knowledge, contacts, and capital. Others feel that the best way is to start out as an entrepreneur and have the advantage of quite a few years of learning over their peers. Whichever you decide, just make sure that the choice is the one that is right for you, not just the one that everyone wants you to make.

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