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The Ups and Downs of Business Ownership Compared to Employment by Elliot Hough Sherer – Aegis Capital

Elliott Hough Sherer, Senior VP of Investments at Aegis Capital Corporation looks at two sides of making a living—business ownership and employment. Both situations offer advantages and disadvantages. As a stockbroker and financial professional, Elliott champions the  entrepreneurial spirit of the independent businessperson as he performs his role as a registered representative at Aegis Capital […]

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Ups and Downs of Business

Elliott Hough Sherer, Senior VP of Investments at Aegis Capital Corporation looks at two sides of making a living—business ownership and employment. Both situations offer advantages and disadvantages. As a stockbroker and financial professional, Elliott champions the  entrepreneurial spirit of the independent businessperson as he performs his role as a registered representative at Aegis Capital Corp. Hard work and dedication are the hallmarks of both successful entrepreneurs and employees. Elliott offers a look at the upsides and downsides of both positions with the understanding that no one answer is right for everyone.

Consistent Pay

From the employee’s perspective, working for a financially solid company provides you a consistent paycheck at the end of each pay period. This fixed income enables you to plan a personal budget and manage household finances.

A business owner’s income fluctuates with the fortunes of the business. Personal budgeting and financial management can be challenging with the constant uncertainty of business profits.

Freedom

As an entrepreneur, you are your own boss. You can build as much flexibility into your work life as you want. When your business runs well with dependable employees, you can make extra time for hobbies and family.

Working for a steady paycheck can also provide freedoms of a different nature. For example, you are relatively free from worry about how the company performs overall. As a benefitted employee, you enjoy vacations and holidays while still getting paid.

Earnings

With added risk of ownership comes the opportunity for greater reward. Because the entrepreneur takes an enormous risk on their business, the potential earning power is much higher than for the average employee who takes relatively little risk. When the company is profitable, the owner receives the benefits of that profit.

The average employee, on the other hand, receives the same salary regardless of the financial standing of the company. Of course, some companies offer bonus plans, stock options, profit sharing, and other compensation packages that shink or grow depending on the success of the business. Nevertheless, the owner owns the risk and reaps the greater reward.

Working Hours

A typical employee owes the company a minimum number of hours each week in exchange for a regular paycheck. Employees who work on commission may not have a strict hour requirement, but they know that if they don’t put in the time to make sales, they won’t get paid.

When you own the business, your compensation does not depend on the number of hours you work but on the profitability of the company. That can be a two-edged sword, however. When business is booming, you may have the luxury to come and go as you please. When your business struggles, on the other hand, the only limit to the number of hours you put in at the office is the number of hours in a day.

Conclusion

At the end of the day, the decision of how to make a living comes down to risk and stability. Business ownership offers high reward at the cost of high risk. Being an employee offers a steady reward at a relatively low risk.

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