Two months ago, one of my co-workers got news that many of us dread that we’ll one day get ourselves.
“Ted,” his manager told him, “we have to let you go.”
Ted (not his real name) had suspected that this might be coming. Between the tough economic climate, and belt-tightening throughout the organization, the news didn’t exactly come as a surprise. Surprise or not, hearing that you’re being kicked to the curb still stings. Hell, it stings a lot.
In Ted’s case, though, he saw huge opportunity in the change. While he could have (justifiably) been quite upset with the situation and complained about his terrible luck, he decided to take advantage of it and start his own business.
Many engineers dream of one day starting our own business, believing that it will be fun, fulfilling, and profitable. We also believe that it might be a good way to take control of our careers and avoid having someone else decide whether we can continue collecting a paycheck or not.
This brings us to an important question: is entrepreneurship really that good an idea? In today’s post, I’ll make the case for building your own business and explain why you should consider it as part of your career plan.
Rich engineer, poor engineer – the case for engineering entrepreneurship
A few years ago, I read a phenomenal book called Rich Dad, Poor Dad (affiliate link). In it, Robert Kiyosaki argues that there are four ways to earn income, in increasing levels of efficiency and desirability:
- As an employee
- Owning a business
- Owning investments
The first two, he says, aren’t all that great because your income is a function of the time you put in. Since we all only have 24 hours in a day, and at least some of that needs to be spent eating and sleeping, there’s a hard limit on how much even the highest paid engineer can make. Being self-employed is better than being an employee in that you have more control over your life, but the same general limitations apply – dollars don’t come out of the system unless you put hours into it.
The next two options are much better in that you are able to multiply the effects of your time and money. When you own a business, other people’s time gets invested towards building your wealth. Now, your earning potential is limited by the number of people working for you, which, in a practical sense, is limitless. When you own a business, your income no longer depends directly on the number of hours you work in a week, it depends on the strength of the system that you build and the people you have running that system.
Similarly, when you own investments, your money earns money for you. Plain and simple. This, it should be clear, is the most desirable way to earn income because it happens automatically.
For most people, they don’t have a lot of money just hanging around that they can invest, so they need to earn it first. The best way to do that, then, is to aim for #3 – owning a business.
Being an employee isn’t risk-free
Gone are the days of the company man. At one point, not so long ago, companies and employees had an understanding. If the employee stuck it out with the company, the company would treat the employee well. You could expect a good job, a respectable wage, benefits, a pension, and a gold watch after 30 years.
Those days are over.
A quick Google search will show you how many employers the average employee has over the course of their career. You get different numbers depending on who you ask, but the reality is you have to expect to work in multiple companies throughout your career. Sometimes this will be because you made the decision to change. Other times, somebody else will have made that decision for you (i.e. you get sacked).
That’s not to say that companies are worse than they were before, or that people have forgotten the virtues of loyalty. I don’t believe either is true. The fact is that in today’s business climate, employers can’t afford to hang on to people at all costs. Similarly, employees must be willing to keep their employment options open if they are to grow and mature as professionals. I don’t necessarily think this is good or bad, per se. It is simply a fact of life.
Given this fact, it’s important for people to bear in mind that being an employee has it’s risks. It’s easy to see how being an entrepreneur can be risky, but I believe it’s short-sighted to think of there being a massive difference in risk between having a business and working for someone else. Heck, just ask Ted.
Being an entrepreneur means you have more direct control over your path. Certainly, you’ll never have complete control. There’s not much you can do about industry trends, changing regulations, stock market crashes, etc. Still, when you’re the boss, you get to make more decisions and have a larger sphere of control over your own situation.
While running your own business can be risky, it’s not like being an employee doesn’t carry its own risks.
Freedom and fulfillment
One of the most compelling reasons I’ve heard for hanging out your own shingle is that you have the opportunity to do something you’re passionate about. You get to chose what products you’ll build, what services you’ll provide, and, perhaps most importantly, who you’ll serve. This, to me, is an incredible motivator. I’m a huge proponent of passion and the role it plays in a person’s success in life, regardless of the particular profession or career you have. Being able to chose the nature of your work and how you’ll make a dent in the universe presents an unrivaled opportunity to tap into your passions.
Imagine getting paid to do what you would otherwise do for free…. Business owners get to do just that. Of course, you need to find something that people will actually pay for (Sorry to all those underwater basket weavers out there), but in many cases that’s not that hard to do.
In my case, I love engineers, and I love to help engineers succeed, whether they are employees, solopreneurs, or business owners. It’s that passion that has led me to build this blog, start a podcast, and speak to engineers all over. If you have a passion that you believe can be put to work, you really ought to consider starting your own business.
What’s next for you?
Have you ever thought about opening your own shop? What would you do if you started a business? What’s holding you back? For those who are already entrepreneurs, what does your business do? What advice would you give to people who are considering starting their own business?
Please share your thoughts in the comment section below! I promise to read and respond to all of them.