Is Starting A Business Safer Than Your Job?

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Source: Lendio

 

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“LAID OFF? DOWNSIZED? LOOKING FOR A CAREER CHANGE? MAYBE THE EMPLOYER YOU’RE LOOKING FOR IS YOU!”
FORD R. MYERS, PRESIDENT, CAREER POTENTIAL, LLC

“TRUE ENTREPRENEURS REDUCE RISK TO THE POINT THAT ACTION BECOMES QUITE LOGICAL.”
JIM BEACH, AUTHOR AND SERIAL ENTREPRENEUR

EMPLOYMENT

  • Unemployment Rate: 9.1%

SELF-EMPLOYMENT

  • 26% of North American workers are self-employed
  • In 2008 on average 2,356 people went into business for themselves every day.
  • Their ventures accounted for 78% of U.S. businesses

WHAT ARE THE OPTIONS?

SELF-EMPLOYMENT
There are only four paths toward business ownership:

  • Start a business from scratch
  • Become a consultant
  • Buy a non-franchise business
  • Buy a franchise (the most secure choice)

Among the fastest-growing industries are:

  • Web search portals (41.2 percent)
  • Internet service providers (16.6 percent)
  • Nail salons (18 percent)
  • Electronic shopping and mail-order houses (12 percent)
  • Recreational vehicle dealers (12.1 percent)
  • Landscaping services (11.1 percent)

WEIGHING THE RISKS | STARTING A BUSINESS

EMPLOYMENT

  • Working for somebody else is like renting an apartment
  • An employee has only one revenue stream (the employer)
  • Job stability is never guaranteed: “one may have no idea that headquarters is considering selling the whole operation”

Out of 15.4 million displaced short- and long-tenured jobs (from 2007 through 2009):

  • 6.9 million workers were displaced from jobs they had held for at least 3 years (long-tenured)
  • 8.5 million persons were displaced from jobs they had held for less than 3 years (short-tenured)

Reemployment figures:

  • 60% of displaced workers were reemployed in January 2008
  • 50% of displaced workers were reemployed in January 2010
  • 31% of the re-employed’s jobs end in less than a year
  • 65% percent of the re-employed’s jobs end in fewer than 5 years

SELF-EMPLOYMENT

  • Working for yourself is like owning your home
  • The self-employed has potentially several revenue streams (clients, product lines, business offshoots, etc.)
  • With X number of clients a self-employed person could lose Y number of clients and still have a stable business
  • 35% of new businesses that have at least one employee, last for two years (business may have been profitable at the time the doors were closed)
  • 35% of new businesses that have at least one employee last for five years
  • Non-franchised businesses are closed within 6 years
  • Non-franchised business start-ups have a 62% failure rate
  • Franchises are still in operation after 10 years
  • Franchises have a 90% success rate

To reduce risk:

  • Before you quit your job, make sure you have at least three months of “security money” for personal bills
  • Securing first clients before leaving old job
  • Do what you can afford with your own money
  • Use other people’s money

INCOME

SELF-EMPLOYMENT

  • Slow annual earnings growth for the first few years grow faster after a critical number of years
  • With a franchise, the time frame to reach profitability is shorter than it would be with a non-franchised business
  • Your reward is more proportional to your effort. You contact with the market directly so any extra value you provide is more likely to be rewarded

EMPLOYMENT

  • Data from the 2008 Current Population Survey indicate that the median earnings of the wage-employed are $26 per year lower than the median earnings of the self-employed ($30,986 versus $31,012)
  • When you are in a corporate environment, providing twice as much value doesn’t necessarily mean getting twice as much reward

AGE

SELF-EMPLOYMENT | STARTING A BUSINESS
No matter your age, no matter your experience, you can be a successful entrepreneur if you have a good idea and are willing to put in the work to make your business a success

Unincorporated Self-Employed by age (2009)

      16 to 19 years ……………………………… .8 %

 

      20 to 24 years ……………………………… 2.7 %

 

      25 to 34 years ……………………………… 13.9 %

 

      35 to 44 years ……………………………… 21.9 %

 

      45 to 54 years ……………………………… 28.0 %

 

      55 to 64 years ……………………………… 21.4 %

 

    65 years and older ……………………… 11.3 %

Incorporated Self-Employed

      16 to 19 years ……………………………… .1 %

 

      20 to 24 years ……………………………… .9 %

 

      25 to 34 years ……………………………… 13.6 %

 

      35 to 44 years ……………………………… 23.5 %

 

      45 to 54 years ……………………………… 32.7 %

 

      55 to 64 years ……………………………… 23.8 %

 

    65 years and older ……………………… 8.6 %
  • Self-employed workers tend to stay in the labor force longer than wage-and-salary workers
  • More wage-and-salary workers switch into self-employment later in life than vice versa

EMPLOYMENT

  • while 16 is the minimum age for most non-farm work, minors aged 14 and 15 may work outside of school hours in certain occupations under certain conditions
  • Older job seekers are having a significantly harder time reentering the workforce than younger adults

GOVERNMENT PROGRAMS

SELF-EMPLOYMENT

  • Self-employment allowances are the same weekly amounts as the worker’s regular unemployment insurance benefits
  • Participants work full-time on starting their business instead of looking for wage and salary jobs
  • There are programs to encourage entrepreneurship. In many instances, these programs target economically disadvantaged demographic groups.
  • One third of program assisted businesses are short lived, typically one year
  • Programs aimed at the long-term unemployed, usually established in periods when the economy is strong are effective
  • Some economically disadvantaged demographic groups’ prospects in the labor market are lackluster
  • Training programs should not be used as a panacea for reducing unemployment–it usually doesn’t work, especially if the economy is not growing

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