The Potential Drawbacks of Entrepreneurship?

The Potential Drawbacks of Entrepreneurship

Owning a business has many benefits and provides many opportunities; however, anyone planning
to enter the world of entrepreneurship should be aware of its potential drawbacks. Although
operating a successful business has never been easy, 59 percent of small business owners say
running their companies is harder now than it was five years ago. In addition to a soft economy,
entrepreneurs cited difficulty keeping pace with technology and more competition from direct
rivals and large companies as the primary reasons that business is more difficult today.62 Entrepreneurship
is not a suitable career path for the timid. Individuals who prefer the security of a
steady paycheck, a comprehensive benefits package, a two-week paid vacation, and the support
of a corporate staff probably should not go into business for themselves. Some of the disadvantages
of entrepreneurship include the following.

Uncertainty of Income

Opening and running a business provides no guarantee that an entrepreneur will earn enough
money to survive. Although the mean and median incomes for entrepreneurs are higher than
those for employees, so is the variability of entrepreneurs’ incomes. In other words, some entrepreneurs
earn far more through their companies than they could working for someone else, but
other entrepreneurs’ businesses barely earn enough to provide them with an adequate income. In
the early days of a start-up, a business often cannot provide an attractive salary for its owner and
meet all its financial obligations, meaning that the entrepreneur may have to live on savings or a
spouse’s income. The steady income that comes with working for someone else is absent because
the owner is always the last one to be paid.

Risk of Losing Your Entire Investment

investor and entrepreneur 

Business failure can lead to financial ruin for an entrepreneur, and the small business failure rate
is relatively high. According to research by the Bureau of Labor Statistics, 34 percent of new
businesses fail within two years, and 51 percent shut down within five years. Within 10 years,
66 percent of new businesses will have folded.64 Business failure can mean financial ruin for an
entrepreneur. Before “reaching for the golden ring,” entrepreneurs should ask themselves if they
can cope psychologically with the consequences of failure:
● What is the worst that could happen if I open my business and it fails?
● How likely is the worst to happen? (Am I truly prepared to launch my business?)
● What can I do to lower the risk of my business failing?
● If my business were to fail, what is my contingency plan for coping?

Long Hours and Hard Work

Business start-ups usually demand long hours and hard work from their owners. The average
small business owner works 51 hours a week, compared to the 40.2 hours per week the typical
U.S. production employee works.65 Adam Warren, founder of Syinc.tv and Sportyourself,
companies that allows users to incorporate links to retailers’ Web sites for the products that
appear in their online photographs and receive payment when someone purchases a tagged
item, says that his business is nothing like a 9-to-5 job. Warren’s workday typically starts at
6:30 a.m. and does not end until 10 p.m. or later, but Warren does not view it as work. Operating
LO3B.

Historical barriers

Dating back to the time of the medieval guilds in Germany, a craftsperson required special permission to operate as an entrepreneur was the small proof of competence (Kleiner Befähigungsnachweis), which restricted training of apprentices to craftspeople who held a Meister certificate. This institution was introduced in 1908 after a period of so-called freedom of trade (Gewerbefreiheit, introduced in 1871) in the German Reich. However, proof of competence was not required to start a business. In 1935 and in 1953, greater proof of competence was reintroduced (Großer Befähigungsnachweis Kuhlenbeck), which required craftspeople to obtain a Meister apprentice-training certificate before being permitted to set up a new business.

2000s

In 2012, Ambassador-at-Large for Global Women's Issues Melanne Verveer greets participants in an African Women's Entrepreneurship Program at the State Department in Washington, D.C.
In the 2000s, "entrepreneurship" has been extended from its origins in for-profit businesses to include social entrepreneurship, in which business goals are sought alongside social, environmental or humanitarian goals, and even the concept of the political entrepreneur.[according to whom?] Entrepreneurship within an existing firm or large organization has been referred to as intrapreneurship and may include corporate ventures where large entities "spin off" subsidiary organizations.
Entrepreneurs are leaders willing to take risk and exercise initiative, taking advantage of market opportunities by planning, organizing, and deploying resources, often by innovating to create new or improving existing products or services. In the 2000s, the term "entrepreneurship" has been extended to include a specific mindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives, e.g. in the form of social entrepreneurship, political entrepreneurship, or knowledge entrepreneurship.
According to Paul Reynolds, founder of the Global Entrepreneurship Monitor, "by the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers." In recent years, entrepreneurship has been claimed as a major driver of economic growth in both the United States and Western Europe.
Entrepreneurial activities differ substantially depending on the type of organization and creativity involved. Entrepreneurship ranges in scale from solo, part-time projects to large-scale undertakings that involve a team and which may create many jobs. Many "high value" entrepreneurial ventures seek venture capital or angel funding (seed money) in order to raise capital for building and expanding the business. Many organizations exist to support would-be entrepreneurs, including specialized government agencies, business incubators (which may be for-profit, non-profit, or operated by a college or university), science parks, and Non-governmental organizations, which include a range of organizations including not-for-profits, charities, foundations and business advocacy groups (e.g., Chambers of Commerce). Beginning in 2008, an annual "Global Entrepreneurship Week" event aimed at "exposing people to the benefits of entrepreneurship" and getting them to "participate in entrepreneurial-related activities" was launched.Courtesy of wikipedia....