This is a second part of the post titled as: how much risk can you tolerate. If you didn’t read the first part, it is better to go to that post and read it because we will continue here.
In the first part, we talk about any possible risks that exist for you as a would-be entrepreneur or potential entrepreneur. In the end, we finally come with some concrete numbers about possible earning for you as a would-be entrepreneur and the potential of your current earnings for the next 10 years.
The calculation was that you can earn $147.500 more if you start your own business. This result leads to a logical conclusion for you to start a business because you will earn more money when you start a business and at the same time you will be your own boss.
Risk Calculation: Is it the same as the corporate job?
Before we continue with the calculations, I would like to make some comparisons between your current job and your future activities as an entrepreneur.
- When you work for some company everything that you need from paper and pencils to the toilet paper you will receive from a supply department. There are persons which job is to make the best possible working conditions for you. However, in your own business, especially in the startup levels you are the only person that must provide everything that your business will need for normal everyday operations. Because of that if you plan that you will work on innovative things in your business, forget it. You will need to add an additional hour daily for supplying your business with all necessary things.
- When I was working for the corporation every morning and noon, I have received a coffee from the colleagues whose job was to make and distribute a coffee for all of us. When I start my own business, especially in the first days of the job of making a coffee was mine and only mine responsibility.
- When you work in the corporation for all your business trips there is a department that prepares documents as tickets, hotel reservations, visas… When you are your own boss, in most cases you will be responsible to accomplish all of these tasks when you need to go on a business trip.
These are only three possible cases and comparisons about some tasks for you when you become your own boss. But, in the reality, there are many more tasks than this.
What does this mean for you? This means that you will need to increase your working time for several hours more. With more responsibilities, there is a need for more time investments from your side.
Let’s continue with the numbers to calculate the risk
Let’s say that you work 2000 hours in one year in your current corporate job. For ten years, you will have 20.000 working hours. If we continue with the earnings from the first part of this post that was $500.000 for ten years you will be paid $25 for an hour.
In the same example, your business will earn you in the next ten years $647.500. If these additional activities for you add you only eight hours more weekly that is 416 hours more on an annual level. For ten years you will need to work 24.160 hours for your business. In such a case, you will earn $26 for an hour.
This example, tells you that on an hourly basis you will earn $1 more with your own business.
Now, what you think is it worth to start your own business?
You will earn more money, but you will need to invest much more in your effort to earn more money.
This is only an example. But, the important thing is that you need to make your own calculations when you decide about starting your own company or stay at your current job.
There are also examples of entrepreneurs who succeed to manage their business on the right way. In such a way that their business work for them. These entrepreneurs don’t work for their business. However, this is only a small portion of cases in reality.
Question: What’re your calculations? Can you share with us your own entrepreneurial experience?