Employment vs Entrepreneurship
by Kofi Annan, VCCS
Many of you on your way out of the military, or even those of you who have transitioned a while ago may be considering entrepreneurship instead of employment. This thought is common for transitioning veterans. One reason is possibly related to the fact that after years of submitting to a pretty restrictive lifestyle, veterans often feel drawn to alternatives careers and lifestyles that allow them more freedom where they don’t have to take orders from anyone....or so they hope. Being a veteran and a bit of a serial entrepreneur myself, I wouldn’t dare discourage any fellow veteran from pursuing entrepreneurship. You definitely have more control, and sense of achievement by running your own business. And very few people get rich working for others, so there's potentially more financial upside. Still, there are pluses and minuses to entrepreneurship, and failure to consider the minuses prior to making the leap can lead to frustration or worse down the road.
The biggest change is you need to be prepared to wear many hats - all the hats if you’re going at it alone. You may be thinking to yourself, “I’ve worn multiple hats in the past. I juggled multiple additional duties while serving.” But creating and running a business is a whole different world that could make your additional duties look easy.” When you have a job, you generally wear one hat. If your are a mechanic, you fix cars then you go home. But if you own your own mechanic shop, first of all you have to design your business plan, find funding sources, find suppliers, hire assistants, design and implement a marketing strategy to generate new business, deal with customers, managing your website, keep records up to date, pay bills, re-evaluating your business model and make adjustments, and still fix cars.
Even if you’re creating a business in a line of work that you're intimately familiar with, turning that know-how into a business is a whole different deal altogether. Being skilled in a trade is not the same as being skilled in creating a business or running it. Your neighborhood burger joint for instance did not become successful because of the people flipping the burgers in the back. It took organization, vision, marketing, budgeting, distribution, management, customer service, human resources skills, and oh yes, you need to know how to make a decent burger. Take McDonald’s for example. I like McDonald’s every now and again, but most would agree that they don’t make the best burgers, yet they continue to be the leading fast food restaurant globally. That’s because all the other components of the business are strong enough to propel the engine despite its product being arguably inferior to some of its competitors.
The second thing to be aware of is that entrepreneurship is inherently unpredictable. Do not take the peace of mind you get from knowing when your next paycheck will arrive for granted. Sounds obvious right? But this is a hard lesson to learn when your personal bills start stacking up. Things change all the time, and until you’ve been in business for a few years you just never know what the next quarter or month will bring. If you’re uncomfortable with risk and uncertainty, owning your own business is not for you. Even if you’ve been in business for a few years the uncertainty remains, and may even get worse in some cases. As you get started even if everything works according to plan you’re probably going to look to expand and adjust to accommodate increased demand or improve efficiency. These adjustments come with additional investments and increased risk. My wife and I decided to expand our services in our third year to offer more services. That required re-investing in our website, getting new certifications and bring on additional contractors. However, for the first nine months after the changes we actually lost 90 percent of our web traffic and took a major hit in revenue. We failed to anticipate the lost traffic. Luckily we were able to recover, but this type of hit could be fatal for some. The other lesson we had to learn was that our business was cyclical - it booms in the first calendar quarter, slows down in the second, and picks up mid-way through the third and into the fourth, and and tails off by the time the holidays roll around. It took us a couple years of tracking sales data to recognize the pattern and plan accordingly.
That’s not to say that employment does not come with risk, because companies lay people off all the time, or you may start a job and decide you hate it a few months later; but so long as you're employed you’re guaranteed to get your paycheck on schedule. The same cannot be said about running your own business. As an employee you don’t have to worry about these types of cycles. For the most part, regardless of the cycle your check will be the same and on time.
That’s the negative. The positive is that these things are not insurmountable. The keys are research, flexibility, and commitment - in that order. The worst possible thing you can do starting out is to...well simply start out. Do not spend a dime on anything before putting pen to paper. If you do spend a money, let it be on business planning software or books. Research your industry, your market, your customers, your location, your expenses, and use these results to estimate your sales. Being flexible is also imperative to success. No matter how much you research you will never anticipate everything, so you must remain poised to make adjustments as you go. Revisiting your business plan and making necessary adjustments will be necessary. Lastly, stay committed. There will be rough periods, there will periods that test your patience, your wallet, and maybe even your self confidence. Anticipate these moments and be emotionally ready to do battle with the little voice in your head telling you to quit.
Need help deciding your path? We can help.
Visit the Veteran Entrepreneurship Portal for more resources and assistance.