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Rajnish SharmaTop Contributor
Content Creator || Android App Developer
Asked a question 3 years ago

Why would some people choose to be employees rather than entrepreneurs?

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Rajnish SharmaTop Contributor
Content Creator || Android App Developer

You might turn the question around and ask why anyone would want to be an entrepreneur. The explanation lies in understanding the personality traits of entrepreneurs (the few) that differ from those of employees (the many).

Being an entrepreneur is hard, it's stressful, it takes up almost 100% of your time-energy-life, and is risky to the point of being more likely to lead to failure than success. And you'll probably tell yourself that, for the good of the company, you'll pay yourself just enough to survive.

Few people can thrive on that kind of risky living, even with the possibility of potentially huge returns (and majority ownership of it). Some can't fathom the idea of working for someone else, so turn to entrepreneurship as the only route they can handle.

Then, you have the "everybody else." For those, the principal of risk aversion helps elucidate the reasons someone would choose to be an employee over being an entrepreneur. Roughly speaking, people feel loss about twice as heavily as they feel success. For example, if you lost $1,000 in the stock market on a given day, you would feel as bad as you would feel good if you won $2,000.

Many people have rich lives outside of work. Hobbies, social scenes, etc. they get off work, turn off work in their head, go do their fun stuff, and know their paycheck when deposited will cover all their bills. They don’t worry, they sleep at night.

Entrepreneurs never turn off work in their heads. They think about work at night, on the weekend, when on vacation. And entrepreneurs know, every minute of every day, that their entire business is one bad decision away from bankruptcy, all their employees could become jobless, and they risk personal financial ruin. And yet, they still have to sleep at night.

For most people the 24x7 responsibility of being an entrepreneur is way too much.

Thank you.