How much is NOT starting your business REALLY costing you long term? (interactive infographic)

If you’ve ever wondered how much money and happiness you’re missing out on by not starting your own business, I made this KICK-ASS infographic to show you.

Everything in the infographic is interactive. Pretty cool!!


Sources:

  • http://blogs.reuters.com/david-cay-johnston/2011/10/19/first-look-at-us-pay-data-its-awful/
  • http://www.ehow.com/info_7908995_salary-range-entrepreneur.html
  • http://link.springer.com/article/10.1007%2Fs11187-011-9413-9
  • http://en.wikipedia.org/wiki/Personal_income_in_the_United_States#Personal_income_and_disposable_personal_income
  • http://ideas.repec.org/p/dgr/unumer/2012013.html
  • http://www.economist.com/node/17929057
  • http://unu.edu/publications/articles/happiness-and-entrepreneurship-new-research-insights.html

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17 comments
Akos_Fintor
Akos_Fintor

I love this infographics 

 

Well....I think it (stating your own online business)  boils down to linking more pain and more pleasure to start it then NOT start it. 

if you have enough reasons to do so you will jump into it, if not you won't . 

 

best

Akos Fintor

DanCristo
DanCristo

Hey dude, I get a weird error when I try to read the infographic. Says, "This infographic has not been made public by its author." Any idea?

EmilieHardie
EmilieHardie

The stats are not representative for the self-employed and are severely skewed, for two reasons.

 

1) If a self-owned business goes bust, the self-employed owner will them almost certainly go work for another company, removing the worst earners from the self-employed stats

 

2) Some self-employed businessmen make a boatload of money and this skews the numbers even higher

 

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Also, of course starting a business yourself is riskier than being employed by somebody else since there is nobody giving you sick days, guaranteeing your retirement funds, providing an established and (hopefully) proven way of doing things. And that's without addressing the issue of the loans that need to be taken out to fund the creation of a business.

 

Put simply, the risk of starting a business is NOT confined only to the actual salary.

 

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As an Australian, let me tell you that there being more millionaires than us is not all that difficult. There are cities with more population than the whole of Australia. Also, Australia is not a continent. It's the largest landmass on the Australasian continental shelf, which also includes the islands of the Torres Straight, New Guinea and (possibly, according to which academic you ask) Timor. These other islands have significantly less landmass but still constitute about a third of the continent's total population, so they're hardly insignificant.

 

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"A positive correlation between an entrepreneurial society"? First off that quote is not from the article you cited but from another paper. Perhaps it would have been more credible if you had cited the actual author.

 

, you have neglected to note the two caveats:

 

"First, the results refer to the entrepreneurs and the employed on average. Entrepreneurs are a heterogeneous group. Joachim Merz and Tim Rathjen presented a paper based on the German Socio-Economic Panel which finds that even though poor entrepreneurs may earn incomes above the (income) poverty line, they are often still poor in other dimensions of well-being, such as time – i.e., entrepreneurs are often “time-poor” compared to the employed.

 

"Second, economic cycles impact negatively on entrepreneurs’ happiness. In their paper, José María Millán and co-authors find that although entrepreneurs are more satisfied with their jobs in terms of the type of work they do, they tend to be less satisfied with respect to the security it affords. This may be particularly troublesome during economic downswings, such as during the current economic malaise in Western economies." - http://unu.edu/publications/articles/happiness-and-entrepreneurship-new-research-insights.html

 

Then the article goes on to note: "According to the International Herald Tribune, there has been a significant rise in suicides amongst entrepreneurs in European countries most affected by the economic crisis." And finally concludes: "For increasing national happiness, the policy prescriptions for labour market reform and human resource management are clear: Employees should be treated more like entrepreneurs, and entrepreneurs more like employees."

 

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"The numbers show that if you want to do meaningful work" and "Data shows that not only are the self-employed". What numbers, what data? If it's the same as the numbers at the top of the infographic (also not directly sourced, making it difficult to tell where each bit of information came from), there problem's of the skewed natured of the data remain.

 

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Looking at your sources, links to ehow.com and wikipedia severely damage the credibility of the post. For goodness sake, even high school students know that wikipedia isn't an appropriate sources

 

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All in all, perhaps you should try doing more diligence in your research if you want to have enough credibility for people to want to take your course. After all, if it has the same amount of research put in, what kind of benefit could it possible have?

 

Rich20Something
Rich20Something moderator

 @Akos_Fintor Agreed, Akos! Tony Robbins used to talk about that a lot - we are motivated by pleasure and pain. Oftentimes, pain is stronger. It's more powerful to run away from something you don't want than to run towards something you do want. So what do we do about that? The best solution I can think of is linking PAIN to what will happen if you don't pursue your dream rather than simply thinking about how nice it would be to get started. Really get mad about your self sabotage. Get angry at yourself, then get going!!

danielghebert
danielghebert

 @EmilieHardie @Rich20Something I think there's an underlying thought that's missing from this debate - when you're "working" for a company, you're essentially working for an entrepreneur. That entrepreneur can fail, and then everyone loses their job. If it wasn't for entrepreneurs, nobody would ever have "work". Someone, at some point, started the company that you're working at. They took the risk, and got the reward.

 

So what would you rather have? Complete control over the actions that you're taking, or work for someone else's actions?

 

The risk is the same wether you're self-employed, or work for someone else - the person that controls the risk is different. Entrepreneurs take that risk in their own hands, but employees leave that risk in the CEO's hands. Which one would you rather have?

Shane D
Shane D

 @EmilieHardie Isn't saying that failed businesses aren't being taken into account like saying that employees who have lost their jobs aren't being taken into account? Some employees lose their job and need to find a new one, some entrepreneurs fail and need to restart.

 

I think Daniel's right here, it's not like all your eggs need to be in one basket. 

 

Many business owners have many streams of income. Just like an employee would (presumably) build up job security as time goes on and they become more established, a business owner would build up a diversified income as they become more established. This doesn't even necessarily mean running multiple businesses, and there are many ways to do this.

 

MacDonalds, for example, is sitting on billions of dollars worth of real estate at prime locations all over the world ... and they've financed that real estate empire by serving fast food. If everyone stopped eating fast food there's a backup plan in place. Simply tear down the restaurants and build whatever else there. Or sell it.

 

An employee has no choice but to put a part of their pay check into a retirement fund. A business owner could do the same – put part of their income towards retirement. They could invest it elsewhere if they choose, sure, or spend it, but that would be equivalent to an employee taking a job with no retirement plan. It's not like employees get magic bonus retirement money ... it's their own money being set aside. Same with health care and all the other perks. The business owner has more choice regarding which perks they purchase, not fewer perks.

 

I had always thought that losing a job was one of the main things that spurred people on to commit suicide?

 

I will agree with you however that being an employee is better for naturally anxious people. Running a business is certainly stressful, as there are many highs and lows. These are typically rather minor (especially as income diversifies and the businesses becomes more established) but stressful nonetheless. I find even when times are good it's even easy to worry that things won't last. I personally enjoy it – I find it adds excitement and makes being passionate a default state. 

 

Being self-employed isn't for everyone. I doubt you'd find anyone arguing that.

 

However, while being an employee is less stressful ... it can sadly be a false sense of security. While a business owner will have many highs and lows, and perhaps even quite the mishmash of total failures and wild successes, they become accustomed to this, and thus extremely versatile. Handling these issues becomes a skill set that business owners are extremely proficient at. If they go bust they can build up another – they have that ability, and it's well practiced. An employee often rides out a career over decades without any stress ... but if that company downsizes or fails (businesses do fail, after all, as you've pointed out) then it can be extremely difficult to find a comparable job, especially if you've failed to build up useful skills ... or you're all of a sudden an oldie competing against young guns who are willing to work harder (more energy), longer (no family) and for less money (fewer bills to pay). 

 

^ My nine cents.

 

 

 

Rich20Something
Rich20Something moderator

@EmilieHardie

Emilie,

 

Thank you for taking the time to read. I'd like to answer all your questions/comments directly.

 

1) "If a self-owned business goes bust, the self-employed owner will them almost certainly go work for another company, removing the worst earners from the self-employed stats" 

 

Perhaps, but you're most likely neglecting the rank of serial entrepreneurs who have more than one iron in the fire, those who have made and saved enough money to "coast" until they are able to reboot. Entrepreneurs who do  things the right way often fall into one of these this category.

 

2.) "Some self-employed businessmen make a boatload of money and this skews the numbers even higher"

 

The incomes I cited were not averages, they were medians...meaning half make higher and half make lower, so this is representative of the middle income group. Medians are not skewed by outliers.

 

3.) "Also, of course starting a business yourself is riskier than being employed by somebody else since there is nobody giving you sick days, guaranteeing your retirement funds, providing an established and (hopefully) proven way of doing things. And that's without addressing the issue of the loans that need to be taken out to fund the creation of a business."

 

This is a matter of opinion and personal value rather than fact. My website is Rich20Something, so clearly the audience is a younger demographic and while we should be diligent, getting things like sick days, retirement funds and 'established practices' from a company are not the highest on our priority list. We know that if we work hard, we can get these things ourselves and do not need a company to provide them for us (see the header of the homepage, above the fold "give your 9 to 5 the finger").

 

Loans? What loans? I understand that you probably just saw the link and clicked, but within the context of the site, that comment doesn't make sense. Rich20Something is focused on digital entrepreneurship - which takes zero capital in most cases. And as far as brick and mortar goes, banks tend not to be lending much anyway (at least in the U.S.), so that's a moot point. There are dozens of ways to get money to start a business without a loan, even a physical storefront. It just takes a little creativity. Loans are the old way of thinking.

 

4.) "As an Australian, let me tell you that there being more millionaires than us is not all that difficult. There are cities with more population than the whole of Australia. Also, Australia is not a continent. It's the largest landmass on the Australasian continental shelf, which also includes the islands of the Torres Straight, New Guinea and (possibly, according to which academic you ask) Timor. These other islands have significantly less landmass but still constitute about a third of the continent's total population, so they're hardly insignificant."

 

Thanks for clarifying the geography. The economist article simply states "Australia", so I'm not sure whether they were referring to mainland Australia or the entire continental shelf. I'm assuming they just meant mainland. Either way, I don't really see why that would matter. The point is that there are over 24 million millionaires in the world, which is quite a few. Enough that it fills up an entire landmass where people live. The idea is to change perspective on what's possible by realizing that an ENORMOUS amount of people have already accomplished this seemingly impossible task. I did learn something though about the continental shelf. Thanks for that!

 

5.) "A positive correlation between an entrepreneurial society"? First off that quote is not from the article you cited but from another paper. Perhaps it would have been more credible if you had cited the actual author."

 

You're right, I will go back and add the original article. The article sourced after my illustration is the actual study, written by the SAME researcher (Wim Naudé,) that conducted the study. The article quoted is an editorial piece based on the credible research, which was cited.  

 

6.) "First, the results refer to the entrepreneurs and the employed on average. Entrepreneurs are a heterogeneous group. Joachim Merz and Tim Rathjen presented a paper based on the German Socio-Economic Panel which finds that even though poor entrepreneurs may earn incomes above the (income) poverty line, they are often still poor in other dimensions of well-being, such as time – i.e., entrepreneurs are often “time-poor” compared to the employed."

 

Time management is outside the scope of the infographic. I never said you wouldn't have to work hard!

 

Rich20Something
Rich20Something moderator

 @danielghebert  @EmilieHardie Precisely, Daniel (great name, by the way!). Thanks for contributing to the community!

 

My thoughts are: you wake up in the morning and you have two choices, work to build your dreams or work to build someone else's dreams. Now, there are scenarios where your dreams can align with someone else's and being employed is tolerable. But the minute you feel like you can't fulfill your dreams because you're too busy attending to another's...that's the clear sign that it's time to move on.

 

Moving on takes courage.

Rich20Something
Rich20Something moderator

 @Shane D  @EmilieHardie Thanks for jumping in, Shane. LOL at "nine cents". To keep it (relatively) brief, I couldn't agree more. Entrepreneurship is a mindset, and if it's right for you, it's probably the only way. 

 

"I find even when times are good it's even easy to worry that things won't last. I personally enjoy it – I find it adds excitement and makes being passionate a default state. "

 

This is a driving force for me. I actually thrive off uncertainty, but I can understand how for many people that would be the worst possible circumstance. It's human nature to want security, but for me, with too much "forced" security comes boredom and ultimately, death. Contrary to popular belief entrepreneurs ARE actually quite calculated and risk averse. There is a difference between being calculated/risk averse and not willing to risk anything at all (like many corporate drones).

 

With these things in mind we can make decisions that more often than not land us in better situations than if we were traditionally employed. The idea is that while being self-employed doesn't absolutely GUARANTEE any level of success, by its very nature it affords more opportunity and potential for growth (as the correctly cited statistics confirm ;p)

 

Thanks for the feedback! Let's keep it going everyone!

 

DD

Rich20Something
Rich20Something moderator

@EmilieHardie

 

 

7.) "Second, economic cycles impact negatively on entrepreneurs’ happiness. In their paper, José María Millán and co-authors find that although entrepreneurs are more satisfied with their jobs in terms of the type of work they do, they tend to be less satisfied with respect to the security it affords. This may be particularly troublesome during economic downswings, such as during the current economic malaise in Western economies."

 

This is a pretty general statement. During an economic downturn, both the "wage-earning" and self-employed person will be dissatisfied with job security. That's the nature of a downturn, isn't it? The point is that they are happier with the work that they DO have. Nobody is happy when there's no work. Within the context of the article I only stated that there is a higher potential for lifetime earnings and that on the whole, the self-employed are happier with their work. Security is affected by many outside sources.

 

8.) Then the article goes on to note: "According to the International Herald Tribune, there has been a significant rise in suicides amongst entrepreneurs in European countries most affected by the economic crisis." And finally concludes: "For increasing national happiness, the policy prescriptions for labour market reform and human resource management are clear: Employees should be treated more like entrepreneurs, and entrepreneurs more like employees."

 

What is considered significant? The article does not state. Often, even very small increases are extremely significant statistically but quite tiny in actuality. The difference between 0 and 1 is huge. That's "nothing" to "something". The difference between 1 and 2 is huge, that's double. So if there were very low rates of suicide in the entrepreneurial class before, and now there are some...that will be significant. And although the article doesn't state, I'm sure there were identical correlations in wage-worker classes (I'm willing to bet higher even).

 

9.) "The numbers show that if you want to do meaningful work" and "Data shows that not only are the self-employed". What numbers, what data? If it's the same as the numbers at the top of the infographic (also not directly sourced, making it difficult to tell where each bit of information came from), there problem's of the skewed natured of the data remain."

 

Yes. Hopefully I've resolved the skew issues.

 

10.) "Looking at your sources, links to ehow.com and wikipedia severely damage the credibility of the post. For goodness sake, even high school students know that wikipedia isn't an appropriate sources."

 

Severely damage? That's a little extreme. And even Wikipedia is cited. That being said, they are only 2 of 6 sources, and were merely ancillary sources. I will add the other source that the paper references though. Good catch!

 

11.) "All in all, perhaps you should try doing more diligence in your research if you want to have enough credibility for people to want to take your course. After all, if it has the same amount of research put in, what kind of benefit could it possible have?"

 

Due diligence was taken, as seen above. As for the course, it is for 20-somethings looking to get a firm understanding of the building blocks behind creating a digital business -- which is has nothing to do with me mistaking mainland Australia for the Australasia continental shelf. Within the context of the site and the sources provided, everything in the infographic was accurate.

 

Thanks for your feedback :)

 

marksworn1
marksworn1

 @Rich20Something  @danielghebert  @EmilieHardie 

You can spend hours ripping it to shreds for accuracy, references etc. OR you can take the data with a pinch of salt, filter out the strong positive message and use it to move forward...

 

Up to you which one you feel is a better use of your time...

danielghebert
danielghebert

 @Rich20Something  I agree. I for one, am pretty lucky. I started working at a startup (www.innetwork.net) in October. I was the first person they hired (we were a team of four til late january, where we hired another team member). I got in very early, with a lot of responsibilities. I feel like I'm playing an important role in the company, because I'm so early on.

 

On the other hand, I also have my startup (www.steamfeed.com) with co-founder DJ that I work on weekends and evenings. I'm doing both, and loving both, because it's in the startup world.

 

If I were to work in a large corporation, I would have a limited amount of tasks, and it's very hard to work up the ladder. There's no way an org with 100+ employees would let me write up their digital strategy and marketing budget, help out with product development, and so on. Startup life is where it's at, whether you work at a startup or have one. You get a lot more in return.