adminI think most people think that entrepreneurs are like Scrooge McDuck. Swimming in money. We read about the success stories. We see the big houses. Expensive cars. Free time. Shiny stuff.
The truth is the opposite. For every successful entrepreneur you see, there are maybe 10, 100, or even 1000 struggling entrepreneurs. First of all, let’s talk about time. Every successful entrepreneur works more than someone on a payroll. There’s not a lot of free time. But there is free time to spend on whatever the entrepreneur wants. And probably, that has something to do with their business.
Making money is not easy either. For every euro that is earned, VAT has to be paid. The cost of goods, gasoline, rent, staff, etc. The government, suppliers, and employees are always paid first before the entrepreneur even sees any money. Then, when they get money, they have to pay more tax.
In reality, net profit (before income tax) for most entrepreneurs is somewhere between 5% and 35%. There are always exceptions, of course. And I bet most entrepreneurs lean towards the lower end, because it’s also very difficult to price your goods or services high enough so that you earn a healthy profit margin. I think employed people underestimate how difficult it is to ask enough for what you offer.
Being employed gives you stability and security (sort of, but that’s a different story). But the income of an employee will always be tied to their time. Do work, get paid. Even doctors, architects, pilots, etcetera are in some sort of way paid hourly. When they sleep, they don’t get paid.
The shiny object that attracts entrepreneurs is the possibility of disconnecting time and income. I can create a website once, and it could possibly generate money for me forever. If I have a webshop, I can generate income while I’m asleep. If I have employees, they an do work for me while I’m on holiday. The goal is that your business keeps on generating revenue while you are doing something totally different.
But to get to that goal, you’ll first have to eat dirt. A lot of dirt. You will have to make time sacrifices. Take risk, be patient, have hope, and work hard. Then, when your product or service is good enough that people are willing to spend money and you have found a business model that gives you a healthy profit margin, it still takes years before you can decouple your input from what you earn.
Most people will say it’s not worth it. But for me, there is no other way. Even if I never reach the goal, the pursuit and building something for my own means the world to me.