Entrepreneurship, like investing, is more like a fleet of vehicles than a single opportunity. Before we explore the different vehicles, let’s look at some of the reasons you might be considering this particular option. Consider the following questions:
- Do you identify with being an entrepreneur? Do you have an entrepreneurial itch?
- If you desire to be an entrepreneur, what is driving that motivation?
- Are you so disenchanted with your job that striking out on your own feels like it is the right thing to do?
- Have you always had the desire to be your own boss?
- Or do you have an idea that is haunting you and keeping you up at night—a product or service that you wish to bring to the marketplace?
We ask you these questions because it’s important to know your motivation. The truth is that sometimes people leap into entrepreneurship with the wrong mindset or unrealistic expectations.
According to Michael Gerber, author of E-Myth, “The excitement of independence associated with getting rid of the boss is almost always fueled by a flawed understanding of what being on your own means. Most small businesses are started by technicians rather than by true entrepreneurs.”(24) The technician believes in the fatal assumption that because he or she knows how to do the work—whether graphic design, engineering, cooking a great dinner, repairing an automobile, snowboarding, or otherwise—they can turn that capability into a business that frees them from the boss. The graphic designer creates a graphic design business. The technologist creates a technology-based business. The cook creates a restaurant. The mechanic creates an auto repair business. The snowboarder creates a snowboarding business.
But instead of freeing themselves from the boss, they have become their own boss, and they’re now—with absolutely no understanding about how it happened—working for a lunatic and doing what they know how to do but in greater volume than before.(25)
Some people leap without understanding the scope of the decision. Others, who may desire to leave the job market, may refuse to make the leap because they do not see themselves as entrepreneurial. They don’t feel bold enough or creative enough. Even if they have a rough idea for a business, the risks of failure seem too high. Because they do not identify with being an entrepreneur, they think they just need to deal with the devil they know (the job market), rather than the one they don’t (business ownership).
Granted, as with all vehicles, business ownership has inherent risks. But just as not all jobs are bad, nor are all investments exceptionally risky, not all business formats are created equally. And you don’t necessarily need to identify with being an entrepreneur to be a successful business owner.
Let’s explore some of the different business ownership formats in more detail.