Owning A Business Can Be Worse Than A Job

I have a problem with all these “Get Rich” books. They lie. They routinely say, “Working for other people is not the path to wealth” and owning your own business lets you “Do things your way”

What a bunch of crap.

I’ve run into so many people young and old who simply say, “I want to own my own business some day”. Have they really thought about this?

Have these people seen what owning a business is REALLY like? It’s not for everyone. People see certain wealthy people with businesses and see their luxurious lifestyle, but they don’t see what the majority of business owners live like. There are over 22,659,000 businesses out there, not all of them have founders that live like royalty.

Some reasons why people want to run their own business:
1.) Freedom to do what you want, when you want.
2.) Loads of cash.
3.) Ability to choose which days you work.
4.) Choose who you work with.

It’s time to shatter some dreams. I want to share some of the less glamorous examples of business owners I have seen:

Business 1:
Mr. X was successful in the corporate and business world. He wanted a new venture so he invested in a large franchise chain. He bought the land, made preparations and opened shop. The store was a big success, land value skyrocketed and the money was flowing in. Then he sold it because he hated it so much. He had to deal with his employees who would constantly steal, outrageously obnoxious customers, very long hours, sexual harassment cases caused by employees, and tons of paper work and a boatload of accounting. If he wasn’t there, there store would probably fall apart.

Business 2:
Mr. B opened up a franchise restaurant. Money is good with the three stores he owns, but he is constantly looking for new employees, dealing with landlords, having to suffer bad months where weather effects sales, bad years where the economy is down. Mr. B has a pretty average lifestyle yet a large amount of responsibility with his three stores. He spends a lot more than 9-5 working at his stores. He could easily live the same styled life if he and his wife both worked. So instead of a regular 9-5 job, he has a 24/7 job with lots of stress and unpredictability.

Business 3:
An asian friend of mine owns with his family 2 successful gas stations. In his 20+ years of life, he has NEVER taken a single vacation with his entire family at the same time. His parents have not missed one day of attending their stores in 15 years. Enough said. He drives a pretty fancy car…and you know the only place he drives it? From home to his gas station and back.

Business 4:
On a trip to a football game in Dallas, we stayed at a medium sized hotel. The entire family worked AND lived there with no additional employees. The dad was the check-in host, the mom and daughter were the maids, the grandmother cleaned and the son did the janitorial work. We saw them all everyday for 3 days.


So, with a business you may STILL have to:
1.) Work very long and unpredicatable hours.
2.) Accept low income at times.
3.) Skip out to attend to your business.
4.) Deal with assholes.

I ALSO happen know some people with very handsomely paying jobs. These people go to work from 9-5 and they are DONE. They save and invest wisely and are financially independent…sometimes fiscally better off than their business-owning friends.

So before you make a generic statement like “I want to own a business,” think about it first. It’s not for everyone.

Blog posted on: May 17, 2005

33 comments on “Owning A Business Can Be Worse Than A Job

  1. Anonymous

    Sounds like you are frustrated. The key to owning a business is passive income. I’m sure you’ve read Robert Kiyosaki and he is spot on (although it isn’t as easy as he says it is). You want to put yourself in a position where your money makes more money. One thing I noticed about the examples you gave are that those business owners were also acting as managers/employees. If they had thought things out, they could have paid someone else to do that part of the work and focus on new businesses. You want to generate money, not work for it. I know, personally, I am getting closer and closer to my businesses really taking off, then I can cut back on work because my income is primarily passive. Keep on plugging away and good luck.

  2. Michael

    Excellent points, Neville.

    It is true that simply being a business-owner is not the Gold-Paved Patch that so many people assume it to be. Creating the above-mentioned “passive income” is key … but it is not easily done, either.

    As with so many other things, in business ownership, it’s good to be good, but better to be lucky.

  3. Cap

    here’s something I found on google answer percentage of new businesses that fails

    I always seem to read different numbers too. regardless, its definitely not for everyone.

    a key point I believe.. is to exactly create one where you can turn it into a franchise, or at least a small business with a set of system that’s easily duplicated by anyone. create and build a business that someone would WANT to buy or invest in.

    like mentioned, its so easy to say that than actually doing it.

    eh. there’s no easy way to wealth, whether from your own venture or a 9-5 job.

  4. Anonymous

    I work for a company and I’m starting my own business. The only time I don’t WORKKKKKKKKKKKK or THINK about WORK is when I eat or sleep (and I don’t get much sleep). I love every second of it. You have to dedicate your life to it. It’s not even about “HOURS”, it’s all about RESULTS. And trust me, it’s worth it.

  5. Anonymous

    Robert Kiyosaki is a fraud and a loser who sells pop culture personal finance to the ignorant masses.


    “Passive income” is what it’s all about, but that idea was around for a long time before Kowalski hyped it up. Keep in mind that passive income doesn’t have to come from a direct investment in a business or real estate – you can get dividends from mutual funds or bond funds.

  6. Anonymous

    Your examples are all retail. Retail is one of the toughest biz to start. In addition, franchasing is not a totally independent venture. While I understand the point you are trying to make, your post is almost as flawed in its analysis as those that say that owning biz is easy. Some folks get rich working but most people that gained financial independence are working for themselves in some way. Most people I know that have or had their businesses have worked hard for few years but now they enjoy real freedom. That is the trade off. Some biz owners do not know how to “let go”.
    My “personal” sampling maybe flawed as well. Many biz fail and most biz owners fail at least once (I know I did). Running a business is not for everyone and it is not easy otherwise everyone would be doing it. I agree with the posts about passive income.

  7. jim

    That site by John Reed is awesome, I found it a little while back and it’s great what he finds out about “RE gurus”.

    While passive income is the key, you have to be operating your business because you like/love it. Doing it just for the check just makes it another job.

  8. Neville

    I do realize this post was a bit one sided. I was hoping people knew that I myself love business, and know it can be a lot better than the examples presented.

    BUT…it brought attention to the not-so-glam side of business which is mostly overlooked.

    While I enjoyed reading Rich Dad, Poor Dad….I always took it with a grain of salt. These books teach people to go after money and not success (which in turn creates money). They make lazy people think they too have hope of sitting on a beach in Bermuda sipping a Mohito by doing nothing.

    But hey…he’s sold who-knows how many copies of his book, so good for him!

    Cap, good article link. Those Google Guys really do their homework!

  9. Anonymous

    Great post Neville. I’m sure it’s been recommended to you already (and you’ve probably read it to), but the best book I’ve ever read on starting and running a small business is The E-Myth. Mentions a lot of the same issues you posted about.


    That other college guy with a business or two. =)

  10. Quant Trader

    You forgot to mention one of the biggest drawbacks to owning your own business…lack of security. An example of how this affects my own life: Some of my friends who have an idea of how much money I make wonder why I don’t move out of my shitty little apartment by the beach. Why don’t I buy a house, a condo, or at least move into a nicer apartment? Why not a nicer car?

    Lack of security is the reason. (Also I like living by the beach.) See my friends can go ahead and buy houses to live in. They get hooked up with an ARM, and put very little money down to secure it. Payments are more than 50% to 60% of their after tax income. They have secure jobs though, so they know they can spend most of their money on a place to live.

    The possibility that one month they won’t get a paycheck because unexpected expenses come up doesn’t exist. They have 401K plans where their employers match their contributions so they don’t even have to get very good returns on their investments. Some even have defined benefit pension plans. In 5 years when that ARM adjusts for the fist time, if the payments go up…well they know that between now and then they’ll have recieved once a year raises 5 times,
    and still be able to make the mortgage payments.

    For me though I know it’s unlikely my business will be around 10 or 15 years from now, so even though I make a lot more money than most of my friends, I couldn’t imagine spending 50+% of my after-tax on housing. My living expenses are a small part of what I make, because they have to be. That money has to go into savings. If at sometime my business no longer works, I better have a pile of cash on hand. Furthermore, I better be able to make enough money from investing that cash so that I can support myself. I have to save my money and live frugally so that I can BUY MY OWN SECURITY, since I don’t have an employer to provide it.

  11. Anonymous

    I couldn’t imagine spending 50+% of my after-tax on housing. My living expenses are a small part of what I make, because they have to be. That money has to go into savings.

    A house is a savings account! The money you would be paying for it is moving from your left pocket to your right. By renting, the money moves from your pocket to your landlord’s pocket – never to be seen again.

  12. Anonymous

    A house definitely isn’t a very good form of savings/investing. Here’s an example:

    If you purchase a $200,000 house for 5% down, or $5000, then your payment at 8% per month is $1430.84 for 30 years (mortgage-calc.com). Your total payments over 30 years equal $515,102.40. You paid interest expense of $320,102 above the purchase price of the house. $889 of your $1430 payment is going to interest. Even if you take the nominal value of the house, your “savings” of $515,102 is worth $269,569 at 2% appreciation (the national average). That’s a gross return of -47.6%. That’s not really the rate, since it’s really an annuity we’re talking about, but you get the idea. The interest expense far outweighs the “savings” you’re making.

    It’s too bad that most people see it as “Wow, I bought the house at $200,000, now it’s worth $269,000, and I own it free and clear! Good thing I saved that money all these years.”

    Now in the renting situation, lets say you again have $1430 per month to spend on housing. Rent is $900 for an apartment, and you put the additional $530 each month into an investment which returned only 3%. If you reinvest the interest at the same rate, your savings equal $520,850 after 30 years. Quite a bit better than the $269,569 you would get out of the house, and you still had a place to live.

    Please correct me if I’m wrong. I’m just an apartment tenant myself. =)


    That other college guy

  13. Neville

    That other college guy,

    Damn good point. Good job using a clear-cut example too! I’ve never seen buying a house as an investment unless you have the intention of renting it out.

    Home equity is TECHNICALLY added to your total net worth, but I think its a bunch of crap.

    On CNN’s “Millionaires in the Making” these couples have maybe $20,000 in cash and stock, then $350,000 in “home equity” and they are called Millionaires in the making. Riiigggghht.

    If you notice in my goals, I always state “Liquid Assets”


    P.S. Who are you?

  14. Quant Trader

    That Other College Guy,
    Thanks for that analysis. That’s exactly my thinking. People who call their houses “a savings account”, should look at an amortization table, and see how much interest they are paying. That’s what I did after my girlfriend bought a condo. I pulled up an amoratization table in excel and looked at a 30 year fixed. It looked to me like for many years most of the “savings” was actually interest payments. Now one factor left out that I’m not sure how to account for is the tax savings. Maybe that tips the balance and make it so that a house is a good way to save money. I’m not sure. Another thing I intentionally leave out is apreciation. Buying a house to live in and counting on apreciation is a suckers bet.

    It seems like there are so many real estate speculators out there who are willing to rent out their property at negative cash flow in CA that they are actually subsidizing renter’s living expenses. My rent is not even a third of what monthly payments would be on a similar sized condo in my neighborhood.

  15. Anonymous

    On taxes in general, I don’t think I’d ever buy an investment for the amount I’d be able to write off in losses. =P

    In the house example, you get to write off your interest of $10668 per year. After 30 years, that’s $320,040. That puts our home buyer at $589,040 – higher if they had invested the savings at the same 3% rate.

    Remember though, the apartment dweller was only getting a 3% return. Hopefully anyone reading this can manage a better return than that. =)

    On another note, I’m all for RE investing because of the leverage you can get at relatively reasonable rates. Try getting a SBA loan or margin of 90% of your total position from any respectable lender. The one other good thing about RE is that trends are very slow – you know when appreciation is going to occur, and when the market you’re in is on a decline and whether that decline is permanent. Since people are actually living in houses and they have to be built, they move much much slower than other asset classes. Both of these (leverage & slow moving, observable trends) are significant advantages in my book.

    - College Guy

  16. Anonymous

    Sorry I did that too fast. I meant that your savings from the tax break (at a 40% bracket) is only $128,061 NOT $320,040. So..nevermind, you’re still nowhere near the “savings” of the renting guy. =)

  17. Anita Campbell

    Thank goodness owning a business is not for everyone. If it were, there’d be no one for businesses to hire. ;)

  18. Anonymous

    What Neville said is definitely true and something that a lot of people dreaming of being in business for themselves don’t realize. There are plusses and minusses to everything. Working for your own business is great but if you factor in all the long hours, headaches, stress and financial and time commitments, it may not be for everyone, especially for people that have a well paid, professional job with benefits, and regular work hours. In the end, what matters is the overall QUALITY OF LIFE which may in many cases be better overall as an employee than as a business owner.

  19. Anonymous

    The problem with the renting vs buying example is you’re assuming that your rent will remain $900 per month for the next 30 years. That is impossible. If you plan on living in a home long term, buying is the way to go.

  20. cecilia

    i’m for renting as wellasowning a house. i am a lnadlord so renting a place to my tenant helps him/her anyway, i.e. lower rent than mortgage and helpig me too accumulate wealth. owning a house aslong as it does not eat more thatn 60% of your net income is okey. you build your net worth fast than by just renting. but for the rent guy, we need more of you. for the business side, i agree that it is not for everyone. but i do not see any employee on the list of forbes billionaires- most of them are business owners. get the point?- a.a.

  21. arnel

    owning a business is really a tough one. but there are businesses that do not require much of your presence. like RE. renting it out to the rent guy, your investment grow whether the rent guy sleeps or not in your place as long as he signs the lease. but it has headache too. same as being an employee- it’s not at all time glamorous. you have the stress also. for me it is up for the person where he finds his niche and makes money out of it in a legal way.

  22. Anonymous

    If you read any of Robert Kiyosaki’s (Rich Dad Poor Dad or Cashflow Quadrant) you would know that the kinds of businesses advised that people build are big businesses. Kiyosaki defines a big business as a business where you could leave your business for a year and come back to find it running as well or better than it was before you left. The tough part is making your small business into a big business. The key is not to do everything yourself but to have people working for you. For instance, your example where that guy was doing all the accounting work could have been resolved if he hired people to work for his business and to manage specific parts of it such as accounting. That way he would have free time to himself to do more important things. Owning a small business however, can be worse than a job just as you say. But financial gurus do not tell people to do that. Most recommend building a team and big business. Surround yourself with smarter people and dont try to do everything yourself. That is the advice the gurus give. Therefore, they are not giving destructive advice if you really listen to what they are saying.

  23. Anonymous

    surround yourself with smarter people? who in their right mind would work with someone they are smarter then? you should hire people who specialize in certain areas, but there is no way anyone is going to work for someone they feel is intellectually inferior to them. Kiyosaki gives out too much vague advice, and alot of it is bad. please, don’t take his advice to heart.

  24. Anonymous

    so what if owning your own business takes more time. The rewards ARE greater and the emotional satisfaction much greater than being an employee. It’s not even close. If you like being told what to do and how to do it, then by all means go the employee rout. If you want to live the American Dream and work hard AND have others work hard for you, become a business owner in something you enjoy doing. I would agree it is probably better to be a bored employee than a bored entrepreneur. You cant be successful being a business owner if you dont at least like what you are doing. NG

  25. Anonymous

    Whatever, you guys are fools to think you wouldn’t need any help. If you aren’t now then maybe you will find a solution system or technique someday… hmmm You think I would take advice from YOU! Are you rich and financially independent? I didn’t think so. I took the rich dad poor dad course 100%, spent the cash, made the money back from my first deal, had a mentor who is a expert in a particular field of real estate investing who might I add basically holds your hand through your first deals until you are comfortable enough to do it on your own and teach you the 20 different strategies to make any deal a good deal. Period! I will retire when I want to which could be now if I choose thanks to a man who happens to be one of Donald Trumps best friends and rubs elbows with Warren Buffett. Scam? You decide. I decide everyday if I want to be rich or poor because you working middle class will soon be gone. Its your life, your choice. You either choose to be rich or poor.

  26. Anonymous

    While I enjoyed reading Rich Dad, Poor Dad….I always took it with a grain of salt. These books teach people to go after money and not success (which in turn creates money). They make lazy people think they too have hope of sitting on a beach in Bermuda sipping a Mohito by doing nothing.
    I do not agree with that. Robert Kiyosaki does not teach you to “Go after money” You do want to become successful and the bottom line is through his teachings are ethics morals and heart. Yes there will be some work that is with all businesses to put a little blood into the game as we say to acheive your goals and dreams It is what makes it all worthwhile besides being able to sit on a beach in Hawaii or Tahiti or Miami or the Italian Riviera sipping Mojitos and Mai tais being lazy Ahhhh! Thats my favorite pastime. Just some girl from NY living the dream in Hawaii

  27. accrual

    Getting a burp out of your little thing is probably the greatest satisfaction I’ve come across. It’s truly one of life’s most satisfying moments. Brad Pitt

  28. Pingback: Better to Receive Than to Give | Master Your Life|Attract wealth and Perfect Health

  29. http://tinyurl.com/takislate28500

    I personally was basically researching for points for
    my very own weblog and found your own blog,
    “Owning A Business Can Be Worse Than A Job | Neville’s Financial Blog”, will you mind if I personally apply a bit of of your own ideas? I am grateful ,Elizabet

  30. Christian Louboutin Shoes Sale USA

    88888 We are undecided if they’re sufficient to prevent a pedicab driver, but we have not nevertheless placed a great deal of our self worth in their fingers.. On the internet TutorialsLet’s confront it, several of us do not provide the time or bucks to work with hair dressers, artsy gm louis vuitton bagshop louis vuitton belts make-up artists and stylists on even an occasional basis.
    Christian Louboutin Shoes Sale USA http://www.cheapclonusa.com


Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>