Entrepreneurs Make Less Money – So You Better Love it

I’m sitting here at Starbucks early on a Saturday morning. I’ve been here since about 7:45 AM (it’s 9 now) and predictably it’s been pretty dead in here. I’ve been sifting through emails, doing a little programming, and now writing a blog post. I’ve never accomplished more than I have in this past week, and I’ve thus never been happier or more comfortable with my future and the overall direction of Pure Adapt.

I’ve wrote about this before, but if you take a snapshot of my life as an entrepreneur and a snapshot of what it would’ve been like had I continued with my career, I figure most people would probably choose the latter if given the choice. For anyone like me who gets a good job in the $40k – $70k range right out of college, you can have an MBA and be making close to six figures by my age (25). You then have the rest of your career to rise to VP roles and rake in the dough. Whether or not you’re happy and personally satisfied is a different story, but there’s no denying you’ll be well off financially.

Now, for me personally, I’m a million times happier pocketing a little less money for the time being and actually looking forward to waking up every day. I would never be as happy in the corporate world because I just don’t love the lifestyle. Like most business owners, I’m pretty confident that I can make more money doing it my way, and if things keep going the way they are going that will most definitely be the case.

However, that appears to be the rarity, at least according to a recent Top Ten Myths of Entrepreneurship article written by Scott Shane and published on Guy Kawasaki’s blog, where myth #8 is:

Most entrepreneurs are successful financially. Sorry, this is another myth. Entrepreneurship creates a lot of wealth, but it is very unevenly distributed. The typical profit of an owner-managed business is $39,000 per year. Only the top ten percent of entrepreneurs earn more money than employees. And the typical entrepreneur earns less money than he otherwise would have earned working for someone else.

So you have to ask yourself the question: if there’s a good chance I’m never going to make more than I would in the working world, will I still be happy?

The other day I was day dreaming and my mind wandered to the thought of Pure Adapt getting bought out for millions of dollars and being in the position of having unlimited time to do whatever I wanted without much concern for finances. As I pondered the question of what I would do after my initial vacation and relaxation, there was only one conclusion I could come up with: I’d teach myself more AJAX so I can work on a sports program I’ve mapped out for a domain I’ve already purchased but haven’t had the time/resources to develop. Sure I’d devote more time/money to charitable works, but on my time that’s what I’d work on.  And based upon that, I’d say it’s safe to say that my answer to that question is a resounding YES. This is what I’ll do independent of how much money is in my pocket.

If entrepreneurs are in it for the money, how come most keep doing it when they make less of it than someone who works less hours and has less responsibility? Some would say the answer to that question is that they continue to hope for that big pay day and therefore keep persevering. But everything we know about human happiness tells us that money isn’t a very good motivator, and that most people will give up on a goal if money is the sole pursuit. I believe that entrepreneurs continue to persevere because they love the freedom, the creativity, the responsibility, and the lifestyle far more than the money or the desire for more money.

Unfortunately, the mainstream perception remains unchanged. I was recently reading an article in Inc. (my favorite magazine) written by Leigh Buchanan (my least favorite writer of all-time) where she interviewed CEO psychologist Leslie G. Mayer:

Sometimes. I’ve heard CEOs say, “I’m tired. I’m so tired of hearing about what everybody else isn’t getting or needs. When is it my turn?”

That’s sort of ironic.
After all, starting a company is a major act of ego. Entrepreneurs would say it’s not about ego. They’d say it’s self-actualization. Doing what you must do. The painter must paint. The writer must write. I must get this product off the ground. I must build this company. They would argue there’s no ego involved in it at all.

That sounds self-deceptive.

Not if you understand entrepreneurs.

4 comments on Entrepreneurs Make Less Money – So You Better Love it

  1. […] my post earlier this morning I mentioned that this was probably the most productive week of my life.   It’s partly […]

  2. Great article.

    I love being an small business owner because of the freedom although it now produces results that are equal to my corporate job salary.

    Money is great but working 4 hour days is better.

  3. rick says:

    I think the argument should be would you rather be an entrepreneur or work for one. After all, every business was started by an entrepreneur at some point in their business lifecycle. Although I work for a large corporation, I spend every waking moment planning my great escape. Kudos to those with onions to put it out there,give it their best shot, and go for it.

  4. […] way or another we’ll be fine, but this is definitely a pretty big roadblock.  Gotta love being a business owner – never a dull moment. Share this post! These icons link to social bookmarking sites where […]

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