Many years ago, I was asked the question by a mentor: “Would you rather be an entrepreneur, or be self employed?”….
My response was “What’s the difference? Aren’t they the same?”
What I learned was that they are very different. They are two dreams that are entirely different. But, without really looking into it, you may never know which one you prefer, and what is a better fit for you. With that, I’d like to elaborate on both, so that you too can see the differences, and so that you don’t end up in one, when you should be in another.
Let’s start with self employed. Self employed people come from all backgrounds. They are plumbers, electricians, small record store owners, small hardware store owners, massage therapists, grass cutters, and more jobs very similar. These are generally people who are a one, or two man show. There’s nothing wrong with these types of businesses. For most of the people in these businesses, they love what they do. A lot of them initially set out to learn a trade, and then went on to work for someone in that trade. Eventually they felt they could make more money on their own, and so they left their “job” and started their own business. Most of your “Mom and Pop” type stores fall into the self employed category. If you have read “Cash Flow Quadrant” by Robert Kiyosaki, then you understand this very well already. Basically, these are businesses that you are entirely responsible for. Everything that the business does somehow relies on you. You need to be present for all decisions, and your business succeeds or fails based mostly on your contributions. If you get sick, you may not earn money. If you take a vacation, you may not earn money. Most of these types of businesses are either run by only one person, or maybe they have 2-5 employees max. Normally the only one in “management” is the owner themselves, and the rest are just labor type employees.
What you find with most of these people is that they were sick of reporting to someone. They knew that they could do it themselves. They told themselves “If I could only replace my income, but work for myself, I would be happy!”
So, they set out to do that. Many succeed. Some do not, and end up back at their old job.
A mentor of mine pointed out an interesting thing about ads for franchises. He said that if you look at the ads, all of them say “work for yourself”, not “make a lot of money”. Why? because as stated above, most people just want to work for themselves, and if you tell them that they can work for themselves, and replace their current income, they will bite. And many do. Franchises are the best example of someone wanting to be self employed. Unless you are a multiple site developer, you are likely working in your business if it’s a franchise on a daily (or almost daily) basis.
Again, the problem with this is that it is very hard to transition from a self employed mentality to the mentality of an “entrepreneur”.
An entrepreneur sees a problem and wants to fix it. They want to grow a business, not create another job for themselves. They look to the future, and see themselves as simply being involved in the business, and not having the business BE their lives. They want to eventually be able to step back, and still have the business run itself, and create an income daily without daily activity. Most true entrepreneurs do not do well in a franchise environment. There’s way too much structure, and most true entrepreneurs just don’t like structure. We want to do things our own way. Develop our own plans and concepts. Create, inspire, and grow. That’s hard to do when you still technically have a “boss” who is the franchisor, telling you how you have to do things.
So… franchises are great for people who want to replace their current income, but work for themselves. Someone who likes structure. Someone who likes the fact that someone else has already done the dirty work to figure out what works, and what doesn’t.
Franchises are not great however for a real entrepreneur. Someone who hates structure. Someone who wants to eventually be able to step away and not work in the business. Someone who likes to create things themselves.
I truly believe that franchises are fantastic opportunities. I have a tremendous amount of respect for both franchisors and franchisees. They have created and run some of the best businesses of our time, and some extremely successful concepts. And they operate because they have both types of people involved. An entrepreneur at the helm, and someone who is self employed in the trenches. I myself have taken a look at multiple franchise opportunities. I know though that I wouldn’t fit well into the mold, so for me, I would invest in it, and have someone who wants to be self employed run it. We’d partner, and we’d all benefit.
So, before you go into business for yourself, really think about which of the above fits your personality more. The last thing you want to do is invest in a franchise and have that fail. Because for a lot of people, they feel that they only get one shot at working for themselves. Make sure that you make it count.