Small Business Entrepreneur Blog

Recently I have been doing a lot of interviews to get on board a few more people to the software business I’m currently working on (and being a shareholder). I would say that about 90% of the people coming at the interviews where laid off or working in troubled companies, about 5% are exceptional professionals willing to get a better job not related to the crisis, and the other 5%, also in trouble, are freelancers or small business owners themselves looking for partnerships. I’m putting freelancers and small business owners together because in a way a freelancer works more or less like a small entrepreneur – has to find opportunities, market themselves, close the deals, do the work, and make some money. Also, the 5% exceptional professionals provide high end services and are truly not affected by the crisis, so they are out of the discussion for now.

Throughout the interviews I could sense there is a fundamental difference between the 90% people coming from troubled companies and the 5% troubled freelancers or small business owners. I didn’t know what it was until this evening when I’ve had a breakthrough:  panic levels where different.

Panic level was different

For the vast majority of the 90% group getting laid off was a fundamental problem. For the 5% small business entrepreneurs, shutting down the business, having a hard time surviving looked like a surmountable situation. How is that possible when most people are more afraid of opening a business and failing than having a job and loosing it? After all having your own business is a big risk, right? Well, the interviews showed differently. And I think I know why.

Why do entrepreneur cope better with the crisis than employees?

Well, to start, having your own business is not really riskier. John Crickett from www.businessopportunitiesandideas.co.uk has an interesting point of view regarding the risks taken by an entrepreneur versus the risks of being an employee. His article kind of supports my discovery regarding the panic levels, so I’m going to take some of his ideas and add my owns.

• Being an employee means you have only one customer; being an entrepreneur comes with more customers. While most employees don’t think that way, they are actually selling. They sell their work to the employer. Entrepreneurs are also selling but have more customers, therefore an employee is more dependent on “his customer”.
• Employees have less control. Let’s say you are a programmer. That’s good, but if your employer gets into trouble with sales, revenues, funds for paycheck you can’t really do much, because you only code. You can’t do much if you’re getting laid off. Entrepreneurs on the other hand can do whatever it takes to make things work – change business line, do partnerships, get help, find funds and investors. They have a chance to improve things.
• Entrepreneurs know from start-up they might be failing. Employees don’t get a job with the thought they might be failing. And therefore the crisis don’t change that much for entrepreneurs, which prepares them better mentally.
• Entrepreneurs are business problem solvers (regardless of the crisis). Crisis or no crisis, entrepreneurs have challenges and need to find solutions on a constant base. This shapes their minds to cope better with challenges, it’s like getting trained for the crisis.
• Entrepreneurs remain entrepreneurs even if they are failing; employees become un-employed. Having your business turned to ashes doesn’t make you less entrepreneur.
• Entrepreneurs have more people helping them getting past the crisis. Employees are on their own. What I’m trying to say is that basically an entrepreneur through the people he hires gets an entire group of people that work to make the business work: sales, marketing, production – more minds to help stay afloat.
• Entrepreneurs have better exit plans. Probably because they know from the beginning they might be failing, most entrepreneurs have exit plans. Including getting a job. It’s not the end of the World.
• Entrepreneurs have an asset to sell, something more than just their work. Coming back to the initial idea that employees sell their work, entrepreneurs have a business to sell and that’s usually more valuable than one man’s work. Might be physical assets – buildings, machinery, might be customer base, might be the idea. It’s more.

I didn’t realised so far, but last year my decision to be more than an employee with a “secured job during the crisis” might be just the best thing I did in years. Even better than 5 years ago when I started my first own business in non-crisis times. Glad to be an entrepreneur. It puts me on the better side of the crisis.