Why a 9 to 5 job is better than running your own small business?

As I discussed in my previous article, "Does Nepal need big corporations?", the general sentiment in Nepal, regarding job versus entrepreneurship is clearly in favour of entrepreneurship. The majority of youths do not conceive job with due respect. In this context, I am here to propose you that doing 9 to 5 job is better than running your own small business. An entrepreneurship scholar advising youths to seek a job might appear contradictory, however, job can be a pathway for entrepreneurship by providing valuable experience and networking.

Work is worship. (Photo Credit: Pixabay)

Defining "small business"

In order to put my arguments into perspective, I would like to define the scope of "small business" as its general definition is very loose. It's meaning vary with context, and legal provisions. According to the Department of Cottage and Small Scale Industries of Nepal, small business are those businesses with fixed assets of less than 3 crore. However, for the purpose of this article, I would like to define small business as those businesses with capital of less than 1 crore, involve less than 3 employees, and business owner is actively involved in the business.

My own experiences

Six years ago, me and my younger brother started a small shop that sold clothing and cosmetic goods. It was a very small business with the initial capital of 3 lakh rupees.We reinvested the sales into the business and kept going for one and a half year. This short experience made me realize some of the things I wasn't aware about business. Firstly, I had to work really hard to buy goods from wholesalers. Wholesalers easily cheated on price by giving some familiar goods cheaply and then charging the unfamiliar one dearly. Secondly, one person had to physically work in the shop during the opening hours, thus it required your presence nearly 24 x 7. Thirdly, working by oneself meant it was no different from a job. Lastly, it was hard to track how much money we were making as we were reinvesting some of our sales back into the business. In addition, there were damages, credit customers, and spoilage of goods by mice, dust and sunlight which reduced our profit. In a nutshell, it was too much a headache for uncertain nominal income when we were in our early twenties.

Some serious reasons that make small business unattractive (not worth the time and effort):

Too many decisions for too little stake

No matter what sort of business you do, and no matter big or small, you face a lot of decision making scenarios, which are responsible to make or break your business. Location, capital, pricing your product (good, service, or experiences), marketing, staffing, and so on are must. Informed decision making can greatly reduce the chances of taking favourable decisions, however, with small business you have limited budget and human resources (employees and partners) to perform adequate research on your business prior to starting. 

24 x 7 commitment of time

With many small business, the time commitment of an entrepreneur is not limited to 9 to 5 only. Day or night, weekdays or weekends, you have to commit yourself all the time. You hardly find time for your family, recreation, and social occasions among other things.

Like a job anyway

When you are the one who is most actively involved or the only one involved into the business, it is not at all different from doing a job, except for all the downsides. Working more hours with more responsibilities is a distinctive feature of running your own small business. Unless you are working part-time to only oversee your business, you are essentially doing a self-employed job.

Uncertain income

For all the efforts you put, your income is uncertain. That's what a business income is most of the time. Compared to the fixed income you earn from a job, business income depends on the business turnover. Increasing income means increasing turnover for which you either work smarter or work harder or both.

Difficult to grow

Small business are designed such that they are hard to grow. Lack of access to capital, expertise, skilled staffs and the like the small business cannot be grown most of the time. Unless you grow your business you will have hard time surviving the social changes, competition and so on.

Unanticipated Competition

Small businesses are subject to fierce unanticipated competition. Despite all the odds above, let's say that you have become successful to make your business highly profitable. Your profit won't stay long as your next door neighbour will open another copy of your business nearby your location to get a share of your revenue. As a small firm, you will have less resources to tackle this type of rivalry. In fact, many small businesses in Nepal have become victim of this copy-cat phenomenon which I have discussed in my previous blog.

Costly lesson learnt and difficult to exit in case of failure

Now, you setup a business, ran it for a while and decided to quit, you cannot sell your business the next day unless you sell it at a loss. It's hard to sell a business particularly if it is not performing well. Given that you are more likely wanting to exit when you fail rather than when you succeed, the buyer will have higher bargaining power over you.

On the other hand, when you do a job, you are learning new skills, acquiring knowledge about a new business, networking with like-minded people, all when you are earning a regular income. When you think that this job is not for you you can easily quit and find another one. Typically, when you run a business you are engaging your whole family. However, with job your family members (particularly spouse) are free to pursue their own job. If you add up family members income you might be making more income than from your business. In addition, you can specialise, experiment and still have more time and freedom. For all these reasons, 9 to 5 jobs win over small businesses.

If you want to conduct or engage into business aim for bigger businesses, that are based upon research and have a proper plan to tackle the aforementioned drawbacks of small businesses. While well researched and carefully planned businesses achieve success, no matter what, majority of small business owners cannot achieve the same level of success. As a result, job can be a solid alternative to doing your own business. A good job is ten times better than a bad business!