Ineffective Guidance: Unlikely to Attain Wealth by Working for Others

Entrepreneur Scott H. Young shares his views on this subject, based on his own entrepreneurial experiences. We hear from him:

I worked as a solo entrepreneur for nine years, then I had partners and we had a company. I earned a good income at that time. My job allows me to do interesting projects, travel full time, and work whenever I want.

Many users are told “Make money from home!” advertised on online platforms. Think of it as if I were living the fantasy you see in the scam. Despite all this, “You will never get rich while working for someone else.” I hate advice like this.

This is a little rhetoric that can be seen in some corners of the internet, making entrepreneurship preferable to being an employee on the path to wealth, freedom and happiness. This advice says that working for someone else is foolishness and that to truly make a living, you need to start your own business.

Why is this stupid advice?

This is terrible career advice. Do not get me wrong. I love doing my own job. But I think the idea that entrepreneurship is the best path to wealth and freedom is foolish. First, the advice doesn't make sense. Many of the richest people I know made all their money working for other people. CEOs, doctors, engineers, accountants; They all work for others and they are all rich. Also, even if we ignore that the advice is literally wrong; Entrepreneurship offers no better way to achieve wealth than working for others.

Supply and demand

All career choices proceed with the logic of supply and demand, just like purchasing decisions. If a career choice is truly attractive i.e. too much money, little effort, low talent etc. If it offers things, it will attract many new participants. These new participants will increase competition, drive down returns, and the business will no longer be so attractive.

Consider for a second that being an entrepreneur requires less effort and offers more money with fewer hurdles than working a startup job. What do you think will happen? More people will start businesses! These businesses will enter competition. Some will succeed, some will fail. As a result, it can be said that the average return to each new entrepreneur will shrink until it is no longer very lucrative.

Why don't people earn the same amount?

There are at least three mediating factors that explain why some people earn more than others:

1. Some career choices have a higher variance.

Some occupations have very narrow ranges of possible income. For example, being a teacher in a public school. Others have greater ranges, long-term prospects for becoming entrepreneurs than a teacher.

This is a problem with assessing entrepreneurship because it has much more variance than regular occupations. This means you will see some people become truly rich. However, when you count the cost of their time and investment, many people end up with zero or negative earnings.

A risky profession may provide slightly higher than average returns. Because people tend to avoid risk. This means that people prefer a regular and stable income to a chance path to wealth or poverty.

2. Some career choices offer other non-monetary benefits.

Some careers are sexy and prestigious. There is job security and retirement benefits. Others guarantee an impressive look when you tell people what you're doing at parties. It gives you a strong image.

Money isn't the only thing people expect from a career. Therefore, the sexier, more comfortable, more prestigious or more secure your job is, the more people will want that job for a given income. A tradesman can earn more money than someone who is a university lecturer. Being a faculty member is more challenging and challenging. However, since having prestige is more important to most people, they prefer to be faculty members rather than tradesmen.

3. Some career choices require more skills, connections, or credentials.

The final differentiating factor is barriers to entry. Sometimes it is blocked by ability. A good job as a supermodel may come your way, but most people can't go for it due to lack of talent and connections.

Medicine is an extremely lucrative profession, although it is a desirable job for non-monetary reasons and offers relatively secure wealth. But medical school is also extremely challenging, and most people aren't smart enough for them. Some cannot bear the years of training to become a doctor.

Once you factor in variance, non-monetary benefits, and barriers to entry, you can explain why most, if not all, career options pay more than others.

Why doesn't this analysis look so good for entrepreneurship?

Now let's do our analysis above and apply it to entrepreneurship. Definitely a big variance! This means some people will win big and some people will win nothing. Most people want to be their own boss because having their own business is attractive.

Finally, the obstacles you may encounter in the beginning are generally few. In some industries, the costs of getting started are really high. However, these industries are not the industries that most people would step into when they think of the ridiculous statements I mentioned above.

However, such analyzes are valid not only for entrepreneurs, but for every profession.

These do not mean that it is impossible to become rich. Effort, acquired skills, connections, credentials, and other career assets can propel you into niches with more serious rewards and less competition. But it certainly dispels the idea that you can get rich by avoiding working for someone else.

This doesn't mean that career choice isn't important. Some careers are inherently more difficult and restrictive than others. Being a janitor will generally pay less than being an accountant. Because how much more can you clean things so people will give you more money?

In short, choose a career that matches your abilities and capabilities so that your full potential can be revealed. Also, your career depends on your values, such as status, money, security, etc. It is also important that it is appropriate. In conclusion, invest in developing your skills, experiences, connections, and aspects of yourself that others cannot. This is the best way to have a successful career, the rest is just luck.

My Experiences

I love being in charge of my business. I think it's challenging, interesting and a great career path. But I definitely don't think this is the easiest way to make money. It's like I'm living an average, semi-stable life. Until I reached this level, I had never worked under conditions that were lighter than those in other fields. I made an incredible effort to establish this business.

If you see an opportunity that will challenge you and attract you with different variations than a typical profession, entrepreneurship may be better for you. If they say you will make a lot of money without working hard, someone is deceiving you.