18 pros and cons of being an employee vs. being an entrepreneur

Both being an employee and being an entrepreneur have their own advantages and disadvantages. Entrepreneurs are often portrayed as happy and free, risk takers that have the benefits of controlling their own time and income. They often have uncapped potential earning and can jump from industry to industry using and developing business skills that ultimately add to their success and experience.

In the real light of day though, many entrepreneurs fail. They don’t have the guaranteed income and work available that a contracted employee can enjoy. Unfortunately, they often don’t have a team of colleagues to rely and depend on, a paycheck to cash at the end of every month, a company car and medical insurance, and a chance of career progression within the same company in exchange for years of service.

From the complexities of registering your company through to arduous tax returns, failures, fallouts and business pitfalls. The life of an entrepreneur is not as star-studded as people would believe when they see the word appear in the press.

However, the diversification available to those that chase their dreams with new inventions and madcap ideas can often lead to self-satisfaction and an abundance in confidence that will help across all areas of life.

In today’s western society there is more and more opportunity for people to succeed and thrive as a freelancer and entrepreneur.

The growth of the internet, remote working and artificial intelligence … Along with the advancements in broadband and WIFI technology are making international freelancing easier and easier.

Below we’ll discuss the advantages and disadvantages available to both the entrepreneur and the employee.

Advantages of the employee:

Leave Benefits

Leave benefits or holidays, are the times available each year for the employee to have some time out and enjoy paid time when they are not working for their employer.

They may take a holiday or choose to work on their personal relationships, hobbies, exercise, or simply rest.

These periods of holiday can give employees the chance to really take stock of their lives and refresh themselves. This means that when they return to work they will have more focus and energy to complete their daily tasks with a new vigor and satisfaction.

Guaranteed Income

Obviously, a huge advantage of employment vs entrepreneurship is guaranteed income. This fixed amount of money deposited on a weekly or monthly basis into bank accounts means financial security for the employee and their family.

Employers pay the employee for their services towards their organization. This pay often includes a range of allowances and benefits which may include, taxes, insurance, health insurance, provident funds and company shares.

Sometimes the family of the employee will also be covered by a health plan. Even after the age of retirement, the employee may continue to get private or state income, leaving them and their families secure for the rest of their lives.

Fixed Working Hours

Employees will often agree on fixed working hours that will be guaranteed and outlined in a contract between themselves and the organization that employs them.

Overtime or extra hours available will be worked at the employee’s discretion and will not be compulsory. Hours exceeding that in the contract are called ‘overtime’ and are often remunerated at a rate higher than the standard hours agreed when employment begins.

Sometimes an agreement is set out between an employer and employee to receive lieu time in exchange for working hours that exceed that of their contract. Hours worked in lieu can be saved and exchanged for longer periods of holiday or extra days off work.

Less Responsibility

In employment, you are often assigned a particular role and are only responsible for performing the tasks that are directly related to that role whilst you are working.

You don’t need to interfere or worry with how other people are performing across the company, as you will still receive your payment as long as you complete all the tasks that are expected and outlined for your individual role.

You will probably be periodically appraised for your role and this will affect your chances of promotion and also your success rate within your profession. Appraisals can be a good opportunity to discover your individual strengths and weaknesses.

Advantages of the entrepreneur:

Growth in Career

As an entrepreneur, you have the ability to fulfill your goals and aspirations as an individual. You will not have a boss in place to interfere or make decisions for you. Your life is your own and the amount and size of the risks that you take is your choice.

Entrepreneurs all have the opportunity to rule their chosen business sector. Obviously, this is decided by the market demand for their product or service along with the amount of drive and determination harbored by the individual.


With no boss in place, the entrepreneur is free to make their own decisions in both their personal and professional life. They can work whenever they want, however many hours they want, and sometimes from wherever they want.

They will be able to direct employees and have other people helping them to make money and achieve their goals.

However, they will need to be natural leaders and set up standards along with roles and responsibilities for their employees. The more they can outsource, the easier their life will become.

Flexible Working Hours

Ultimately, the entrepreneur will choose working hours that suit them. While some entrepreneurs will work 80-hour weeks when they first start out, others will have the people and resources in place to sit back and work as little as possible.

The Ability to Earn

The financial growth for an entrepreneur is much greater than that of an employee constrained to a salary or an hourly rate decided and agreed on at the start of their employment.

They will own their company outright and often have a large share of the business profits.

They have the potential to earn as much as they want to, depending on the demand for their product or services.

Change and Exploration

If an entrepreneur sees a new opportunity to make more money by expanding or re-training, they have the choice to do so.

Entrepreneurs are often out networking and making new business contacts and opportunities. This means they are the creators of their own destiny and can always change and explore new horizons.

Disadvantages of being an employee:


Employees have to follow their employer’s instructions and can become dependent on their monthly income as they buy things on finance and slip into debt.

Employees with big families have added pressure and can feel a growing dependency on their job as their family grows and expands.

Limited Income

The income of an employee is often limited to their agreed salary or hourly rate, meaning that is capped and can’t be expanded without overtime or a pay rise.

Limited income puts constraints on almost every part of life. Some employees may be incentivized with bonuses etc. However, they are often capped or limited until they change jobs or get a pay rise.

Limited Development Scope

Again, the constraints of employment within a specific industry or role can really minimize an individual’s scope for development.

Employees often have fewer choices for career progression and can only advance within a very specific industry.

Job Security

In a competitive world, people are disposable. Jobs are not always guaranteed for life and employers can often sack employees without giving a solid reason. Of course, this all depends on how professional the contract of employment is. But job security is never 100% guaranteed. Some companies can appear to be doing well and then fold without apparent reason.

Disadvantages of entrepreneurship:


With no guaranteed income, no boss for guidance, no colleagues for support… Entrepreneurship can prove a stressful and lonely place. For all the advantages that it offers, it has its pitfalls. The stress of being your own boss, marketing department, legal department, networker, and accountant can prove too much for some people.


Starting a business can need a lot of money depending on the type of business you are starting. Some entrepreneurs start out in debt because they have had to borrow money in order to cover their start-up costs.

This investment can have a huge impact on performance and can lead to debt.

The entrepreneur is at the scrutiny of his or her clients at all times. A bad reputation can lead to a loss in earnings and can incur debt on prior investments.

Long Working Hours

Some businesses need to work a lot of hours in order to get off the ground and be successful.

If you are starting a business that has many competitors, sometimes man hours are the only way of building a solid reputation and customer base.

Working long hours can have a negative impact on your family and social life and also your health.

Financial Instability

When starting a business and for the first few years of trading, there may not be much disposable income available. This can affect your individual finance rating and lead to trouble securing mortgages, cars, mobile telephones and other lifetime essentials.

Are you ready to face this level of financial instability?


Going it alone and deciding to become an entrepreneur carries a lot of risks. The risk of failing, the risk of others witnessing your failure. The risk of debt, the risk of hungry competitors, the risk of bankruptcy… It’s not for the light-hearted!

This article first appeared on YourCoffeeBreak.