You must first complete Intro to Module 1: What is an Entrepreneur? before viewing this Lesson

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This part of the module will give you an overview of the risks and rewards that you can expect when you become an entrepreneur. This will give you a better idea what will be different compared to when you are in employment with a company and allow you to take the necessary steps to be prepared.



The Risks of Entrepreneurship


No Steady Pay Check

If you are an entrepreneur, this means that you will often have to give up the security of a steady salary at the end of the month. This means that if your business is not doing so well, it can have a serious effect on your personal income.


Sacrificing Personal Capital

A lot of times entrepreneurs have to use their own savings to get their business off the ground until they have developed it enough to be ready for external funding from angel investors, government grants, loans or crowdfunding campaigns. If you are not planning to take investment or look for funding, the strain on your savings can be even larger.


Relying on Cash Flow

It can be a real challenge to secure enough cash flow in your business on an ongoing basis. This is particularly true if one of your bigger clients pays late or you lose a client, then costs can quickly exceed your revenues and you will need to tap into savings to pay the bills.


Interest in Your Product/Service

Even with a lot of research and tests, you only have an estimate of people’s interest in your product/service, and that interest is somewhat unpredictable. This means that your financial projections can be flawed, which can have major effects on your company.


Trusting Key Employees

If you are starting your business, you won’t have the resources to hire a full team, which means you will have a small group of people putting a lot of effort into the product to get it going. This means that you will have to put a lot of trust in this small group of people to get the job done, otherwise your timeline can be completely wrong.


Betting on a Crucial Deadline

Finances are often tight in a start-up and investors want to see progress, which means that several milestones can be tied to a certain deadline. This means that entrepreneurs regularly have to worry about hitting a specific deadline and need to make sure to have a follow up plan if it does not work out.


Committing Personal Time (and Health)

You will spend countless hours working on your business to make it successful, which will make you miss out on personal time and often entrepreneurs end up sacrificing their health by not sleeping enough, being under constant stress and eating unhealthy foods.


Emotional Risk

Starting a business will mean that you will go through an emotional rollercoaster – you may feel others had it easier to start with, there might be jealousy of a competitor who got into press, romantic difficulties because you are spending so much time on the business, self-doubt, problems with time management and not enough time to see your family and friends, feeling of rejection by investors, press, etc., or problems with your fellow co-founders or employees. It can also be a large burden to be responsible for the business all by yourself, which can be scary and lead to feelings of loneliness.


Risk of Scaling

As your business is growing, a new set of challenges will be awaiting you, spanning from hiring more employees, opening another office, technical upgrades, launching a new product to acquiring another business. There are a lot of pitfalls on the way so you need a strong support network and a team you can trust to help you with these challenges.

(DeMers, 2014; Rawat, 2016)


The Rewards of Entrepreneurship



A major benefit of starting you own venture is that you have a large degree of agency and control of what is happening in your company. You can decide whom you want in your team and you set the vision for the company and make strategic decisions.



Building your own business can be a very exciting and highly enjoyable process as you get to apply your skills and abilities to solve problems, make fascinating breakthroughs and meet interesting people. Your work is dynamic, as the company constantly needs to adapt as it is growing so you never get bored. There is no better feeling then creating something out of nothing, and you get to work with people who are not only your customers/suppliers, but also your friends.



Because you own the company, you can decide how to organize your schedule and when to take time off, but the truth is that entrepreneurs often have to work very long hours, particularly in the beginning.



The freedom you have will also add to your life satisfaction and make you more fulfilled. You have the freedom to choose if you want to work from home or while you are travelling, and you can choose when you want to work.


New Skills

Even if you have expertise in certain areas, in the beginning you have to do a bit of everything and this way you will learn about accounting, design, marketing, public speaking, how to delegate, how to be more creative, about sales and much more. Furthermore, you have to learn how to fail as well as face rejection but still get back up on your feet.


Rational Salary

Another advantage is that your salary is directly related to how much work you put in and how many new contracts you close. Over are the days where you put in so much more effort than your co-worker but get paid the same and you also don’t need to wait for a raise anymore.



You get to see the impact you make first hand as you work closely with your customers and the problems you solve make a real difference in people’s lives. Furthermore, you create jobs which will attract talent to your local area and also helps economic development.

(Ducker, 2017; Britt, 2013)




Recommended Reading:

Apart from the above risks and rewards, which affect any first-time entrepreneur at any age, this article sheds some light on advantages and disadvantages if you are starting out in your teens or early twenties:



Click the View the Lesson Quiz button below and successfully complete the quiz to advance to the next lesson...



Ducker, C. (2017). 10 Reasons to Love Being an Entrepreneur!. Available at:

Britt, D. (2013). PROS AND CONS OF BEING AN ENTREPRENEUR. Available at:

DeMers, J. (2014). 7 Risks Every Entrepreneur Must Take. Available at:

Rawat, R. (2016). 5 Entrepreneurial Risks and Ways to deal with them. Available at:


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