We have read a lot of inspiring entrepreneurship stories like how some self-made founders or college dropouts who started their endeavors on garages and more rags-to-riches success stories. Nowadays, business owners are deemed as our heroes who save our economic growth as well as the innovation in our communities.
Let us now know some risks of entrepreneurship that every inspiring business owners should keep track of.
1. The reality of starting a business is not glamorous
Entrepreneurship is an unwarrantable line of work, as a matter of fact, only 50% of all businesses reach their 5th birthdays. If ever they stay longer in the industry, these business owners often lack health insurance making them on high risk of poverty in retirement. According to the Treasury Department, there is only 8% contributing to a retirement plan in a year. On the other hand, people with lots of acquired assets, spouses with stable jobs or wealthy families are the best ones to start their own business. Because if all else fails, they are sure to have something to fall back on.
2. Entrepreneurship is not for older workers
For people 50 years and older who’ve moved back into the labor force through entrepreneurship, most of the time their non-pension wealth fails. Opposite to what the common belief is, business owners earn less compared to their spouses who work for someone else. For retirees, the risks accompanying entrepreneurship increase with age.
3. Safety net programs are significant
Safety net programs or what we usually knew as the retirement savings and health insurance are essential to every person as it gives us healthier and happier lives. However, business owners are mostly the ones whose later lives are at risk. We should be aware of the costs and the benefits of being an entrepreneur especially if you are approaching the age of retirement. Thus it is vital that we make the key safety net programs accessible for people of all ages.
Check out this video with famed entrepreneur, Richard Branson, that goes into more detail: