Why do many hesitate to start their own business?
I wrote a response to the above question that was asked in Quora, which I am sharing below (with a bit of tweaking).
As an entrepreneur for last two decades, I have seen this “hesitation” often and used to wonder why?. I will list few of them that come to my mind, in no particular order.
- After you graduate, when deciding between a job or starting on your own, you are generally given the advice by many to first work for few years, gain the experience and then start your business. For me, I started my business right after my engineering – in fact, I was doing freelance software consulting even during my college days, so I didn’t have time to get into this dilemma. While running my business at many stages I did wish I had prior work experience when I had to handle unknown or tough issues, I had to work harder to learn those areas – which I did by reading books and speaking with friends and well-wishers who had the experience. Today one of the big advantage start-up founders have, which was not there before – I am not talking about funding or VCs – is the availability of plenty of experienced people like me who have been there, done that, ready to spend their time in mentoring youngsters – make full use of these valuable resources.
- In India, starting and running a business is tough. Government and the Society at large see businessman as evil – recent events of large bank frauds don’t help the image either. The general public in their mind, equate the Forbes businessman with a local tea shop owner. Navigating the maze of our antiquated tax laws and procedures is not for the faint-hearted. A would-be entrepreneur has seen and heard these “horror” stories around him/her, which would definitely scare anyone. Compared to that, a job is certainly a comfortable option.
- Rationally speaking, if you are well qualified, in India you will earn more by working for giants like Infosys or Microsoft or Google, than running your business. In many sectors today the profit margins are around 10% or even lower. Think about this, in IT industry if you are working for ten years + you can earn a salary of ₹20–30 lakhs – for you to make the same money from your own business, you need to do a turnover of ₹3–4 Crores recurring per annum and that’s not easy. Of course, the reward from business tends to scale faster than in a job but that’s a different topic.
- Lastly, in India, it is not that entrepreneurs don’t exist a lot. I have argued they are the backbone of the Indian economy in my post written a few years ago. Look at the statistics of tiny and small businesses (organised and unorganised sector) in India:
– 45% contribution to national GDP vs. 15% by the corporate sector
– Provides 90% of employment in the country
– They employ 46 crores and out of which 24 crores are self-employed
– 62% of businesses are owned by ST/SC and OBCs
But, the part that hurts me most is that only 4% of them get their financial needs met by banks and by recognised financial institutions. Others either don’t get funded or get caught with loan-sharks.
Hope the above helps you to understand the landscape a bit better. All the best.