The Difference of Being an Employee vs. a Business Owner

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Entrepreneurship is exciting! At least it’s most often portrayed that way. Being your own boss is a great option for many people, especially experienced business people who have a clear picture of what they want and how they intend to achieve it. There has never been a better time to start, grow and enjoy your own business.

Both being an employee and being a business owner have advantages and disadvantages. It’s important to understand what the advantages and disadvantages are and be clear on what is important to you. Let’s take a look at each and also a few ways that a franchise can be a valuable option for you.

Advantages of Being an Employee

Guaranteed Income

One of the largest advantages for being an employee, is being paid a fixed amount and being paid on a known schedule. This can include:

  • salary,
  • commissions,
  • bonuses,
  • expenses,
  • benefits,
  • health care plans,
  • insurance,
  • pensions,
  • company shares and more.

Some forms of income, like health coverage, can even extend to employee’s family members. Depending on the employer, many employees may even enjoy income into their retirement.

Set Hours

SalesEmployees agree on set working hours. This can be outlined formally or informally, but almost always falls under legal employment guidelines. An employee is entitled to be paid for the time they work. Extra hours worked beyond these legal standards are not compulsory. If the employee agrees to work “overtime” they are often paid at a higher rate than standard hours or compensated in other agreed-upon formats.

Defined or Limited Responsibility

An employee is assigned a role or position; that role has a defined responsibility. Employees still receive payment as long as all the expectations outlined in their role are met. Periodic evaluations for their role are done with the idea for promotion or pay increases when deemed appropriate. Employees only have responsibility for their position. They don’t have a financial risk to the company.

Vacation Pay

Employees receive paid time off. They can take a holiday or chose to use that time however they choose. Paid time off allows employees to refresh and often means they come back to work with more focus and energy.

Disadvantages of Being an Employee


Employees are hired for a position with a company. Their pay is tied to their ongoing performance. As time passes, other job options may become less available. This will make employees become more dependent on the employer for their income.

Set Income

The income of an employee is limited to their salary or hourly rate. Their pay is capped and can’t be expanded without overtime, a pay rise or changing positions. Limited income puts constraints on almost every aspect of life.

Limited Development

CoinsEmployees are limited to the industry and the position they hold. While they can look to improve within that position, there are no options to develop in new fields or to pursue opportunities outside of their position.

Job Security

In a competitive environment, jobs and employees are expendable for business success. There isn’t a guarantee for life and employers can cut employees as needed or as they see fit, often with short notice.

Advantages of Being an Owner


When you are your own boss, you are free to make your own decisions. Owners are free to run their personal and business life as they choose.

Pursue Passions

Owners have the ability to pursue their goals and priorities. They aren’t limited by a boss who may have different aspirations. An owner’s life is their own and they can pursue the interests that they choose to.

Flexible Hours

Owners can set their own hours. They can work as much or as little as they want or need. As important, they can choose when they work. There isn’t a boss who sets when they work.

Earning Potential

The potential for an owner is greater than an employee. It isn’t tied to a fixed salary or hourly rate. As an owner, they are able to enjoy the growth of the company as much as they choose.

Disadvantages of Being an Owner


Owners have no guaranteed income; they have no boss. There is rarely any peer support. Being a business owner can make for a very stressful and isolated experience. For a business to succeed the owner needs to manage and succeed in multiple areas such as:

  • marketing,
  • sales,
  • legal,
  • production,
  • accounting, and
  • human resources.

The sheer scope of responsibility can be overwhelming.


InvestmentStarting and growing a business can require a lot of investment. Some owners have the funds in advance, others use debt for start-up costs. Depending on the type of business, this investment can be big.


Owners often are required to work a lot of hours, especially in the early days of a business. The amount of effort required to be successful often comes down to long hard work. This can have a negative impact on family, friends, and personal health.


While the opportunities for success are unlimited, so are the risks. The first few years of starting a business can be very unpredictable.

How does a franchise fit with business ownership? What are the benefits of owning a franchise?

Benefits of Franchise Ownership

Proven Concept

The prospect of opening your own business can be complicated and intimidating. But by buying a franchise you immediately leverage the benefits from the franchisor’s experience and tested system for opening and operating their business model. Additionally, it is statistically proven that franchisees stand a much better chance of success than people who start independent businesses. While independent businesses stand a 20% chance of surviving the first few vital years, franchisees have an 80% chance of surviving.


TrainingYou don't necessarily need business experience to run a franchise. Franchisors provide training in everything from technology, to sales, to continuing business education and anything else needed to operate their business model.


For franchisors to be successful, their franchisees first have to be successful. They provide their franchisees with support every step of the way. Doing this helps them build a strong reputation which makes it easier for them to expand their brand and attract new franchisees.


Many franchisors encourage communication between their franchisees. This allows franchisees to leverage the built-in support of like-minded owners who are there to help each other out in many ways. Contrast this with being an independent business owner where you have to deal with isolation and loneliness.


There are many challenges and benefits to being an employee or owning your own business or being a franchisee. What you have to decide is if you want:

  • the security of a being an employee (which is becoming less and less secure with every passing year),
  • the independence of starting your own business but with the headaches of trial and error,
  • to become a franchisee with the freedom of running a small business while being supported by a proven business behind you.

If you have questions or want more information on how owning a FocalPoint Business Coaching practice makes being a business owner possible, let us provide you with some additional information. If you are looking for tools, training or Coaching on ways to improve in any of these areas, let’s connect. The next step would be to set-up a 10-15-minute call to clarify if what you’re looking for is something we can help with. Contact us today!


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