Is entrepreneurship better than the traditional path of getting a good job and working hard for 40+ years? For many readers of this blog, this is the ultimate question.
Whether you’re a corporate type (like I was) who’s spent countless hours in a cubicle with no real end in sight… or you’re an ambitious high school student with the creeping feeling that college is not the ticket to a good life it once was.
For whatever reason, you’ve become aware that there are alternatives to the traditional path and the thought is making you a bit restless–good! How do you channel that anxiety in a useful way, unwind the confusion and develop a new plan that you can be comfortable with?
I believe the answer involves thinking about the question in a deeper, more analytical way. Approaching this is a pseudo-scientific fashion may seem over the top for some folks… but hopefully it will resonate and be useful for my fellow left-brained thinkers.
Why Bother With a Deeper Analysis?
Information can be powerfully motivating. A complex life decision, analyzed and presented in the right way can help destroy debilitating confusion, prompt deliberate action and instill confidence in setting a new life course.
As it relates to our question, the proper analysis has the ability to either propel you down the path of entrepreneurship (as now you would have renewed confidence in a worthwhile goal), or provide the proper justification to continue happily down your current (traditional) path.
Either way, you’d be better off for having thought about this question in a more meaningful way and based your actions on something more tangible than society’s existing conventions.
Defining the “Traditional Path”
When we talk about the Traditional Path, we’re referring to the trajectory in life that, for decades, Western societies have preached as the most likely path to a fulfilling life.
Broadly speaking it looks something like this:
- Work hard in school and graduate high school
- Go to college
- Graduate from college around the age of 22 (likely with significant debt)
- Get a starter job where you work at least 40 hours a week and only get 2-3 weeks of time off per year
- Receive modest pay increases as you move up the the ladder of change jobs
- Save for retirement
- Repeat for 40+ years until the age of 65
- Enjoy the blissful life for which you have worked so hard!
Defining “Entrepreneur” and the “Entrepreneurial Path”
Throughout this analysis, when we use the broad term “entrepreneur”, we are really referring to a specific breed of entrepreneurism–the location-independent entrepreneur.
This is virtually implied to most folks reading this blog, as the idea of being a brick-and-mortar entrepreneur (e.g. restaurant owner or store-front retailer) does not appeal to us whatsoever.
Factors such as startup costs, overhead, adaptability, barriers to entry and many of others are so much more favorable for location-independent business models, not to mention the freedom that comes along with not being tied down to one physical location.
When referring to the “entrepreneurial path”, it is generally referring to a modified version of the Traditional Path.
That is, it’s describing a scenario where someone begins on the Traditional Path (completing college and beginning a traditional career) and then later (perhaps upon realization that life could be better) transitions to the Entrepreneurial Path.
We call this scenario the “side hustle entrepreneur” and it is compared and contrasted with other likely entrepreneur scenarios later in the analysis. However, for the majority of the analysis, for the sake of simplicity, this scenario is synonymous with the “Entrepreneurial Path”.
Establishing a Framework for Answering Our Question
As our hypothesis is essentially a comparison (which path is better), it follows that we need a way to define “better” and objectively quantify each path such that an effective comparison can be made.
I’ll start by proposing that, at a high level, everyone is in pursuit of a more fulfilling life, however you choose to define it.
Therefore, for our discussion, I’ll use this single word, “fulfillment”, to embody our comparison of life choices–i.e. a more fulfilling life is “better” than a less fulfilling life.
In addition to defining “life fulfillment”, we’ll need a way to quantify and compare the fulfillment that is attainable through each of our two paths. Only by doing this will we be able to objectively validate our hypothesis. I’ll call this comparison mechanism our “Life Framework”.
Selecting the Variables for Measuring Life Fulfillment
Clearly, everyone’s vision and definition of a fulfilling life is different (and that’s a good thing!). However, I believe that if you asked thousands of people to describe how they envision a fulfilling life, you’d see some general themes emerge. Here are just a handful:
- More time to do the things you want to do
- Less need for doing things you don’t like to do (e.g. to work a job you don’t like or working too much)
- Inner peace
- Minimal distress and anxiety
- Safety and security for you and your family
- Being in control of your future
Many of these variables are similar and/or interrelated. After evaluating these and other factors that contribute to a more fulfilling life, I propose these three variables for the framework:
- Time Required
- Cash Flow
- Quality of Life
Let’s take a closer look at each variable to understand how they contribute to the overall goal of defining our Life Framework.
Variable 1: Time Required – The amount of time one must spend to generate the income needed for their lifestyle.
For most people, this describes the time spent working.
And this would include time spent at work, as well as time spent commuting to work, working remotely, or even thinking about work.
Inherent to this is the thought that the time spent at work is time that cannot be spent doing more interesting/ productive/ enriching things.
Conversely, it’s also assumed that if afforded the opportunity of having more available time, it would not be wasted and instead would be applied to a noble cause.
Variable 2: Cash Flow – The amount of money one earns each month.
Money is another major theme that comes up regularly when envisioning a fulfilling life.
Not money as an end goal (we all know better), but money as a useful and necessary tool for navigating the world in which we live.
Having “enough” money frees from the base level stressors (like not having a place to live or not being able to eat), and having a bit more than that provides some enhanced level of comfort, security, freedom and flexibility–all things that were on our list above.
To be more specific, we can think about money as Cash Flow which is a more day-to-day and useful way of conceptualizing money. Cash flow is not the same as net worth. Hard assets and non-cash-generating assets (like gold or homes) do not count as cash flow as they are not directly spendable.
Cash flow can come from a variety of sources, but for most people it’s a paycheck from a traditional job.
Cash-generating investments (interest, dividends, cash-flow positive real estate, etc.) as well as earnings from entrepreneurial ventures are other common sources of cash flow.
Variable 3: Quality of Life – The general measure of your emotional and physical well-being
Having plenty of available time and cash flow as resources does not guarantee fulfillment.
They will only take you so far, and thus we need a variable for our framework that encapsulates some component of application of these resources to your life.
Unlike the other two variables which can be easily measured (in time or money), Quality of Life is more abstract. Here are some factors that may contribute to a higher Quality of Life:
- Physical health. Having sufficient energy to enjoy all the activities in which you care to participate. You are not confined to the indoors and are free to travel and move as you please. You have no debilitating conditions or ailments.
- Mental health. Strong connections with family and friends, an inner peace and calm, frequent and intense feelings of joy and affection and infrequent feelings of anger, sadness and stress. You feel in control of your world and your emotions.
- Spiritual health: A sense of purpose, close relationships with family and friends, a feeling of connectedness with the natural world
- A sense that you are making the most of your life. Relative to other people, you feel that you are living a more productive, enjoyable life.
Defining the Life Framework
Now that we’ve selected three variables that, when taken together, are a decent measure of life fulfillment, it’s time to begin thinking about how these variables can be represented in a way that helps us know ‘where we are’ and ‘where we’re going’ on our path to life fulfillment. I’ll call this visual representation our Life Framework.
Figure 1: Defining the Life Framework
- Our first variable, Time Required, is plotted on the vertical axis.
- Our second variable, Quality of Life, is plotted on the horizontal access.
- Our third variable, Cash Flow, is represented as a bubble (where a bigger bubble represents higher cash flow).
In this way, you begin to see the regions of the graph where it is more and less desirable to be :
Zone 1 – Corporate Drone
This is the upper left portion of the graph and is loosely defined as the set of people whose work requires a lot of time, are paid marginally (low cash flow) and have a relatively low Quality of Life.
Zone 2 – Life is Good
Those here have managed to earn a better living (more Cash Flow) than their Corporate Drone counterparts, while doing it on less time and having a better Quality of Life. Life is good here, but there is still room for improvement.
Zone 3 – A Fulfilling LIfe
Those that find themselves in this portion of the framework are doing a lot of things right. Their work requires very little time, they have lots of available Cash Flow and have created a high Quality of Life for themselves.
Defining the End Goal: A Variety of Work/Life States
Now that we have defined our variables and established a framework for charting and visualizing our stated goal (a fulfilling life), let’s have a deeper look at where most people fit within this Life Framework.
More importantly, where do you currently fit?
Figure 2: A Sampling of Work/Life States within the Life Framework
The Average Job
Let’s begin with the area of the graph where post people on the Traditional Path end up.
This is your run-of-the-mill 9-to-5 job, with modest pay, not much time off, not much room for big pay raises and not much job autonomy. There are worse places to be on the Life Framework, but you are still within the Corporate Drone zone and far from living a fulfilling life.
The Working Poor
This is the worst of all scenarios–work takes all available time, provides a poor quality of life and barely pays the bills. An example would be someone working two or more minimum wage jobs, including late nights and weekends just to make ends meet.
This is “trading time for money” in its purest form and, sadly, is very difficult to move from this spot. With barely any available time, tough to look for better options or learn new skills.
To compound this, cash flow is barely sustainable, preventing the ability to save and invest. A huge percentage of the population exist here and stay here.
This is what we are often led to believe is the best of all scenarios–work hard, get a good degree from a prestigious college and make a lot of money right out of the gate. Examples might include investment bankers, lawyers, and business consultants.
Jobs like this require a huge amount of your time–this ain’t no 9-to-5! Late nights and weekends are expected and bonus points seem to go to those that spend the most time at work.
The pay is quite good, as it needs to be to fetch top talent and retain them long enough before burn-out. On the Life Framework, this is represented by a very large bubble (good salary with lots of Cash Flow) but is notably quite high on the Time Required scale.
Quality of Life is low as there is not much physical or mental energy to devote to health, family, friends, hobbies or bettering one’s self in any way outside of your current career.
These people have a high Quality of Life because they are truly following their passion, regardless of other life consequences.
Examples might include working full-time as a missionary or at an animal shelter. Work is spiritually rewarding, thus contributing to a higher Quality of Life than the standard Corporate Drone.
However, this job requires significant time for very little pay and is not sustainable long term if you hope to have a decent retirement.
The Forced Retiree
Having lots of free time is not an automatic ticket to the fulfilling life–sufficient cash flow is required.
People in this group either cannot work due to age or disability, or perhaps are desperately struggling to find a job (and become part of the Working Poor group mentioned above).
While these might have enough to pay the bills (possibly through governmental assistance), they have very little options or freedom as they have minimal cash flow, thus contributing to a low Quality of Life.
Lottery winners and people with extreme inherited wealth would find themselves here on the Life Framework.
Without the need to work for money, time is prevalent and Cash Flow high (with huge fortunes allowing for structured cash pay-outs via cash-generating investments). Very little can be done to put yourself here, but that’s probably a good thing!
Ironically, quality of life is not ideal, as those in this group often feel unchallenged and have no real direction.
A FULFILLING LIFE
Finally, let’s investigate where we want to be–the section of our Life Framework that defines our goal: a fulfilling life! Besides an abundance of money and time, those here have also created a high quality of life for themselves. Paradoxically, people who get here often find it easy to stay here.
With tons of available time and excess cash flow , one is in the best position to invest, make strong relationships, make smart choices, spend quality time with family and friends, find the time to exercise and eat healthy.
Clearly, the groupings above are just a smattering as there are an almost infinite number of possible Work/Life states in our Framework.
This exercise of mapping some of the more common states serves to hopefully test out the usefulness of our framework in its ability to visualize ‘where we are’ (for most of us including me, somewhere towards the left/middle) versus ‘where we want to go’ (a fulfilling life–to the lower-right portion of the Framework).
With this in place, we can now finally explore our hypothesis from within the Life Framework and be one step closer to validating whether the Entrepreneurial Path is better than the Traditional Path.
Stay tuned for Part 2 of this post where we dive even deeper into the analysis and compare and contrast the differences between the Entrepreneurial Path and the Traditional Path!
[For another great read on lifestyle choices, you can also check The retirement hypothetical by Dan Andrews]