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Is Getting a Job Riskier Than Starting a Business?

Play at your own riskWe were recently walking through the retail business area of our campus – our campus “downtown” you might call it. In the middle of the main block, two storefronts in a row were boarded up.

It’s a reminder that small businesses fail. The dreams of two or more entrepreneurs were unrealized. Lives were disrupted. Money may have been lost.

The most cited number is misinterpreted

Like us, you’ve probably heard it over and over again. It usually goes something like this:

“Starting a business is risky. Ninety percent of all entrepreneurial ventures fail within the first year.”

Some people say two years or five years. It doesn’t matter; the number is daunting.

We think the origin of this number stems from The State of Small Business: A Report to the President for the year 1994. We got it via Entrepreneurial Finance by Janet Kilholm Smith and Richard Smith.

The 90% number so often quoted is a misinterpretation of the data. The research actually showed that nearly 91 businesses ceased operations for every 100 startups, on average for the five years from 1990 to 1994.

To understand the misunderstanding, let’s say 100 new jobs were created in the past year while 91 people got laid off. Would we say we had a 91% job loss rate? Or would we say the net gain is 9 jobs?

When it comes to jobs, net gains are reported. When the subject is startups, the failure rate is cited. Why the difference?

The actual failure rate of startups

Scott Shane takes a different approach in his excellent book, The Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By. His data shows that, if 100 entrepreneurial ventures were started today, the expected number of failures each year would be:

failure rate chart

While his numbers look a whole lot better, the odds are still stacked against startup entrepreneurs. But statistics are funny things.

The failure rate for employees

The Bureau of Labor Statistics recently released the results of a long-term study on labor market mobility. You can go to their news release if you want the details. In general, they showed that if 100 people started a new job today, only 67 would still hold that same job in a year. In five years, only 32 will hold the same position in five years.

So the survival rate for jobs is lower than the survival rate for startups!

We can hear the chorus of objections.

Some of these employees may have been promoted.

Others may have elected to take another job – maybe even a better one.

Of course, some were involuntarily let go.

Even then, many of them may have been eligible for unemployment.

In any case, they didn’t have money at risk like entrepreneurs do.

The number rarely discussed

Well said! However, it also highlights what we often ignore when we cite statistics about the failure rate of startups:

Some of the startup entrepreneurs may have ceased operations for a better opportunity – as an employee or an entrepreneur.

And then there’s the statistic we haven’t talked about yet. In fact, almost no one ever talks about it. Its source is the same as the 90% statistic mentioned earlier.

Only 9% of startups cease operations with unpaid obligations, on average.

Few entrepreneurs actually walk away owing money. They may have lost what they invested. However, no one else did. Suddenly, entrepreneuring doesn’t sound quite as risky as we are led to believe by popular lore

Freedom or security is the age old argument. It turns out there are risks in both employment and entrepreneuring. Successful entrepreneurs are masters at risk mitigation.

You can reduce the risk of leaving your job with a little advance preparation. Test yourself against these 10 signs you’re ready to quit your job and start a business. And check out The Entrepreneur Equation by the amazing Carol Roth.

Image in this post from nosheep

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What’s Hot in 2009: Careers

maple_leaf_foods_logo This week on The Bigg Success Show, we’re taking a look at opportunities and threats in 2009. We begin the five-part series today by looking at careers.

We recently posted an article on hot careers for 2009. On today’s show, we want to share some more thoughts. It’s a tough market if you’re looking for a job or changing careers right now. However, rest assured, there will be opportunities in 2009.

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Opportunities in 2009

In the near future, we think the best opportunities will be “pockets”. As we define this term, “pockets” are niches within a larger job category. To find the pockets of opportunity in 2009, think about what’s been in the news and what opportunities in your area of expertise may benefit from that news. 

For example, while foreclosures and bankruptcies are wreaking havoc on many, they are also creating opportunities for others. The finance profession has probably been hit as hard, or harder, than most fields.

However, opportunity still exists for certain specialists. A friend of ours is employed by a major bank’s workout department. In the last month-and-a-half, they’ve gone from our friend and one other employee to a department with about forty employees.

Some of these opportunities may be really hot in the next year or two. Then it will be time to move to a different specialty.

Opportunities in 2009 and beyond

For the long-term, think trends. In the article we mentioned previously, we looked at careers that the Bureau of Labor Statistics expects to be in high demand for the next eight years or so. Then we refined it by looking at expectations for 2009, industry by industry. 

If a downturn was expected in an industry, we excluded careers in that field from the list. For example, it’s expected that the casino industry will be hiring people at an above-average rate in the coming years. However, the industry isn’t expected to do well in 2009 so we removed jobs in that sector.

One trend we’re all familiar with is the aging of the baby boomers. As they reach retirement age, many career fields are expanding to serve them. One is the health-care arena where demand for workers isn’t expected to be saturated for some time to come.

Another field that plays into this trend is financial services. Especially in light of what we experienced in 2008, people are being more diligent with their investments. In particular, the baby boomers are looking for professionals who can advise them on crucial financial decisions.

These are just a couple of examples that play off this one trend. The full article has over fifty occupations with a bright outlook in 2009 and beyond.

Even if you’re not currently in the market for a job, you might find it valuable to take a look at this information. You may just discover your bigg opportunity.

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Thanks so much for checking in with us today. Again, be sure to check out our extensive article on hot careers for 2009, you'll find over 50 professions listed. Next in our series of what’s hot in 2009, we’ll focus on business opportunities. Until then, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00301-010508.mp3

Related posts

What’s Hot in 2009: Businesses

What’s Hot in 2009: Threats

(Image in today's post by MISHA)

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What's Hot in 2009: Careers

maple_leaf_foods_logo This week on The Bigg Success Show, we’re taking a look at opportunities and threats in 2009. We begin the five-part series today by looking at careers.

We recently posted an article on hot careers for 2009. On today’s show, we want to share some more thoughts. It’s a tough market if you’re looking for a job or changing careers right now. However, rest assured, there will be opportunities in 2009.

___

___

Opportunities in 2009

In the near future, we think the best opportunities will be “pockets”. As we define this term, “pockets” are niches within a larger job category. To find the pockets of opportunity in 2009, think about what’s been in the news and what opportunities in your area of expertise may benefit from that news. 

For example, while foreclosures and bankruptcies are wreaking havoc on many, they are also creating opportunities for others. The finance profession has probably been hit as hard, or harder, than most fields.

However, opportunity still exists for certain specialists. A friend of ours is employed by a major bank’s workout department. In the last month-and-a-half, they’ve gone from our friend and one other employee to a department with about forty employees.

Some of these opportunities may be really hot in the next year or two. Then it will be time to move to a different specialty.

Opportunities in 2009 and beyond

For the long-term, think trends. In the article we mentioned previously, we looked at careers that the Bureau of Labor Statistics expects to be in high demand for the next eight years or so. Then we refined it by looking at expectations for 2009, industry by industry. 

If a downturn was expected in an industry, we excluded careers in that field from the list. For example, it’s expected that the casino industry will be hiring people at an above-average rate in the coming years. However, the industry isn’t expected to do well in 2009 so we removed jobs in that sector.

One trend we’re all familiar with is the aging of the baby boomers. As they reach retirement age, many career fields are expanding to serve them. One is the health-care arena where demand for workers isn’t expected to be saturated for some time to come.

Another field that plays into this trend is financial services. Especially in light of what we experienced in 2008, people are being more diligent with their investments. In particular, the baby boomers are looking for professionals who can advise them on crucial financial decisions.

These are just a couple of examples that play off this one trend. The full article has over fifty occupations with a bright outlook in 2009 and beyond.

Even if you’re not currently in the market for a job, you might find it valuable to take a look at this information. You may just discover your bigg opportunity.

___

Get the tips and tools you need to be a BIGG success
when you subscribe to our weekly newsletter
the Bigg Success Weekly – it’s FREE

___

Thanks so much for checking in with us today. Again, be sure to check out our extensive article on hot careers for 2009, you'll find over 50 professions listed. Next in our series of what’s hot in 2009, we’ll focus on business opportunities. Until then, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00301-010508.mp3

Related posts

What’s Hot in 2009: Businesses

What’s Hot in 2009: Threats

(Image in today's post by MISHA)

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How Long Do You Have To Work to Pay for What You Buy?

leftovers In physics class, we learned about the law of inertia – an object in motion stays in motion. So it is with our money. We start spending and we keep spending!

Now we’re trying to slow down our spending and find ways to save money. Today, we want to discuss a new way to think about your purchasing decisions.

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Getting to the numbers

The Bureau of Labor Statistics (BLS) tracks many things, including consumer finances. From their most recent study, we calculated how much the average wage earner makes a year.

We then did some more research to determine how much vacation we take and how many hours a week we work, on average. From all this data, we determined that the average earner made $19.38 per hour before taxes.

Next we looked at spending by category, according to the BLS study. We divided that amount by the $19.38 an hour to determine how long we have to work to pay for what we buy.

The numbers

The average American wage earner works for almost a month to pay for entertainment and dining out.

We work about a week and two days to pay for our vacation. Think about that – we spend more time working for our vacations then we spend on them!

And since we’re nearing that time of year where we’re all feeling extra generous, we also found that we spend a full week working to pay for Christmas presents.

There’s power in this tool for you

It may be useful to think about past spending decisions, but the power of this tool comes in helping you make decisions now.

For example, say you’re the average wage earner thinking about purchasing a LCD HDTV. It would cost you around $600. You would have to work two-and-a-half days to pay for that TV.

Is it worth it to you?

A bigger house

We recently saw that the median price for a house is $200,500. You would have to work two months and a week every year to make your mortgage payment on that house.

You may not be thinking about a bigger house now. But let’s say the day comes when you decide you’d like to stretch a little. The median priced house was requiring 19% of your income; you think you could handle 25%. Now you’ll have to work three months out of every year to pay the mortgage on this bigger house.

Is it worth it to you to work three extra weeks every year just to pay your mortgage? Is there anything else you would rather buy with your hard work?

The formula

So far we’ve talked about averages, but they don’t really matter. What matters is how much you make per hour. Here’s how to calculate it:

Amount earned per week ÷ Hours worked per week = Hourly earnings

Your pay cycle may not be a week, but you can adjust accordingly. The BLS statistics look at before-tax income. Ideally, you’ll look at disposable income – after all taxes have been paid – since that’s the only money you have available to spend.

As salaried employees, we often don’t fully track how much time we work. You may have to track it for a week or two. If you really want the full picture, include your commuting time and any other job-related time.

Invisible expenses

Don’t just think about your major purchases. Consider your invisible expenses – those frequent small purchases that can really add up over the course of the year.

For example, say you spend $5 every day on lunch. Over the course of the year, that would add to $1,275 (assuming one week’s vacation). The average earner would have to work 66 hours to pay for this.

Is it worth it?

You might look at that and decide that it’s not. You start packing a lunch which only costs you $1. Now you would only have to work thirteen hours a year to pay for your lunches.

That’s 53 hours of work that could be spent on something else!

How about a nicer vacation, starting that emergency fund, or paying off the debt that’s keeping you up at night?

So frame your expenditures by the number of hours you have to work to pay for them. Then ask yourself if it’s worth it. It’s a great way to prioritize your spending.

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Thanks for visiting us today. Come back next time when we discuss why you can’t have it all, but you can have all you really want. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00276-120108.mp3

Related posts

These Forgotten Costs Often Sink Us

Is Convenience Busting Your Budget?

Don’t Make This Costly Mistake

Getting Aggressively Passive: Creating A Passive Income That Sets You Free

(Image by House Of Sims, CC 2.0)

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Hot Careers for 2009

By Bigg Success Staff
12-15-08

2009_hot

There is no question that it is a tough market to be looking for work. However, there will be opportunities in 2009. To find one that’s right for you, think news lines and trend tracks.

News lines

If you want to know what will be the hottest careers next year, look at the headlines this year. Related jobs may not be in the highest demand in the long run, but there certainly will be plenty of opportunities in 2009.

Many of these jobs are specialties within a larger job category. Therein lies a lesson for all of us – think about what you do and how it relates to the news. Then look for opportunities within that niche area.

Foreclosures and bankruptcy
Professionals who can help companies work through the financial and legal morass left by the housing bubble will do well in 2009. Banks, law firms, accounting firms, and large corporations are already ramping up workout departments, creating a need for both the professionals themselves and people who assist them.

Collection agents will also be in demand as businesses turn to outside firms to collect money they haven’t been able to collect themselves.

On the consumer side, credit counseling is an old industry with a new reputation. It is now considered mainstream and occupations in this industry were growing rapidly even before the last quarter of 2008. For more information:

National Association of Certified Credit Counselors 

International Association of Professional Debt Arbitrators 

Center for Financial Certifications

Energy costs
Oil hit new highs in 2008 only to recede to prices not seen for years. However, it is fully expected that oil prices will rebound. Alternative energy companies are expected to do well, especially if expected development incentives from the U.S. government come through.

Since this is a relatively new industry, not many people have direct experience. So the industry will recruit from outside for all areas of the business. If you have transferable skills, consider companies in the emerging industry. This field should have traction for some time as the developed world moves from its dependence on oil.

Layoffs
The last couple of jobs reports have been dismal. Companies are cutting back on their workforce with a vengeance. Career coaches should be in demand as more people become disillusioned with their current career and seek more fulfilling alternative. You can learn more about coaching from the dominant certifying body, The International Coach Federation.

In tough times, many people think about starting their own business so they can have more control over their lives. One of the best ways to do that is to buy into a franchise system. Expect franchisors – those companies who offer franchises for sale – to do well. For more information about the franchise industry, check out the International Franchise Association. You might even decide to be your own boss and buy into a system yourself.

Trend tracks

There are careers that play off major trends that should still do well in 2009 and beyond. We took a two-step approach to developing this list. First, we turned to the Occupational Outlook by the Bureau of Labor Statistics. These are careers expected to be in demand through 2016 because they play off of major trends – the aging population, the growth in education, technology, and more.

Then we refined the list by looking at industry predictions for 2009. If an industry was still projecting growth, we kept it on the list. If not, we culled it. Here’s our final group, organized by level of education required:

Professional degree
Dentists
Lawyers
Optometrists
Pharmacists
Physicians and surgeons
Veterinarians 

Doctoral degree
Biochemists and biophysicists 
Clinical, counseling, and school psychologists 
Computer and information scientists, research
Medical scientists, except epidemiologists
Teachers (postsecondary)

Master’s degree
Counselors (educational, marriage and family, mental health, rehabilitation, school, vocational)
Mental health and substance abuse social workers
Physical therapists
Physician assistants

Bachelor’s degree plus work experience
Actuaries 
Computer and information systems managers
Education administrators, preschool and child care center/program
Medical and health services managers

Bachelor’s degree
Accountants and auditors
Computer software engineers, applications
Computer system analysts
Financial analysts and personal financial advisors 
Network systems and data communications analysts
Substance abuse and behavioral disorder counselors
Teachers (elementary school, except special education)

Associate degree
Cardiovascular technologists and technicians
Computer support specialists
Dental hygienists
Environmental science and protection technicians, including health
Paralegals and legal assistants
Physical therapist assistant
Registered nurses
Secretaries (legal)
Veterinary technologists and technicians

Vocational degree
Automotive service technicians and mechanics
Licensed practical and licensed vocational nurses
Nursing aides, orderlies, and attendants
Teachers (pre-school, except special education)

Experience in related field
Sales representatives, wholesale and manufacturing, except technical and scientific products
Self-enrichment education teachers 

On-the-job training (long-term)
Automotive glass installers and repairers
Electricians
Interpreters and translators
Plumbers, pipefitters, and steamfitters
Police and sheriff’s patrol officers

On-the-job training (moderate-term)
Bookkeeping, accounting, and auditing clerks
Dental assistants
Maintenance and repair workers, genera
Medical assistants
Pharmacy technicians
Social and human service assistants

On-the-job training (short-term)

Home health aides
Personal and home care aides
Physical therapist aides

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Great guide

We found a great resource that may be unfamiliar to you. It’s called Career Voyagers. While it seems designed for career choosers, rather than career changers, we still think there is a great deal of value in spending some time with it.

You can look at industries in which you have a particular interest. For a more general view, check out their Top 50 In-Demand Occupations and Other In-Demand Occupations.

Hear today’s lesson and laugh on The Bigg Success Show. 

Related posts

Hot Businesses in 2009

5 Questions for Job Seekers in 2009

Top Threats to Your Career and Finances in 2009

(Image in this article by -MISHA)