[lujim]

Half of all small business fail in the first 3 to 5 years. Imagine taking a job where you had to pay for your office, office supplies, computer, and every thing else out of pocket. And oh yeah, half the people are fired within 3 to 5 years without being reimbursed for their expenses. While some people have more resources or come from a more privileged background that is a social discussion. It's still pretty risky in terms of cash, assets, and time no matter who you are.

[fnordfnordfnord]

>Half of all small business fail in the first 3 to 5 years.

I'm curious about that statistic. A lot of these business could be hobby or other casual enterprises, tax avoidance schemes, and doomed businesses started by naive people. It doesn't mean a whole lot without some more context.

>Imagine taking a job where you had to pay for your office, office supplies, computer, and every thing else out of pocket.

Become a teacher!

>...that is a social discussion.

Social factors aren't irrelevant. People behave differently based upon socio-economic incentives. Not just entrepreneurs, either; take two engineers, one comes from a family with "fuck you" money, the other is a first generation college graduate. They both have started their own families and have young children at home. Now, imagine how their reactions might differ when placed in various ethical dilemmas.

[lujim]

> I'm curious about that statistic. A lot of these business could be hobby or other casual enterprises, tax avoidance schemes, and doomed businesses started by naive people. It doesn't mean a whole lot without some more context.

All models are wrong, but some are useful. That particular stat covers a pretty good cross section of legitimate small businesses. Some small businesses may be a cover for an underground marinara sauce operation used by the mafia to funnel dollars to a dog fighting operation..... Sure we could muddy it up more, but I don't think that stat is all that malicious or disingenuous.

> Become a teacher!

This claim does seem to be a bit disingenuous and exaggerated. Sure teachers cover an unfair amount of supplies and get paid very little. Do they really rent their classrooms, buy their own computers, and pay for 100% of everything out of pocket?

> Social factors aren't irrelevant.

My post was refuting the claim that entrepreneurs aren't taking real risk. Granted if you come from a wealthy family you aren't taking as much risk starting a business as someone taking a small business loan. I still contend that the risk to an individual (relative to them-self, not others) is greater when starting a business than taking a job.

[fnordfnordfnord]

>This claim does seem to be a bit disingenuous and exaggerated. Sure teachers cover an unfair amount of supplies and get paid very little. Do they really rent their classrooms, buy their own computers, and pay for 100% of everything out of pocket?

It was exaggerated a bit!

>Do they really rent their classrooms,

Of course not, but increasingly, my own resources are being put to use on behalf of my / my employer's students. Furthermore, remuneration in my field is easily several times what it is in education; and I think that's true for a lot of teachers. Sure, there are other benefits, but the pay is poor, approaching minimal, and that's not going to get you the best teachers.

>buy their own computers

Often enough, yes.

> and pay for 100% of everything out of pocket?

Far, far too much out of pocket.

[lujim]

I think we went of the tracks a few posts ago. I was saying that entrepreneurs take significant personal and financial risks and there is a high rate of attrition for even good businesses. My point was that after a physically, emotionally, and financial draining 5 year period there is a high probability that you end up with significant debt and no source of income (lol kind of like my college experience I guess). I know that teachers get crapped on and are underpaid. I get that it's unfair and it sucks.

[fnordfnordfnord]

Yeah, I probably should have used /s after that line.

> I was saying that entrepreneurs take significant personal and financial risks and there is a high rate of attrition for even good businesses.

I agree, and I think it's may just be a nasty feature of our country's demographics and the law of supply and demand.

I'm reminded of a post from a few years ago (I think I saw it here) examining someone's observation that a lot of engineering types were packing up and moving to Germany to start their company because failure would mean less financial hardship (that's not a great summary of the article). Here is an article in a similar vein (vane?). http://www.theatlantic.com/business/archive/2012/10/think-we...

[falcolas]

Most business owners are risking very little out-of-pocket money. Most are either funded via business loans against the business assets, or from investors.

Only a small number of bootstrapped companies (few of whom are represented on Hacker News) are risking their own money, and even then only the brave (or foolish) push it to the point where they can't sustain themselves if the business fails.

[lujim]

Don't forget about opportunity cost. It's common to discount opportunity cost and equity as "not as real as the money you spend on your credit card". However when the house payment keeps showing up every month and you decided to strike out on your own instead of taking that $6000 to $10000 per month you could have made in a stable software development job you are going out of pocket whether you realize it or not. That $300k you missed out on because you failed to cover expenses for 4 years when you could have been working as a software dev in some employers cubicle are real dollars.

Also some business owners do leverage some retirement savings when starting a business. It's a pretty good way to get low interest money. They can sustain if things fail, but they certainly feel it if they fail.