Don’t Mistake Change of Employer for Entrepreneurship

 

Suppose you had a job as a driver for a company ferrying executives and employees to their destinations. One day, you decide to quit and become a Uber driver. Overnight, you change from being a fixed salaried employee to one with a variable income in the gig economy. Are you then an entrepreneur?

The short answer is No. What changed is that instead of working for a single employer, you now derive your income, piecemeal, from multiple employers. These multiple employers are passengers taking your Uber ride. The reason why you are not regarded as an entrepreneur is that you did not take considerable risk in making this move. It is true that you did take some risk in that your income is now variable. However that is not sufficient to be regarded as entrepreneurial.

Now suppose that instead of becoming an Uber driver, you decide to buy a limousine and provide a service to transport passengers from the airport to the city’s hotels and vice versa. Now you may say that it is not much different from being a Uber driver. One part of it is true. The part where you now derive your income from multiple employers who are your passengers. The other part is not. However instead of relying on Uber to provide the bookings, you now do your own marketing. This may include posters at the airport and hotels to advertise your services, a website or an app to inform and receive advance bookings and so on.

When you first started, you probably do all the driving as well as all the other aspects of the business. Later, you decide to employ another driver to take care of the hours when you are not driving. Then another driver after you got bogged down with all the other work. Then as business expands, you decide to purchase another limousine and with it, 2 additional employees.

These steps count as entrepreneurial as there are 2 distinct risks that you took. The first is to begin taking in employees. The second is the capital risk involved in the purchase of another limousine. Furthermore when you started, you probably worked from home or shared premises. In time to come, you probably had to rent premises to conduct the business.

It is all right to start in the gig economy and then make an entrepreneurial move later. In the example above, the startup used such a step approach.

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