Read: If You're Thinking of Becoming An Entrepreneur

Are you cut out to be an entrepreneur?

The idea of running a business and “being your own boss” will appeal to most people. Owning a business gives you control over your income but also presents some risks. Now, risk is something most people understand and are fine with, especially if it is within their risk threshold. What a lot of people don’t sign up for is the day-to-day hurdles involved in running a business. Not many people are cut out for this side of entrepreneurship, therefore, it makes sense if some people prefer not to be directly involved. For this group of people, entrepreneurship may not be their forte, at least not in the traditional sense of it. So, before jumping on the entrepreneurship bandwagon, let’s help you decide which one you are, a Passive or an Active entrepreneur.

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Passive Entrepreneurs

You might have heard people talk about earning “passive income.” This is common nowadays as more people look for ways to boost their lifestyle by earning additional income. Passive income is, therefore, income that is not the primary income and that is earned from activities that aren’t the primary source of livelihood of the individual in question. So if you have a strong career going on for you but still need to bump up your income, then becoming a passive entrepreneur is the best route for you. It is also a safer route if you are not sure entrepreneurship is for you but are willing to test the waters. Common businesses suitable for passive entrepreneurs are real estate rentals, affiliate marketing, blogging, investing in stocks, bonds, or a startup, and earning royalties from intellectual properties.

Active Entrepreneurs

These groups of entrepreneurs are actively involved in the day-to-day management of every detail of the business. Becoming an active entrepreneur could mean putting your career aside and treating your business as your sole source of income. Becoming an active entrepreneur is rigorous and would demand a huge chunk of your time, money, and effort, especially at the initial stage.

Deciding what’s best for you

Here are other points that will help you choose between passive and active entrepreneurship.

• You need a little extra income on the side but are not willing to forfeit your job or career.

• You are just starting a business and are not sure what to do

• You don’t have so much time to run a business since you’re already juggling so much

• You are short on capital and need to work to keep your business running until it becomes profitable

• You want to limit the risk associated with running a business by not putting all your eggs in one basket

• You feel you are not ready to manage a business or are simply not cut out to be an entrepreneur. So you prefer not to get involved in the daily decision-making but rather sit on the sidelines and let your money work for you.

If you agree with most or all of the points above, then you should consider passive entrepreneurship. For most people, switching from passive to active entrepreneurship is a matter of income. Most passive entrepreneurs will give up their jobs or careers once they begin earning consistent income from the business. But before you do that, here are some tips to guide you.

• Test your idea

• Network and connect with others in your chosen industry

• Put your finances in order

• Be resourceful and emotionally prepared

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