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As I had pointed out in my prior post, thats simply not true. It only applies to certain businesses (e.g. doctor, lawyer), sole proprietorships, or designated S corporations. If you were one of my customers, you wouldnt have the right to sue anything other than the corporate entity for assets owned by the corporation. You cant attach my personal possessions. Thats a matter of law, not my opinion.
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<p>No, actually it applies to ALL cases. Again, take the case of the guy who slips and falls on an icy patch on your sidewalk and breaks a bone. You better believe that he is going to sue whatever business shell you are using (corporation or whatever) and if that isn't enough to pay his bills, then he is going to furthermore sue you personally. And that IS a matter of law. This is something that you can look up. You can't just run a business that hurts somebody and then just walk away from all of the obligations by just hiding behind a corporate shell. Otherwise, everybody would do that. </p>
<p>In fact, this is precisely the problem that many would-be entrepreneurs run into. I happen to know quite a few people who would love to be entrepreneurs, particularly selling computer services to companies (i.e. setting up and upgrading computer networks, servers, and so forth). But what's the major hangup? Liability. Basically, if they screw something up on the job that causes a customer's computer systems to go down, the customer will sue them, bankrupting not only whatever corporate shell they are using, but potentially their own personal beings as well. That's why most of them don't become entrepreneurs. They checked it out with their lawyers and there is no way to get around it. In short, there is no way that you can completely shield yourself from all personal liability as an entrepeneur. </p>
<p>Besides, look at it from the standpoint of the customer. Let's say that you are a big company that needs to upgrade your computer systems. So you hire one of these computer consulting companies (which are usually just small shops), and they come in and screw up your existing systems, causing all your systems to go down for several days, resulting in lost productivity and lost e-commerce sales. You know that you are going to want to sue that consulting company. If that consulting company is just a corporate shell, then you will want to sue the individual entrepreneur too. After all, you ought to be recompensed for all those days of lost productivity. Otherwise, rich entrepeneurs would simply create new corporate shells all day long, knowing that they can never lose their possessions. So they set up company A, and that company gets sued our of existence. So then they set up company B, and that company also gets sued out of existence, and then they set up company C, etc. etc. Everybody would do this then and lawsuits would be pointless because you would always be attacking an empty corporate shell. </p>
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Your other example is rather extreme. Building destroyed? Terrorism? Perhaps you know some people whove suffered grave misfortune? Regardless, your examples seem to be about possibilities, not realities.
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<p>It doesn't have to be extreme. It can just simply be an economic downturn. It can be just a random lawsuit. It can be a whole hosts of factors. </p>
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As far as debt is concerned, that depends. Often, startups do require loans and personal guarantees. Mine didnt. My wifes didnt (shes owns & operates a multi-disciplinary facility that provides health care). Both are over two decades old & were started with little no or no debt. Again, I can cite many specific examples. Youre talking about generalities.
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<p>Uh, of course we have to talk about generalities. After all, we might as well talk about people who win the lottery. That's the easiest way I know of to become a millionaire. However, the GENERALITY is that playing the lottery will lose money. Just like there are people in the world who smoke 3 packs a day and still live to be a 100. However, the generality is that smoking will reduce your life expectancy. </p>
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Regardless, research by economists such as Thomas Stanley, author of books such as The Millionaire Next Door repeatedly indicates that entrepreneurs make up a large percentage of those who are well compensated
which I believe was the original subject of this thread
I simply dont think you should discourage (disparage?) entrepreneurship.
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<p>I am not trying to discourage anything, I am merely stating that entrepeneurship takes a certain mentality that not everybody has. Are successful entrepeneurs well compensated? Of course. But that doesn't mean that everybody should become one. The real question is whether you can take the risk of not having a steady paycheck. </p>
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And sure. Youre right. Businesses fail (your 90% figure). And when they do, employees can lose as much as or more than employers. If I go out of business, what happens to the employees who have outstanding mortgages and rely on that income to pay all their bills? You assume I (as the business owner) have higher debt than they do
youd be mistaken. I suppose you also assume they'll immediately find new jobs...</p>
<p>Again, though Im sure its not your intent, I simply think youre being somewhat extreme
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<p>The difference between entrepreneurship and "employee-ship" is quite fundamental. Entrepeneurs only make money when the business is profitable. But employees make money no matter what. Whether the business is making money or losing money, employees still expect to get paid, and if they don't, they can sue, and they have the power of the law to force employers to pay backwages. Nor would the corporate shell work very well, as I highly doubt that the government and the courts would look too kindly at an entrepreneur who was trying to hide behind a corporate shell to avoid paying his employees. If the business makes no profit, then the entrepreneur makes nothing. But all the employees got paid their wages. </p>
<p>Hence, it is quite clear that the risk is far higher for the entrepreneur. It's a correlation of risk and reward. Every week that an employee works, he knows he is going to get paid. However, an entrepreneur can work for a whole week and get paid nothing. Entrepeneurs get all of the upside, but also all of the downside. </p>
<p>This is why I have seen many former entrepreneurs got regular jobs during the 2001 downturn. This was particularly true in Silicon Valley where many people who had struck out on their own as independent computer consultants found that there was no consulting business to be had and they needed a steady paycheck, so they took a regular job. </p>
<p>The point is, everybody has to assess whether they really have the risk profile associated with entrepreneurship or not. Some people have it. Some people don't. We should not encourage people who don't have the risk profile to try entrepreneurship. </p>
<p>Besides, I said it before, I'll say it again. If all you care about is money, then just go and become an investment banker. A lot of entrepreneurship happens in banking too - i.e., a lot of successful bankers go off to start their own hedge funds and private equity firms. But again, you have to ask yourself whether you can tolerate the banking lifestyle. </p>
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I dunno man. My dad is an engineer (though I do believe he'd be considered management) and he makes quite a fine paycheck (200-300k/year.)
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<p>I don't want to be harsh, but 200-300k is a rounding error for the top bankers. The best bankers can literally make more than 100x that.</p>