Do you ever find yourself dreaming of having your own business? I think most people do at one time or another (that is, those who aren’t already self-employed). Striking out on your own to blaze an independent career path is an integral part of the American Dream. But is being your own boss something for everyone to pursue? Should you start your own business?
You probably should be self-employed if…
Being self-employed requires, as much as anything else, a different mindset. What makes up that mindset?
You LIVE to work! Some people work to pay the bills, but others live for work itself. This is often a matter of finding the right kind of work, the kind that you truly find fulfilling, and sometimes it’s that you’re on a hot streak and making a lot of money. But what ever it is that drives you, if work is your obsession, having your own business is a natural development.
You’re flexible and creative. Obstacles and difficulties may slow you down, but they never stop you completely. You’ll do what ever you have to do to move forward, and you’re the kind who can think around problems. Most jobs today require an increasing amount of both flexibility and creativity, but when you’re running your own business, you’ll need to have both qualities in unlimited supply!
You’re a self-starter. You don’t need a supervisor setting your agenda—you know what it is you need to do and you’re fully capable of setting and executing the plans that will make it happen.
You have sales skills. No matter what kind of business you might choose to go into, you need sales skills. Having them is often the fundamental difference between an employee and a business owner. Having the right skills or products is an important part of running a business, but nothing happens in the business unless you can sell those skills and products to willing customers.
You’re security drive isn’t very high. A high security drive is to a new business owner what excess weight is to a marathon runner—too much of it will keep you from moving forward. A business owner needs to be able to function effectively in a situation where nothing is guaranteed—not cash flow, customers, supply lines or even employees.
You have “retail skills.” I’m not referring to retail experience here, but of having the type of skills that can be sold directly to the public or to a specific client base. For example, a corporate accountant would have some difficulty translating his skill set into a “product” that could be sold to the general public; a certified public accountant (CPA) would have a much easier time of it because he can prepare tax returns and conduct independent audits.
You’re a natural saver. Income can (and most typically is) a roller coaster when you have your own business. One of the best ways to deal with the income instability is to have a well-fed savings account. If you’re a saver by nature, this will come easily. If you’re not a saver, your business may fail for lack of ability to manage cash.
You probably should NOT be self-employed if…
As much as you might want to go into your own business, there are certain personal preferences that might make it the wrong path to take.
You value your free time. It’s often thought that one of the benefits of self-employment is having more free time, but nothing could be further from the truth. The self-employed typically work longer hours than those on someone else’s paycheck, especially when the business is new. If you like having your evenings and weekends free, you’re probably better off not working for yourself.
The prospect of an un-steady paycheck stresses you. If you like financial predictability, you should work for someone else. There’s much to be said for a steady paycheck, especially one with benefits and paid time off.
Outside interests take up a lot of your time. If your primary interests in life are non-work related, you should work for someone else. When you do, there’s a limit to the amount of time, energy and concern that you need to expend in the earning of your income. That frees up your time and even your mind to concentrate on your outside pastimes.
You live paycheck to paycheck. For many people this is just a way of life, even if no one ever admits to it in public. And when you’re on someone else’s payroll it’s much easier to live on the financial edge—not only will there always be another paycheck coming after the last one, but there are usually benefits in the mix as well.
You’re more comfortable working within a structured environment than working alone. Some people are self-directed—they do their best work when there’s no supervision. Others thrive on structure, order and authority. If you fall into the second category, you’re better off working for someone else.
Never assume you’ll be better off being in your own business. In the end, being self-employed or working for someone else isn’t a matter of one being better than the other—it’s mainly about what works better for you personally. For some that will mean working for someone else; for others it will mean striking out on their own. What’s most important is knowing which will work better for you.
There are some good points in this post, but I disagree on two major points. First, people who climb the corporate ladder will also work incredible hours. It’s widely known that Jeff Immelt, CEO of General Electric, works 100+ hour weeks. People will work hard in self-employment, but there’s a much better chance of working the hours you want to work. Second, people with outside interests have a better opportunity to fulfill those goals as self-employed people. If you are required to be in the office for a set amount of time, you don’t have the time to fulfill those interests, especially if you have to do those interests during the day.
The self-employed people alluded to in this post are usually the people looking to grow their businesses at all costs before cashing out for millions of dollars. The percentage of businesses like this are extremely small. There are plenty of self-employed people and small business owners who run businesses that more than provide for themselves and their families while giving them the time freedom that traditional employment with two weeks of vacation and set hours simply does not allow.
Dallon–Jeff Immelt is the CEO–that means he’s self-employed. And he works 100+ hours per week. That’s what you do when it’s YOUR company.
I’ve really enjoyed being self employed though I do have a high need for security and value my free time. In some ways I feel that being self employed allows me to more directly control those two values. Another benefit of being self employed is that you can incorporate those outside interests in to your work occasionally depending on what your business is.
But don’t be self-employed. You’ll end up paying a lot of taxes like an employee in the E quadrant (Cashflow Quadrant).
Create a company (i.e. LLC, C Corp, S Corp) and get the tax breaks like the rich.
If you can, start it part-time when you’re home. Don’t quit your day job yet. But once your business picks up, “See ya!”
Dallon makes some good points. While a self-employed person does have to want to put the time in, there are people who balance their work and other interests.
I have many of the characteristics of someone supposedly set to be an entrepreneur. Except the one no one thinks to mention–a desire to make money.
After more than 20 year working in nonprofits, I think I’m unable to consciously turn a profit. Maybe my entrepreneurial project should be to start my own nonprofit org. 🙂
I was an entrepreneur and loved it! I still use my skills in teaching young people. As you get old(er), I started switching to semi-retirement. I do the things that are more fulfilling and less stressful than having my own business.
I’ve done freelance work before, but just as a way to make extra money. I don’t think I’d like to do it full time. Would consider starting a business with some people though.
I really liked this post. 🙂 Sometimes people can get so caught up in the idea of starting their own business that they never really think of all that goes into it. It’s also a good reminder.
My advice would be to seek advice. 🙂 I’ve seen more than a few friends step into entrepreneurship with a terrible business model or with a product that has no market. We all need outside people who will tell us the hard truth and save us from ruin. Sadly, many over-optimistic business owners end up in bankruptcy because they failed to seek wise counsel at the outset.
It’s ALL about mindset.
I think what most of these bloggers are forgetting to mention, is that they are writing blogs and we are reading them. The fact that people who are successful take action. They don’t know how to get rich if thy never been but they started. Thats the idea I have. Most people have great ideas and are experts at something and just from that one idea you can branch off with millions. Im a suspect to this tradition, I guess part of my problem is that I think I can come up with a better idea or something that would be more fun. I guess, the key, is to just start on any idea, get motivated, and have fun while gaining some experience and getting your feet wet in the entreprenurial world.