Begin Unrelated Story: I was talking with an employee who works for Mind Your Own Business–a company that makes small business accounting software. She was relating a time she had been pulled over by a policeman who asked her the standard questions, “where are you going?”, “where do you work?”. When asked where she worked, she replied “Mind Your Own Business”. The cop was kind of surprised and started to explain that it would probably be better to cooperate. She had to pull out her business card to prove that she, indeed, worked at Mind Your Own Business. End Unrelated Story
Okay, back on track. When you do work, you are providing value to someone. Actually, you are providing value to several people. You are providing value to yourself (assuming you get paid for your work). You are providing value to the end customer and you are providing value to your employer. If you work for the same employer for years, you will have built a great deal of value that goes beyond just the work you were paid for. Your work is contributing to making the business, itself, more valuable. Eventually, the owners of the business can cash out. They can take the value that has accumulated and sell the business to someone else.
The problem (from your standpoint) is that a good portion of the value you help create is never going to benefit you. Someone else is taking the risk of running the business and so they are getting the reward.
Now, assuming you are someone who puts a lot of effort into being highly productive, this means the value that you are producing is much greater than the value you receive. The discrepancy is caused by the fact that someone else (the business owner) is being paid to take the risk of being in business. Part of the value you produce is going to paying for your job security. So basically, you make a little less in order to have a secure job. Sounds reasonable right?
Well, not really.
Just how secure is your job? Companies merge, fold, downsize, and do all kinds of things that end up laying off employees. The idea that your job is secure is probably more of a fantasy than reality. So, what ends up happening to the value of what you produce that is in excess of what you are paid?
Several years ago, much of it went to support work systems. The cost of running your own business was so great that you had to work for someone who hired enough people to justify the cost of a computer system, network, telephone system, advertising, payroll system, etc.
This is not as much the case today. Many of the systems that were very expensive 5 years ago are now handled by simple subscription based services. For example, I pay $50 per month to have a company run my payroll and handle direct deposit for my company. I pay another $30 per month for a dedicated webserver when a T1 line alone would have cost $1,200 just a few years back. For a few hundred dollars each month you can even get an ERP CRM system that rivals the systems many Fortune 500 companies put in for millions of dollars.
My point is that the benefits of working for a large company are shrinking. If you are someone who really concentrates on doing work that is above average, you should probably be considering a plan to go into business for yourself. It isn’t easier to work for yourself, but if you are willing to work hard, you can build your own business in a way that captures as much of the value of your work as possible instead of basically paying someone else for a false sense of security.
Originally published May 3, 2007.