Did you know that a single two-second distraction can cost you 15 minutes of your day? When your concentration is interrupted, it takes up to 15 minutes to get your focus back.
I was recently talking with a friend who said he’d be scared to try to start his own business because it seemed so insecure. I asked, “How is that any different than what you do working for someone else?” After a moment’s pause, he admitted that it really wasn’t.
When it comes down to it, you work for yourself, regardless of who is the owner of the company that cuts your check. It is your responsibility to market yourself, develop your skills, identify trends and position yourself to profit. Abdicating these responsibilities doesn’t somehow put you into an “employee” category where you have more job security.
Most successful people see their jobs like this. They are in a business relationship with their employer, but they see the employer as their client. This represents a significant change in mindset for most employees, but if you can get your mind around it, it can be one of the most powerful changes in perspective you will ever have.
Here are some ways that being an employee is very similar to being self employed:
- Your employer/client can get rid of you at any time.
- There is minimal job security from any one employer/client. You need diversification.
- Economic forces often determine if you keep the job/contract.
- Clients and employers aren’t required to be rational – even if you make them money and are valuable, you may lose your job/contract.
- Your ability to command large sums of money is directly related to your ability to “walk away” and find another client/employer.
- Employers/clients want people who bring significant skills to the table.
- Even if you are 10 times more productive, it may be hard to convince people to pay you 10 times more. (Although it is harder as an employee.)
If this is true, why aren’t more people their own boss starting their own business? It mostly comes down to education. Most people have an employee mindset. They don’t know how to get the things that their employer provides for them and assume they need to work for someone else to get those things. Here is a short list of some of the things that people tend to rely on their employer for and keep them from starting their own business:
- Retirement plan
- Health insurance
- Tax witholding
- Vacation and sick pay
- Marketing (finding clients)
None of these are particularly hard to get/do for yourself if you start your own business, but you have to put some effort into learning how they work. If you think you may want to be in business for yourself at some point, it is time to start researching the above list and learning how you can provide those things for yourself. You are a lot better off having a solid knowledge foundation ahead of time. Not only does it take away some of the fear of the unknown, but it can help you understand how to structure your business in a way to maximize your profits.
Maybe you shouldn’t start your own business. However, everyone can benefit from acting as if they are in business for themselves–regardless of who actually signs their paychecks.
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You bring up valid points. I never really thought of my job that way. Well, there is an issue of financing and if you fail, the possibility of losing a lot of money. Starting up a business is not that easy. It takes guts. Of course, there are now businesses you can start online where the only requirement is time and not money.
I think not only the fear of failing is what’s stopping most people. Some people fear success (like I do). Besides, it’s not really for everyone. Maybe people are just happy being employed.
A lot of people like the false security of being employed. It is amazing how little money it takes to start a business now days–and I’m not just talking about some online build-a-website type thing. So much of what you use to have to pay for is now free or very inexpensive.
I was talking with a business man this weekend who told me how he bought a computer for his business in 1985 for $4000 (in 1985 dollars) and how much easier it made it to run his business. You can get a very usable computer and software today for $300 and probably less if you want to watch CraigsList for a few weeks to find a good deal.
Same thing goes for how inexpensive communication is. You can get setup on skype with unlimited calling for something like $30 to $40 per year and it works very well. 20 years ago this would have been extremely expensive.
So much of the basic infrastructure is free or dirt cheap.
There are still a lot of things to consider. And it all depends on the nature of business. What if you need to hire employees? That would cost money too. And what if you can’t find cheap equipment? All I’m saying is it’s not that easy. Simple maybe but not easy. I guess most of my fear came from seeing my mother fail three businesses she had in the past. I didn’t want to make the same mistakes she did.
You could choose a business that requires a lot of employees or you could choose one that you can start with just yourself and outsourced help. You can choose to start a business that requires a huge capital investment or you can choose to start a business where you can simply pay as you go with little start up capital needed.
My point is that just because there are some businesses that require a lot of money to start up shouldn’t be an excuse. If I need a car, I don’t let the fact that some cars cost over $250,000 keep me from purchasing transportation.
If you want to start a business, start one where the cost of failure is low. Yes it requires planning and yes it requires work, but you can either do your planning and work for someone else or you can do it for yourself. :)
Health insurance isn’t particularly hard to get for yourself? Maybe that’s true if you have no children, no pre-existing conditions, and no need to ever go to the doctor. My husband actually quit freelancing mostly to get our family decent health insurance at a price we could afford. It remains to be seen how much the new health care reform package will change this situation. (And yes, I know all about HDHPs and HSAs and all the other options, believe me. Been there, done that.)
I’m speaking from experience of getting health insurance for my wife and I when my wife was already pregnant–so a pretty big pre-existing condition. Yes we had a high deductible, but we were able to keep the costs fairly low by forming a two person group. In some states group policies can’t go up by more than a certain percentage for pre-existing conditions so there was a cap on how much more they could charge. It wasn’t super cheap, but it wasn’t too much out of line with what an employer would have had to pay for our insurance.
Was the insurance you were finding significantly higher than what your husband’s employer has to pay for your coverage?
I often think that ‘being self-employed’ vs. ‘being an employee’ is very similar to ‘owning your own home’ vs. ‘renting’:
As a renter/employee there’s less responsibility (you pay the rent & that’s it/you do your job & go home). But there’s also less flexibility (your landlord sets the rules/your employer sets your hours).
As a home/business owner there’s more flexibility (you make the rules/you choose your work). But also more responsibility: You’re the one who has to replace the roof if it blows off/If your payroll taxes are late, you’re the one with a penalty.
I know people who have the education to run their own business, but they choose to exchange some flexibility for a lighter load of responsibility. I know others who have their own business, but are suffering because they are unprepared for the responsibilities that come with it.
Is working for someone else really that much less responsibility? Obviously if you work for yourself, you have to deal with your own payroll, doing taxes, etc. but most of these things can be outsourced to other small businesses that specialize in those things. But when it comes to taking responsibility for making sure you have an income, working for someone else isn’t any less precarious than working for yourself.
The only real difference is mindset. Our schools train us up to think like employees and teach that there is security in working a job. On a subconscious level many people just think that is the way it is, and have been taught that stating your own business is risky.
However, starting a traditional brick and mortar type business, especially in today’s economy, is still very risky, the internet offers several, love investment business opportunities, that the risks have been drastically reduced for today’s entrepreneur.
We live in the information age, isn’t it wonderful?