"Oh, I don't really have a business, I just work for myself."
Is something often heard out in the field. It sounds like a simpler, more manageable way to work independently without all the hassle of running a business. Who wants the headache? Get work. Get paid. Repeat.
But getting stuck in that cycle is a problem...
There is nothing wrong with doing an honest day's work for fair pay. Problem is that it isn't particularly sustainable. One day we may want or need to retire from manual labour. This requires saving funds overtop our living wages. We may get sick, or have an emergency that interferes with our ability to work and earn. There may be no government or corporate benefit plan to bail us out. In order to lean on savings or insurance benefits to get through a rough patch, money will have to be set aside and insurance premiums paid - all above our workin' man wages. Come a time we may like to invest in a small property, an opportunity, expanding our business or training in a new vocation. Those investment dollars must come overtop daily wages.
Two months ago I heard on the news a lady pleading with the Prime Minister for relief from skyrocketing energy costs and carbon taxes. She was bringing home $50,000 per year as a single working mom, and was left with $65 every two weeks to feed her family of 3. Real estate and rental markets are tight and increasingly expensive. It's a tough go out there. In my part of the world, the average household income for a family with 2 working parents is well north of $100,000.
The problem is that there is no middle ground - if you work for yourself, you are essentially a small business owner, and with that comes a ton of overhead and complexity. There are all the costs involved in setting up and operating as a proper small business. The licenses, fees, insurance premiums, marketing materials, website, communications and management devices and software, extra vehicles, tools and equipment, stationary and home office expenses, training and up-grading, bookkeeping and accounting, on and on and on...you will spend a lot more money than if you just had a regular job. Sure, we can write off some of those expenses, but we still have to come up with the money and all we save is the income tax and some sales tax on most business spending. Then there is the mental costs - the stress and the never ending task lists. Your brain will always be tired because of the constant decision making and planning required. We may just want to bury our heads in the sand for a couple of years but eventually something will catch up to us and we will find ourselves painted into a corner. The sooner we know all that is required to track and report, as well as best practices for running a business, the sooner we can put systems in place to handle these responsibilities. That may mean scheduling time do deal with administrative tasks, or delegating things that are not our strengths and that stall our momentum.
So if you are a solo-preneur there is a good chance you are flying without a net, doing all sorts of high-wire tricks to bring in the crowds and get paid. If you don't have a significant buffer after your business and family necessities are settled, you may want to carefully re-examine your exposure to risk, and what the actual rewards are for taking on those risks. How exactly are you benefitting from going solo?
Working for ones-self can remove some restrictions in our work life, but all the accountability for outcomes falls to you and me individually. The self-employed person is content with bringing home wages, but this is draining and eventually less and less profitable. The small business owner complicates his life investing himself to build an asset. The entrepreneur isn't looking for the next job, he is looking for the next opportunity to create exponential value for others, his success a by-product of the success he helps others realize in their lives. A successful entrepreneur is courageous and resilient and resourceful, but he does not foolishly take on unnecessary risks. Where do you fit on this scale?
Can you run a low-stress, values-driven small business and build an asset that returns some security for you and your family long term? Yes, you can. But it takes intention. It takes hard work and commitment. It requires setting clear goals for yourself and your business. It requires organization and delegation. It requires setting boundaries, even for yourself. It requires regular re-evaluation. It requires being excellent at communicating and working with others.
At the fork in the road between a job and self-employment, the path to independence is the much more difficult one. But that does not make it the wrong choice. Anything worthwhile requires effort and in time it gets easier, or maybe you just get tougher and smarter. Just make sure you go in knowing the deal, and try to look out for your future self.