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Is Self employed all its cracked up to be?

by Scott

During an economic downturn where established businesses are laying off people on a weekly basis we usually see an upsurge of the self employed or those in business for themselves.  Many times you will hear of people who have decided to go their own way in the world.  Some of them will flourish at it and some will be desperately seeking employment while presenting the brave face of happiness to the world.  You will read a lot of books that speak to the joys of entrepreneurial ventures.  Rarely do you find books that speak to the joys of being simply employed and not self employed.  Is one better than the other?

My personal belief is that the world requires all types to function well.  GetRichSlowly.Org has an article titled Employee or Entrepreneur.  It covers some of the differences between being self employed vs being employed.  While it does a good job of starting the discussion, I think it leaves a lot of ground uncovered.  What do I mean by that?  Well I think their is a wide range of categories that people can fit into when it comes to the working world.  I believe we all should work and provide value into the world.  It is the only way our world can continue to grow and prosper.

What are some of those catergories?  And realize that you can fit into many of them at the same time.  So this isn't an either/or situation but a sliding scale.

Ok on to the groups.

Group 1 - Not working Whoa there.  I thought you said we should all work and provide value to the world??!?!?  So why do you start out with the not working?  This category is better thought of as Not working in the traditional sense.  It includes stay at home moms and dads, volunteers, retirees, and other people who provide value to the world and do a tremendous amount of work but don't fall into the traditional categories.  I think this group is probably the most underappreciated group in the world.  If you are currently in the Not working category, realize that you are appreciated and valued.  All of us fit into this category at some place in our lives.  Being a son, a daughter, a father, mother, a volunteer at church or charity, our hobbies, etc. We all have parts of our lives that don't directly generate income.  Many times those are the parts that make us the happiest.  Enjoy Not working!! 

Group 2- Employee or W2s  You work for someone else.  You get a paycheck, benefits, and someone else makes the overall decisions.  You can work for an hourly wage or be on salary.  This group covers a wide range of responsibilties from the janitor sweeping the floors and changing the trash up to the CEO making millions of dollars.   Regardless of your position in the company, you have an obligation to your employer to be the best you can at your job.  The majority of the workforce fits into this category.  It is the easiest one since your employer provides most of the structure for you.

Group 3 - Self Employed -  Pretty self explanatory.  Self employed people are those that work for themselves.  They are the company and the employee. Don't think that a self employed person is limited to only being a one man team though.  Self employed people can have employees as well.  They are the technicians of the world.  Plumbers, lawyers, auto repair, even doctors and dentists fit into the self employed category.  Are you self employed?  There are a couple of ways to find out.  Would your business continue without you?  If you got sick would your income disappear?  Is the business based on your skills and personality?  Regardless of the size of the group you work with you may still be self employed. 

Group 4 Business Owner  Do you own your business?  Now many people will argue that self employed people are business owners since they have to file taxes as business owners.  I want to point out that if your business depends predominately on you and your work then you are self employed, just with a nice support staff.  A business owner has a business that can exist without them.  Can grow and prosper without them.  Being a business owner is much harder than most people think.  The author of the E-Myth refers to it as working on the business rather than in the business.  When your income is no longer limited by your hours, you are a business owner.  A business owner can be anything from a franchisee to a bootstrapped start up or someone who buys an existing business.

Now to function, a society needs all 4 groups.  Too often we want to focus on the group we are in to the exclusion of the others.  Not eveyrone wants to be a business owner.  It has a great deal of responsibility, stress, and requires a different mentality and set of skills than being an employee or Not working.   A business owner depends on having people that enjoy being employed.  Employees allow our business to grow beyond us.  Many times a business also depends on contractors or self employed people such as contractors, copywriters, consultants and others.  We all need a doctor or dentist at one time or another. 

The key to happiness and great wealth is to understand which category we are happiest in and spending more time there.  Many enjoy the structure and consistency that comes from being employed but enjoy doing side jobs for themselves or starting a small business on the side.  Realize that we can fit into many categories during our life and at the same time.

The question is do I understand where I am happiest and wealthiest?  Enjoy your life regardless of which category you fit in.  The world needs every category to create wealth.  Be the best at Not working, employed, self employed or business owner you can be.  Grow and expand and become great.

My next few posts will focus on making the transition from being employed to self employed to business owner.  It will cover the skills and mindset needed to be successful at each category.  If you have specific things you would like covered in these articles, please leave it in the comments below.

Sincerely
Scott Lovingood

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 Is Self employed all its cracked up to be?

About

Small business owner and coach - Helping you grow more profitable
Single Dad, Christian, Geek about marketing, psychology, and business

  • Patrick

    Right now I'm 40% business owner, 40% self employed, 20% unemployed. I was 100% employee a couple months ago.

    Looking forward to your coming articles on transitioning. I'll probably give you a call sometime to discuss.

    Patrick Autry

  • http://freedomista.wordpress.com/ Michael

    I agree in life either you are an employee or entrepreneur period. The employee is a follower and the victim of his circumstances. The entrepreneur is a leader and the designer of his life! Become an entrepreneur is easier than most people think, but also requires a burning desire!

  • http://www.AskTheWealthSquad.com TheWealthSquad

    Not sure that you have to be in only one category. You will notice that I stated you can be in a couple or more of them at the same time. Being an entrepreneur is definitely easier than many think but involves more than most realize. How's that for a contradiction in terms. Being good at either of them can make your life wealthier. I do think being an entrepreneur has a much higher top end than being an employee.

  • http://www.AskTheWealthSquad.com TheWealthSquad

    Enjoyed our conversation this afternoon. Look forward to getting you some more information on it and discussing the best way to go forward.

    Glad to hear you landed on your feet after your employment change.

    Talk to you soon
    Scott

  • http://www.TheWealthSquad.com Scott

    I don’t think you only have to be one or the other. Many people make a transition in life from being an employee to being an entrepreneur. I think it is very possible for people to be good at both of them though most people do seem to fit in one or the other category.

    Being an employee in a company that allows you a lot of freedom is very similar to being an entrepreneur without the risk.

  • mikethompson

    I'm 67% employee, 30% business owner and 3% self employed. I like the diversity this brings.

  • http://www.AskTheWealthSquad.com TheWealthSquad

    Hey Mike!!! Hope all is going well with your business. Where are you working now? Thought the business ownership would keep you busy.

    Still in SC?

  • http://www.AskTheWealthSquad.com TheWealthSquad

    Hey Mike!!! Hope all is going well with your business. Where are you working now? Thought the business ownership would keep you busy.

    Still in SC?

  • http://twitter.com/selfemployedguy Self Employed News

    self employed is a nice thing between a gruelling day job and soul killing business..

  • http://www.AskTheWealthSquad.com TheWealthSquad

    See the difference is I see us as all being self employed. Some people work directly for a company and get a W2. Some people work on a contract basis (The traditional version of self employed) and others work for themselves running a business.

    If you think a business is soul killing, you don’t have it set up correctly and aren’t doing it the right way.

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