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10 Myths about Self-Employment

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10 reasons you should never get a job, 10 stupid mistakes made by the newly self-employed, 33 rules to boost your productivity

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									5/9/12                                             10 Myths About Self-Employment




                   10 Myths About Self-Employment
                   July 24th, 2006 by Steve Pavlina

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                   My article 10 Reasons You Should Never Get a Job has quickly become very
                   popular, so I figured it would be nice to write something about the realities of self-
                   employment as well. Since there are so many myths about self-employment (especially
                   among lifelong employees), a good place to start would be to dispel some of those
                   myths.

                   I started my first business right after graduating college (I graduated in Dec 1993) and
                   have been continuously self-employed since then. The only time I was ever an
                   employee was during college, when I worked six months as a part-time retail sales
                   associate.

                   1. Self-employed people have to work really long hours.

                   Many self-employed people work longer hours than employees. Some enjoy their
                   work so much they want to put in long hours. Some set up their businesses in such a
                   way that their physical presence is necessary for income generation. Either way it’s a
                   choice though because you’re the one who decides how to set things up.

                   Many self-employed people start businesses where they get paid only while they’re
                   working, such as an attorney who opens a law office and bills his/her clients at a
                   certain hourly rate. When the attorney is at home, s/he generates no income.

                   But there’s no law of self-employment that says you have to start a business that
                   only generates income while you’re working. If you start a business like this, you’re
                   really just creating a job for yourself. I prefer to think of self-employment in terms
                   of systems building. You build income-generating systems that generate income for
                   you, systems you own and control. It’s like you own the golden goose, and it does the
                   work of laying the golden eggs.

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                   So working long hours is largely a symptom of the type of business you create as well
                   as your personal choice. If you don’t like working long hours, you certainly don’t have
                   to.

                   2. The only reason to build a business is to sell it.

                   This is a favorite statement of Michael Gerber, author of The E-Myth Revisited and
                   various other E-Myth books. While you can certainly build a business to sell or
                   to take public, you can also build a business to keep. In fact, it’s perfectly valid to
                   build a business, run it for a while, and then simply kill it.

                   As a self-employed person, you’re free to build whatever kind of business you want.
                   You’re the boss. If you want to build a business to sell, go for it. If you just want an
                   income source that doesn’t require you to get a job, that’s fine too. There’s no rule
                   that says you have to build a business that’s a monument to human greatness.

                   Many people enjoy serial entrepreneurship. They start a business, run it for a certain
                   time, and then either sell it or close up shop. Then they repeat the process.

                   You can also run multiple businesses at the same time. This might sound too
                   complicated, but once you’ve been running a business for a decade or more, it’s not
                   that hard to repeat the process and spawn another one. Such variety can be fun if you
                   don’t overdo it.

                   3. Self-employment is much riskier than getting a job.

                   Security is a result of control, and self-employment gives you far more control over
                   your income than you have with a regular job. When you’re self-employed no one can
                   fire you or lay you off. Which is more secure — owning your income stream or leasing
                   it? Ownership obviously.

                   If you need to make extra cash quickly, that’s very tough to do as an employee. But
                   as an owner who controls all the business assets, you have the ability to rechannel
                   resources to increase income in a pinch. Having control makes a huge difference.

                   Employees take the biggest risk of all. You learn how risky it is when you


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                   unexpectedly hear the words, “we’re letting you go,” while the owners enjoy the spoils
                   of record profits.

                   4. Self-employment means putting all your eggs in one basket.

                   Ask yourself this: How many people would have to turn against you to shut off all your
                   income? For employees the answer is usually one. If your boss fires you, your income
                   gets turned off immediately. Whether or not it’s justified is irrelevant — you suffer a
                   total loss of income regardless of the reasons. Now that’s putting all your eggs in one
                   basket.

                   With self-employment, however, you can more easily diversify your income streams
                   and thereby reduce your risk. You have the control necessary to make this happen.
                   Generating different types of income from thousands of customers is a lot more secure
                   than receiving only one paycheck.

                   Together Erin and I receive about 10 different types of income, including direct sales,
                   third party sales through distributors, ad revenue, royalties, affiliate income, consulting
                   fees, etc. Even if our single biggest source of income were turned off immediately,
                   we’d still be fine.

                   5. Being self-employed is stressful.

                   What’s stressful is not being able to make ends meet, whether you’re an employee or
                   self-employed. But given the same standard of living and income, I think self-
                   employment is less stressful because you enjoy more control. Not having control over
                   your time and your life is stressful. When you have the freedom to say no, you can
                   more easily control your stress.

                   Self-employment can be very low-stress if you decide to make it so. You can turn
                   your office into a relaxing place to work. You can set your own hours. If you
                   notice the onset of stress, you can take time off to relax. No one can force you to do
                   anything you don’t want to do.

                   6. The customer is always right.



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                   If you’re self-employed, feel free to fire customers that cause you grief. Some
                   customers just aren’t worth having.

                   Erin and I have interacted with thousands of customers over the past 11 years, and
                   nearly all of them have been great. But every once in a while, we’ll turn a customer
                   away and refuse to accept any more business from that person. We rarely find it
                   necessary to do so, but it does happen.

                   I can handle criticism just fine, but what crosses the line for me is when a customer
                   becomes obnoxiously rude, insulting, or threatening. Some people think that if they
                   behave like jerks, any business will bend over backwards to help them. But my
                   customer service motto is: no civility, no service.

                   If you’re self-employed, there’s no need to do business with people who think it’s their
                   privilege to treat you like dirt. You won’t enjoy having such customers, and you won’t
                   enjoy the types of referrals they send you. Besides, it’s a lot of fun to refer these
                   people to your competitors.

                   7. Being self-employed is lonely.

                   Many employees think they enjoy a rich social life when all they do is hang out with
                   their co-workers. That’s fine for starters, but it can get pretty stale after a while. On
                   the contrary I think it’s easier for self-employed people to recognize the need for social
                   activities outside their work. At the very least, this may be motivated by the desire to
                   network and to learn from other business owners.

                   There’s no need to be isolated and lonely if you’re self-employed as long as you take
                   the time to pursue other social outlets. Personally I love hanging out with other self-
                   employed people. Such people have a certain energy and proactivity that I rarely see
                   in employees.

                   A regular job provides some built-in socialization, but if you think about it, you’ll see
                   that it’s very limited. An employee can be fired for excessive socializing on the job.
                   But a self-employed person can socialize freely at any time of day.

                   Self-employment can be wonderful in the early stages of dating, especially if you’re

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                   both self-employed. When Erin and I started dating, I would often pop over to her
                   house in the morning and spend half a day with her. This allowed our relationship to
                   progress more quickly, and after three months we moved in together. Sure I didn’t
                   work as hard during that time, but self-employment gave me the freedom to put my
                   social life ahead of my work.

                   8. Self-employed people have to do everything themselves.

                   Self-employed people may be responsible for making sure everything gets done, but
                   it’s usually foolish for them to do everything themselves. That would be way too much
                   work.

                   Erin owns and manages VegFamily Magazine, but she doesn’t do the work of
                   publishing each issue herself. She has a staff of writers who create the content and a
                   managing editor that oversees the details of each issue. Erin designed and created the
                   system, but other people run it for her.

                   You don’t even have to design your own system if you can leverage someone else’s. I
                   generate advertising income from this site, but the vast majority of ads are served up
                   by Google Adsense. I don’t sell the ads or deal with the advertisers — Google
                   handles all of that. If I had to sell every ad myself, that would be insane… way too
                   much work for me to handle alone.

                   9. Self-employment is too complicated.

                   Self-employment can seem complicated because there’s a lot to learn in the beginning,
                   such as accounting, taxes, payroll, legal issues, insurance, etc. It does take a while to
                   learn the basics, but most of it isn’t particularly difficult. Just get yourself a good book
                   on the subject, and you’ll be off to a great start. I recommend picking up a copy of
                   Small Time Operator.

                   Don’t let the initial learning curve get you down. You only need to learn this info
                   once… and only for your first business. If you start a second business later, you’ll be
                   up and running much more quickly.

                   If you set things up right, the ongoing maintenance of a business doesn’t have to be a

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                   nightmare.

                   10. You need lots of money to start a new business.

                   That depends on the business. You can start an online business for very little cash
                   since domain names and web hosting are dirt cheap. We’re talking less than $100 to
                   cover the whole first year.

                   I used about $20K of my own money to launch my games business in 1994, but I
                   learned my lesson because the money went way too fast. So when I started this
                   personal development business, I decided to do it as cheaply as possible. I spent only
                   $9 (to register StevePavlina.com), and I required that any other expenses would have
                   to come out of revenue. I didn’t make any money the first 4 months, but after 22
                   months the business is now earning about $9000/month. I’m pleased with this result,
                   but I’m not that far along in my plans yet, so this is by no means the end.

                   I’m not suggesting that any idiot can kick-off a decent self-employment income for the
                   price of a movie ticket – you did notice this site is called “Personal Development for
                   Smart People,” didn’t you? The point is simply that you don’t need to pour your life
                   savings into your first business. You do, however, need an intelligent way to provide
                   value to people. The nice thing about an online business is that you can create value
                   (like an article) for a fixed time investment, and technology can deliver that value
                   millions of times over without costing you any extra time or money. You invest a little
                   time in the initial value creation, but you get paid for the ongoing value delivery.
                   Technology does most of the work for a cost that’s virtually zero, but you get paid for
                   its results (significantly more than zero).

                   In contrast to self-employed people, employees don’t normally get paid for their
                   ongoing value delivery. They get paid a flat rate or a one-time commission while their
                   employer reaps the ongoing rewards indefinitely. Employees are very generous to their
                   employers.

                   Try it for yourself

                   Hopefully I’ve helped dispel some common myths of self-employment. Such irrational


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                   fears aren’t representative of the reality. Of course the only way to really understand
                   self-employment is to experience it yourself.

                   I’ve met quite a number of self-employed people in my life, but I’ve never heard any of
                   them say that becoming self-employed was a mistake and that they wished they’d
                   gotten a regular job instead, even if the business didn’t do well financially. Self-
                   employment is a powerful vehicle for personal growth, and often the greatest value
                   comes from the skills and self-knowledge you gain along the way. Like many other
                   self-employed people, I’d sooner give up all my businesses than the lessons I learned
                   from building them.


                   Read related articles:
                           You Are Self-Employed
                           10 Reasons You Should Never Get a Job
                           10 Reasons to Develop Your Technical Skills
                           What Is Passive Income?
                           How to Earn $10,000 in One Hour
                           How to Raise Your Hourly Rate
                           10 Business Lessons From a Snarky Entrepreneur



                          Uncopyrighted by Pavlina LLC, www.StevePavlina.com. Feel free to share.




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