What are the big differences between having your own business and being employed?
The risk and return ratio – you take risks in your own business for an uncertain return (called profit) which can be much higher than you could earn as employee or much lower than you’d accept for a job.
The amount of control you have over your own destiny. An employee (even a senior one) has someone else telling him or her what to do but as a business owner, you call all the shots.
I’ve been self employed with my own consultancy business since 1995 and I can’t imagine ever being employed again.
However the differences between being an employee and being the business owner have been brought home to me over the last two years as serious illness has hit me and my family hard.
Two different conditions at two different times but they’ve both severely restricted the time and effort I can put into work and my effectiveness.
Either could have caused my business to collapse if I didn’t have results of past successes still in the bank to take me through the lean times when I couldn’t work and cashflow dried up.
No one likes to think about being seriously ill and as I found out, it is easy to take your good health for granted. The body can go wrong in so many unexpected ways.
But you can be prepared for serious illness.
- Keep some rainy day money to one side either in your business or personally – whatever works best for tax and future returns. Just be sure to have some cash to buy thinking time.
- Make sure your staff are fully trained, know what’s expected and have a clear number 2 who you trust and has the respect of your other team members if you have to be away from the business because of serious illness.
- Have great systems and processes which run smoothly without any key individual.
- Think about possible exit strategies which allow you to turn your business into cash if you find that your working days are coming to an end. Run a tight ship with everything up-to-date so that if the business has to be sold in a hurry, you can still get a good price.
It’s not so easy if your business is only you.
If I stop working then big parts of my business stop working.
This is the peril of the solopreneur but also afflicts many other small business owners who do have the opportunity to create something better. Michael Gerber said it well with the idea that you don’t have a business… you have a job and your boss is crazy.
In a business like mine, when I am selling time for money, if I don’t work the money stops.
That sounds just like a job but without all the employee protections that proper employees get. No automatic sick pay for me… just a shuffling of cash from one pocket to another with nothing new coming in.
Fortunately my information products business is more automated. The hard work is done and income comes in whether I work or not although there is a diminishing return over time.
Being a business owner is a great life and i wouldn’t change it but serious illness brings home the risks involved of really having to rely on you and you alone.
When your body and mind let’s you down, you have the extra pressure of your business on top of dealing with the stresses and strains of the illness.
A little preparation can go a long way to making sure that you and your business come out of the serious illness the right way.