The Good and The Bad of Owning a Business

Work For Yourself

My office today.

A friend confided in me recently, “I hate my job and I’d love to talk with you about starting my own business, like you’ve done. Would you be willing to share your insights?”

This meme is a very popular one right now. (The “start your own business” one. Not the “getting Renee’s brilliant insights” one.) A quick keyword check shows that “how to start a business” is Googled over 1,000,000 times per month. So, having started two businesses of my own in the past five years, I thought “Yeah, I’ve got some insights, you probably won’t like all of them, but sure I’ll share.”

Data from the Bureau of Labor Statistics show that a whopping 90% of Americans work for someone versus for themselves, presumably because of a traditional job’s perceived security, the 401(k) plan, paid-for health insurance, and paid-for vacations. You don’t bring the work home with you (generally speaking), the income is steady, the predictability makes it easy to plan your life around, and sometimes it isn’t even boring.

But those are precisely the things that I hate about working for others. (Except for the 401K. Dammit but who doesn’t want free money?)

Predictability.

Steadiness.

Conforming to the whims of others.

Boredom.

To say nothing of having to endure three of corporate life’s biggest curses: too much air conditioning, florescent lights, and informally obligatory holiday gift-giving.

Those conditions constitute Death by A Thousand Cuts to me. I’d gladly trade a steady paycheck and hours of mind-numbing boredom for the satisfaction (and adventure!) of starting my own small business and creating my own destiny.

That’s because my experience has been there’s rarely enough actual work to fill 40 hours per week in most organizations, which is the conventional amount of face time required to “do the job.” So we spend our time instead sneaking looks at Facebook, buying baubles on Amazon, wistfully dreaming of our (whopping) one week vacation that’s four months away, and gossiping at the proverbial water cooler. Totally unproductive and a soul-killing waste of our precious life’s energy — especially for someone like me who wants needs to spend as much time playing outside as possible — or sometimes playing World of Warcraft, which is absolutely NOT a waste of time ;-).

Everybody knows the GOOD parts of working for yourself

You can work when you want, where you want, hopefully doing something that you at least moderately enjoy. (The photo for this article is a poorly-taken one of my “office” one fall day at Bent Creek Campground outside Asheville, NC.)

You decide what task you want to work on at any given moment.

You create your own destiny, and reap the tremendous pride associated with building something from scratch.

I get to go camping at Bent Creek in the middle of the week because I work for myself.

Having my own business allows me to balance my freedom-loving outdoorsy playful self with my tax-code-deciphering methodical serious self — a condition that I require in order to stay sane, and of which so many cube dwellers can only dream.

So yeah, those parts are really really good things.

But nobody talks much about the bad parts

You have to do everything yourself

One part of my job is living and breathing taxes. Despite what you may think of the CPA exam, it doesn’t actually teach a person one iota about tax administration, and certainly nothing about working for yourself as a tax practitioner. So in addition to interpreting the tax code for my clients, I also spend a lot of time teaching myself how to run a business.

I’m my own marketer, copywriter, IT troubleshooter, website coder, janitor, and bookkeeper. Being able to juggle all those roles at least reasonably well on your own is important for small businesses trying to keep costs low, or for those just starting up.

And all that stuff takes a lot of time, both to learn and to do.

Then there’s self-motivation and self-responsibility

The other part of my job now is writing, or thinking about writing. I started this blog because I want to take a wider-than-local approach to growing my tax practice and advisory services. No other accountants that I know even think about writing.

But my business is still growing — and I firmly stand in the camp which believes that marketing our small businesses with social media and, more importantly by providing useful content through blogging, is a growing imperative for success.

Which entails a lot of writing.

Which entails dealing emotionally with the woeful sound of The Blogger’s Lament: Crickets.

And therein lies one of the major downsides to owning and marketing your own little empire.

Lots and lots of time and effort spent, with unknown and uncertain payoff in the form of clients served, products sold, and money made.

It’s very easy to get discouraged. It’s not necessarily easy to “get paid to be you” or to work a 4-hour week or any of these other magical fairy-dust things that starting your own business supposedly brings.

Another little-acknowledged aspect of working for yourself is that there’s no one to blame but yourself when things go wrong. Controlling your own destiny is both a blessing and a curse.

YOU have to stay focused, manage your time, and juggle many tasks.

YOU have to avoid the siren song of TV or that novel you can’t put down or hanging out with friends.

Though I’m enjoyably camping while I’m writing this, I’m actually working. I’m writing this post. I’m creating my editorial calendar for the rest of this year. I’m reading the latest issue of The Tax Adviser. (OK, the latter only sometimes. Yes, that’s Infinite Jest you see on the table in the photo.)

Bottom Line: The truth about why working for yourself ROCKS

So why do I work for myself? Why do I and so many other people prefer self-employment if it has all these downsides, difficulties, and uncertainties? Why go to the trouble?

For me and probably most others, it comes down to these two reasons:

1) I simply can’t work for others.

I can’t work in a box. I despise the notion of putting in “face time” whether there’s work to do or not. I’m not ladder-climbing, partner-track material. I need a regular change of scenery to improve get perspective and stay sane. That doesn’t happen for me by going to the same place every day. (“Going to the same place every day” is not to dismiss the importance of rituals, which I think are very important to both effective work and creative inspiration.)

Granted, being your own boss often requires working very much more than 40 hours per week, but you’re usually busy doing something that you at least like versus being bored or simply told what to do by somebody else. Whether you *love* every single minute of what you’re doing, or whether you’re working from the beach or from your kitchen table is irrelevant. At least you’re doing it for yourself.

For a lot of people including me, that’s everything and enough.

2) You’ll ultimately earn more per hour working for yourself versus for someone else.

I might not make as much money in absolute terms because I happen to choose more free time over more money. In other words, by working less than “full-time,” I might earn 60-70% of the salary I’d earn as a 3rd year staff accountant at a local accounting firm. But I earn more per hour when I work on my own.

For example, in that staff accountant job let’s say my wage is $25 per hour, but the firm is billing out my time at $125 per hour (at least). That’s $100 that I’m missing!  So I charge $110 per hour and make a far better living (even though a lot of what I do is not hourly work).

It’s simple math.

40 hours per week x $25 = $1,000
25 hours per week x $110 = $2,750 (+15 extra hours in the week to do what I want, whether that’s more work or more play)

Some people will say that you don’t need to keep track of your time. “Don’t think about how many hours you spent producing that ebook,” or “If you’re doing what you love, it doesn’t matter how long it takes!”

That’s fine for them, but I think it’s nonsense.

Charging your clients by the individual project (such as a single photo shoot, website redesign, or income tax return) has two great benefits:

  • Your client knows up front exactly how much your services will cost them (which clients like), and
  • It allows you to earn more per hour worked as you get more efficient.

Let’s say you’re a photographer. You charge $200 for an informal photo shoot. Back in the beginning when you were just starting, it would take you an hour to take the pictures, two hours to Photoshop them, and a little bit of time — say 15 minutes — to put them on a disk for your client. That’s 3.25 hours of work for a $200 project, so you’ve earned a little over $61 per hour of work.

Not shabby, but check this.

Now you’ve been doing your thing for a few months. You’ve got all your systems in place, and you’re much more efficient. The same project takes only half an hour to shoot, one hour to PhotoShop, and a couple minutes to upload to DropBox. That’s the exact same $200 project completed in a little over 1.5 hours, for (drum roll) $133 per hour of work.

$133 is 54% more money than $61.

You’re still amongst the 99% (who isn’t?), but you’re not a wage slave to someone else. Plus, good luck finding an actual job that pays more than $100 per hour.

This metric is rarely discussed by the lifestyle design / quit your job / get paid to do what you love folks. But to me, the potential to earn more money money per hour worked is the single most important reason to be self-employed. (Maybe that’s because I’m old and no longer starry-eyed. And I also know I’m oversimplifying my example and not including all the extra things that solopreneurs have to pay for themselves, but you get my point.)

Start your business, but be realistic

As I told my friend: Don’t be afraid to go out on your own and create new opportunities for yourself.

Just remember to take off the rose-colored glasses, and don’t delude yourself about all the hard work and odd hours involved. People romanticize the joys of working for themselves, particularly when they’re in a job they hate. It isn’t all beaches and unicorns. The money isn’t steady. There are no guarantees.

Of course there are also no guarantees that you won’t be served a pink slip in your current hated job anyway. Nothing is certain, except death and taxes (<<—job security for me, heh).

If we possess patience, emotional fortitude, a strong propensity for taking action, and realistic expectations, I think creating our own small businesses is the safest bet for our personal financial futures during uncertain economic times.

(You may also enjoy this timely post about self-employment from one of my very favorite writers, Penelope Trunk. I love her notion of “tricking yourself,” and I wish I’d written these tips myself.)

Now over to you. What’s your self-employment story? What trials and tribulations did you face or are you currently dealing with? Would you advise someone to “go out on their own” during this recession? Do you think it’s actually more secure to be self-employed, or do you think I’m nuts? Please share your thoughts in the comments below.

 

 

Comments

  1. Anonymous says

    Renee, thanks for the mention. There are so many pioneers in our profession it isn’t even funny. I wish you could make it to our Firm of the Future Symposium next week in Gvegas (a hop, skip and a jump from you). We’re going to bicycle the Swamp Rabbit Trail – something I know you would enjoy.

    You are a freakin’ leader, dang it.

    • Anonymous says

      I do *hate* to be missing the symposium (and, of course, the bike ride!). Next year for sure.

      Thanks for stopping by and thanks so much for leading the way for us “boring” ol’ bean counters! You really are an inspiration.

  2. Dena says

    Great article Renee. I recently took the plung as well and today I do not regret it. There are days that the uncertainty and chasing payments does get old. Hopefully, that big settlement will come soon so that I can have a cushion. I have had to learn to collect payment up front and as person that just wants to help people, it was a hard lesson that even friends or referrals from friends will stiff you. I have no entreprenurial genes at all. I am an attorney and know how to practice law, but not the faintest idea on how to market, brand or bookkeep..but I am learning. Depsite the uncertainty and the need to make more money, I do not regret taking the plunge.

    • Anonymous says

      Thanks so much for sharing your story Dena. I’m glad to hear that you don’t regret your decision, and I’d love to hear more about it. (Expect an FB message soon. :-)

      P.S. Learning all these entrepreneurial skills is probably just as hard as law school, eh? Well, maybe not.

  3. Brandon says

    This is a great article Renee. I’m glad I could ask the question to prompt it. I certainly never have thought that running your own business or being a solopreneur would be all rosy. I have seen a lot of small businesses not work out, I have seen a lot thrive, and I have seen just how hard some solo folks work. I have had a lot of conversations with people to try to get them to realize that is things they are considering aren’t all wonderful. Yet, I think I agree with you that money is not as important as being healthy and enjoying your life as best you can. So, now on to figure out if I have enough passion in me to put a plan together and risk it.

    • Anonymous says

      Thanks for allowing me a little editorial license with our conversation, Brandon. Honestly, your question helped me better crystallize my thoughts on the whole thing. I spend a fair amount of time in the “internet marketing” space, trying to learn as much as I can. In my post, I was referring to rosy-ness more as something they espouse and sell vs what you asked or assumed about starting a business.

      But for sure time is more important than money…for me anyway. :-)

      See you Saturday.

  4. says

    Hey Renee,

    I am a fan! I couldn’t have said it better (that’s why you are the writer and I am not). And thanks for being so honest about what some of us gain from being self-employed. I have been self-employed most of my life, the last 11 as a CPA and I don’t regret a minute of it. What I do regret are those times I felt compelled to take a full-time job because of the predictability, stability and the 401(k) plan. I freakin love you too!!

    • Anonymous says

      Hey Meredith,

      Thanks so much for your kind words and for stopping by my little corner of the internet. I appreciate the support of a fellow self-employed CPA!

  5. Nbarbosa says

    Thank you so much. I am only 23 and very keen to start my own business but very discouraged at the same time. Do you know of any biographies on other people method on the essentials of starting one from a newbies perspective?

    Thank you.

    • says

      Hi Nbarosa,

      Thanks for your kind words and for stopping by my site! Off the top of my head, I don’t know any biographies about starting a business from a newbie’s perspective, but I can offer these two pieces of advice:
      1) Have a financial back-up plan. This can be a part-time job that you work on the side while starting your business, or it can be a supportive partner/significant other who helps out financially while your income is growing.
      2) I’m not sure if your business is online or off, but I highly recommend reading Chris Guillebeau’s blog, books, and products — for example, his Empire Building Kit is something that I purchased and found to be of great use.

      One more thing. You’re young! Don’t stress. Just start slow, don’t overanalyze, and do one little thing every day. :-)