It often seems that people who work for someone else, who hold traditional jobs, dream of the day when they’ll break out of their cubicle and jump into self-employment. But talk to many of the already self-employed and you’re likely to hear of a deep desire to pitch it all for the predictability of a steady paycheck. Is anyone actually happy where they are? And how do you know if you’re best suited for one or the other?
Many of the discussions of traditional employment versus self-employment center on the financial side of the debate. For example, questions might center around the amount of capital you have to enter and maintain an upstart business, or on your track record of success as an employee at other businesses. These certainly matter in the decision to transition into self-employment. But I’d like to center this discussion on some of the more personal characteristics that could mean the difference between success or failure.
Lifestyle preferencesOne barometer that might make it easier to determine which one you fit into is to figure out if you’re the kind of person who needs to self-actualize through work. Or, are you one who is driven primarily by non-work activities and uses work to support and enable those activities.
The person who self actualizes through work is probably an entrepreneur at heart. He feels the need to go beyond the limits of traditional employment and to have absolute control over the final product. This is the sort of person who usually can’t be contained in a traditional job situation anyway. Some form of self-employment will be the only way.
If you aren’t particularly passionate about your work, but find true happiness in doing sculpture, playing golf, working out, maintaining an active social life, etc, you might be better off working for someone else. The predictability of a job tends to better support outside activities.
With self-employment, you’re mind is never very far from work no matter where you are or what you’re doing. As a salaried employee, it’s possible to do your job—and to do it well—but to cut it off at 5 pm or on Friday afternoon, to pursue your true passions. If you’re self-employed, your business is your passion. Though many salaried people dream of the prospect of self-employment, the source of your passions can’t be ignored as a determining factor.
Nothing hard and fast here, I suspect most of us have a little of both in our personalities, so it’s really a matter of how deep we are in one direction or the other. Some honest soul searching might help sort this out.
Could the job you hold now be transformed into self-employment?
A lot too depends on the work that you do. If you can take what you do in your job and translate it into self-employment, there’s a lot less risk in making the move. If the job you have can’t easily be converted into a business the stakes are a good bit higher.
If you’re an IT consultant or an architect working for a company, and you want to make the jump to self-employment, there’s a ready market for your skills.
But for a banker or a research scientist, it would be a lot harder, if it’s even doable. It might require either approaching your career/industry from an entirely different angle (thinking out of the box and coming up with something completely new) or taking a plunge into an unrelated business. Both would be high risk ventures. No statistics here, but I’d be willing to bet that most business failures are concentrated among those starting businesses unrelated to their previous career tracks.
If you’re in the second group, where you’re job doesn’t translate easily into self-employment, you’re probably better off trying what ever business you intend to pursue as a sideline, at least until there’s a reasonable indication of long term success.
Money management skills
When you work for someone else, a crucial element of money management—insuring a steady cash flow—is handled for you by your employer. In fact, some of the spending side is also handled by the employer via payroll deductions for insurance and retirement. But once self-employed, this burden will fall squarely on your shoulders, and you’re ability to manage it intelligently will be as important as any other factor in your success as a business person.
The fact is, a self-employed person has more financial concerns than a salaried one because there is far more that must be done. Businesses are as likely to fail for poor money management as for lack of sales.
If you have an aversion to managing your money, you probably will be happier being on a paycheck. Though there are very real stresses involved in working for someone else, money management is most definitely easier with a steady paycheck.
If you think that building a side business may be the right path for you, but you don’t know what kind of business to go into, check out my post, The Freelance Blog Writer Side Hustle. Blog writing is one of the most promising side ventures you can enter because it’s growing rapidly and has excellent potential to lead to still more opportunities. Even if you’ve never written professionally in the past, this post can help get you started.
There are many, many factors involved in reaching a decision to either stay on a paycheck or start your own business. What are some others that might help someone trying to make the decision?