10 Myths About Self-Employment
10 Myths About Self-Employment
Updated 10 February 2021
You hear a lot from many people, especially ones who really know nothing, about the perils and risks of being self-employed.
A lot of people love to rant about how you “give up your security” when you give up a regular job.
So I decided to make some observations and comments on this masterful article …by a fellow who makes a lot of money annually and hasn’t worked (at a job) in 27 years.
I value Steve’s expertise since I, myself, actually had a job up until 2003 .. so Steve has at least 10 years of “unemployment” experience on me.
If any of its sounds interesting, read on… (I’m not selling anything)
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.
Frankly, having been employed in a regular job, for more than 38 years, and after finally freeing myself from the yoke of “normalcy” I have only one regret?
Why, ever, did I wait so long?
Here are the “Top Ten” myths about self-employment
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.
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.
My thoughts on Self-employed people have to work really long hours.
The best thing about self-employment is, you are the one who controls the time and effort you spend. Not some bean-counter in a distant office looking at company time and attendance records.
When you are self-employed you control the when and how of your hours. You may well have to work hard and put in hours, but the saving grace is … it is under your control, not an outside boss (or despot).
Also, even though you might have to work many hours a week, the ability to work those hours as you need to, rather then someone tells you to, means a lot.
For example, two online colleges of mine, Shane & Jocelyn Sams, were employed in “real” jobs, as teachers in public schools. They were doing “OK”, following the national “lemming life” standard of going to college, getting a job that really only pays about half what a family needs to live decently (that’s why both of them had to work), and likely would have kept “grinding” along until they went broke or one of them became old enough to retire.
But they were “secure”. They could pretty much guarantee that their (low-pay) contracts would be renewed every year. The standard American Job treadmill.
One day there as a problem with their toddler-age son at his day acre (the amount people have to pay for daycare just so they can work mediocre jobs is a disgrace) and Shane went to his supervisor to get permission to go to the daycare provider and care for his son.
Answer? “No, you still have classes to teach today and I have no substitute for them.”
Think that might have pissed Shane off a little?
Well, apparently it did because Shayne and Jocelyn up and quit their “secure” jobs and started their own business known as “Flippedlifetyle.com“.
Their company’s mission is:
We help real people identify and use their God-given talents to create an online income, and change their family’s future!
A worthy goal indeed. I recently saw that Shane and Jocelyn were written up by Forbes. Did you follow the link? $45,000 a month. Pretty risky in contrast to a mid-level “secure” teaching job. Or perhaps not so risky at all.
2. The only reason to build a business is to sell it on:
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.
My thoughts on The only reason to build a business is to sell it on:
This point ties in directly with the previous point, the Shayne and Jocelyn story. They obviously could sell out of their business at any time they chose too, but they are very unlikely to do so because they built their business to help folks and that’s exactly what they do.
The reason(s) for building a business are many and varied. You can. always, build it to make an asset you can resell.
One reason (the major thrust of my own building efforts) is satisfaction. After many, many years of working for others … often working toward unsatisfactory goals, doing my best to “support the team”, and hating it, I can now devote myself only to efforts I find satisfaction in.
Money is something to keep score with, but building something satisfying is really the entire game itself.
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 unexpectedly hear the words, “we’re letting you go,” while the owners enjoy the spoils of record profits.
My thoughts on Self-employment is much riskier than getting a job.
Especially when this is being written, in the time of COVID 19 problems, the whole idea of “job security” makes one want to laugh, if it weren’t so terrifying and sad for so many families.
One day, the job is there. The next day, without even an hour’s notice, the company closes its doors. And especially if the job is in business segments such as retail or food service, it might never come back … ever.
Just today as I was finishing writing up this article, I watched a video from a college of mine, Lindey Glenn. Lindey makes a living as a reseller on eBay. She loves doing that because she’s a mom with small children at home, and she can earn without ever leaving the kids or paying daycare fees.
But Lindey’s husband keeps the family “secure” buy having a regular, nine-to-five job. Or he did until today. See the whole story here. Lindey’s hubby just got laid off, and there’s no guarantee or even any indication at all when or if he gets called back.
Good thing Lindey has a nice income from her own online eBay business. They are currently discussing whether or not the husband should just start working at home with Lindey …and never leave himself at the mercy of a “so-called” secure job.
Even when there’s a downturn, like the terrible COVID 19 pandemic, consider a self-employed individual who earns an income by perhaps publishing eBooks on setting up and running a restaurant kitchen.
Sales may drop, slowly, or, with the popularity of “Ghost” or “Cloud” kitchens sales might zoom upward.
One thing for sure, there is no entity on earth that can tell the independent entrepreneur that “today is your last day”. Being responsible for your own employment gives you terrific power that the “sheep-like” employees of the world will never have.
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.
My thoughts on Self-employment means putting all your eggs in one basket
Just as my example about the idea of a kitchen publisher pivoting slightly to publish on the idea of “Ghost Kitchens”, if you are self-employed you are never really putting all your future in one “basket”.
Here’s another example. A self-employed publisher friend of mine, Jack Reed. Jack is a contemporary of mine, he went to West Point about the same time I enlisted in the Air Force, so he’s older than most entrepreneurs you think of … in the 74 or 75-year-old range.
But look at the range of books Jack has written and sells directly to the end reader via his online store.
This picture doesn’t show the dozens of real estate investing books Jack also publishes and his profitable subscription-based real estate newsletter, sent out the old fashioned way on paper via the USPS.
Jack’s been supporting himself in mid-six-figure style annually for many years with these books … does it look like he’s putting all his eggs in one basket?
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.
My thoughts on Being self-employed is stressful.
The real stress is when you have “month left over at the end of your money”.
Real stress is struggling along on a “fixed” income when, in reality, you have the power, these days to “UnFix” your income.
All you have to do is let go of that age-old belief that a J*O*B (Just Over Broke) or a meager, fixed pension, is all you are worth, or all you can ever hope for.
Many of you know that I live in the Philippines and I run a blog that answers common questions about living in the Philippines. Probably the most frequent question I have received over the years is … “I make $xxx a month, will that be enough to live in the Philippines??
Well, it’s only good common sense to survey the ground and find out if your budget would be enough to live comfortably in the lace your considering, but some of these queries would make me very sad and depressed. Why?
The depressing ones would all say, in one way or another, “I’m on disability insurance (of some form or another) and I can only earn a maximum per month of $xxxx or “they” (that common boogeyman “they”) will take away my monthly benefits.
Just recently I heard from a fellow who was only 23 years old, was rated permanently disabled and was trying to live (in a typical US city) on $1100 USD per month. He was desperate and hoped that the lower cost of living in the Philippines might afford him a better lifestyle.
Can you imagine being 23, with perhaps 80 more years to live, knowing that you were permanently “capped” at $1100 a month … and the government would take every dollar more than $1100 a month that you made, just “because”?
I felt so strongly about this I wrote an article for him and for others stuck in the same mindset. Here’s One Of The Reasons I Tell You To Think Bigger — You Are So Much More.
(Go ahead, click on it, I’ll wait for you here)
6. The customer is always right.
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 awhile, 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 backward 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.
My thoughts on The customer is always right.
Steve has really hit the mark on this one. One of the things I have noticed over the past 70 years or so (yes, I really am that old) is that politeness, patience, and fairness are now at an all-time low.
Years ago, if some company sold a product that broke, or otherwise failed to do its job, a customer might make a phone call or write a letter that requested (in a courteous way) a replacement or a refund of the purchase price.
Today, the first notice of a customer being dissatisfied is frequent a scathing, nasty “Yelp” review or a phone call filled with curses and threats of legal action. And even if your boss authorizes you to make a refund, the customer is still likely to be complaining and defaming the company’s name for months. Dealing with dissatisfied customers as a regular employee, with a job is very often stressful and very unfulfilling.
If you, however, are self-employed and you own and manage the business, there will still be “unsatisfiable” clients. It’s a fact of life these days.
But if you’re in charge there are many more avenues use available to try and salvage the situation … and if all else fails, you can always use Steve’s masterful solution and refer the nasty person to your biggest competitor, LoL.
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 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.
My thoughts on Being self-employed is lonely.
Except for astronauts locked inside the International Space Station. lonely really doesn’t mean much to me. I have so many online associates (and even a few real friends) that my day is busy, every single day.
In fact, the online community is so broad that one of the dangers of being self-employed is the danger of getting distracted and wasting so much time that I don’t get useful work done.
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.
My thoughts on Self-employed people have to do everything themselves.
One of the biggest attractions to an online business is the resources available to perform tasks you don’t want to do, or perhaps don’t really know how to do. You can use services like Fiverr.com or online agencies that can help you find reliable, experienced Virtual Assistants to do the jobs you don’t want to.
You can also find experts in virtually any field and online people have been almost invariably friendly and helpful to me.
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 nightmare.
My thoughts on Self-employed is too complicated.
There is nothing in self-employment I can think of that is “too complicated” for the average person to learn, and learn quickly. There are things that sound daunting at first, but break them down into bite-sized learning modules and in a few months you will surprise yourself with how much you have learned.
This is a pet issue of mine also. One of the big advantages of self-employment is nothing about your business is “off-limits” to you. Learning is an exercise for the mind just as gym workouts or biking is an exercise for the physical body.
I LOVE to learn and one of the fascinations of an online business, even such a small one like mine is that every single day I am learning something new. I never intend to stop, and you shouldn’t either.
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 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.
My thoughts on: You need lots of money to start a new business.
Starting an online business is often the absolute cheapest path to starting a new business and income stream. There are so many free or extremely low-cost online options. Just a few examples:
- Start a monetized “niche-focused” blog. Cost is as little as zero, including comprehensive individualized taring to get you going. Just one example … try it, you’ll like it, it makes money for me: Wealthy Affiliate
- Here’s another one that provides, “One Shop Stop” website, training and success coaching: SoloBuildIt
There are many more comprehensive opportunities out there, Would you like me to tell ou more, or are you content sitting around and waiting for Congress to mail you a stimulus check? “It’s Up To You”