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Thread: Is Your Business Your Main Source Of Income?

  1. #11
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    I'm not saying you shouldn't go for the more money assuming money is more important to you. But I am saying that money isn't the most important thing to everyone. For me the things I get from being self employed are worth far more than money.

    All other things are not equal when it comes to comparing working for someone else and working for yourself. By definition they're very different.

    As far as my second point I didn't mean it about working to sell your business, though that's certainly a possibility. What I meant was that most businesses aren't going to do as well in their first few years as they will in later years, but you can't get to those later years without going through the early years.

    For example lets say market value for a job is $50,000 and someone working that job can look forward to a $5,000 raise each year. That same person could start their own business and make only $20,000 in year one and maybe $30,000 in year two. They might then be able to go on to make $60,000 in year three and $150,000 in year four.

    Obviously I'm making up the numbers above, but the idea is there's a higher upside in regards to revenue when running your own business. When you work for someone else you work to make them money. When you work for yourself you work to make you money.
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    Vangogh, made up number's or not, i believe they are the realistic possibilities.

    Wroking for someone else you have the potential to get a CPI raise or maybe if you are lucky a few thousand more. Where as working in your own business you practically have unlimited potential. Today when i go into work i am going to be paid $18 for 1 hour, how hard i work or what i do will not change that, it is a fixed rate. I could work three times as hard as the other people but that does not matter.

    In contrast working for myself i have no fixed hourly income. I could have an hour where i make nothing and then the next i could spend 15 minutes doing a quote, and 15 minutes later have an order that has $1000 profit in it. Or i could be on site charging $100 an hour to the client.

    Between working for someone and yourself there is major contrast that cannot be compared in dollar figure, even if dollar's are the most important thing to you.

    However there is a complete other set of questions you need to answer for yourself before you decide if your own business is better for you then working for someone else. Things like
    - Do you mind doing book keeping (unless you are comfortable with out sourcing this it is a requirement for small business, and more involved then your own personal taxes) If you are going to loath this part, maybe you are better off working for someone else.
    - Also record keeping, you need to keep good records, so if you have trouble finding simple thing's for your tax consider if you are really going to be able to maintain a solid record keeping system.
    - Self Discipline, If time management is not a strong point and you have trouble sticking to a plan, then again working for someone else may be a better idea.

    the lure of potential better income from small business, cannot become a reality if you are not able to keep good record, know whats going on with your book keeping, manage your time well, and any number of other things. But probably the most important thing is that you need to be able to focus and eliminate distractions. When i was working solely for myself, i wound up watching an hour or two of tv in the middle of the day, i would find myself going to the shops more often and many other distractions, while at the time it did not really affect my business to any large degree, if i had better spent that time marketing and promoting my business it may be a much different business today.
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    Lots of good points Joel. What I was saying above was just the potential money making aspects of a business. The ceiling is much higher when you work for yourself than when you work for someone else. There's no guarantee you'll reach that ceiling of course. Most probably won't.

    It's a valid point that going into business is not for everyone. There are different challenges and different skills.

    My main point in my last few posts was simply that it's not always an automatic choice to take a job for more money than what you're making in your own business. There are valid and good reasons to making less working for yourself than you could working for someone else.
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    I think that the main key to owning your own business is that the biggest key is that when you set-up your business correctly, their really is no ceiling. Again that method of continual growth may not be for everyone, but it is the unlimited potential of working for yourself.

    The other key thing that has potential in your own business is the ability to leverage time. When you work for someone else, and in a position of management, you automatically are leveraging your time through the employees that you manage, however you could manage 5 or 5o people make roughly the same money and still have a whole pile of work you need to look after. Where as when you have your own business, you have that potential to leverage your time to people that you employee, and where when working for someone else the additional profit that is generated through you leveraging your time to your employees is not profit on your own balance sheet. Not only this but you have the ability to earn more and with the correct system's and employees in place give yourself much more time for yourself or family or such.

    Finally another area that i think you need to take into account when looking at the comparison of how much you earn is what value you are creating. In respect of a service business this may not be a lot if you are the sole employee, however if you can set up a business model that has employees and procedures in place, then even if you are not making more then your market rate in your own business, initially, there is a great chance you will in the future, plus you need to take into account the value you are creating in the business itself.

    Unless you operate your business like i do, which is do almost nothing with it and turnover only a few hundred dollars with minimal profit per month (more so because i have not got the balance between work and my own business to do much more) Then you are continually moving towards a potentially better future in your own business.
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    I see owning my own business as an unlimited ceiling too. At least much less limited than were I working for someone else. I think there are many different ways to approach that ceiling and my task is to find those ways and make them work. I know I'm closer to the ceiling than I was a few years ago when I first started.

    For me though, the main reasons I'm in business for myself are the ones that have less to do with the money specifically. Sure the money is important and I'd like to continue to make more, but I never felt the same sense of accomplishment and satisfaction working for others as I do working for myself. The enjoyment I get from having all the responsibility for my success or failure on myself is something no job can ever give to me. I could make half or less the market value I'm worth and I'd still prefer to work for myself.

    I'd need to be offered far above market value to even consider working for someone else.
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    You sound like me, Vangogh.

    One of the parts I hated most about having a job was the realization that my income was capped. That no matter what I did, I could realistically predict what I'd be making 10 years from now. And even if I was off by, say, 30-40k (say I changed companies and got a bigger offer), it's still a pretty stifling thought.

    To give an example, my brother is a radiology tech - he can pretty easily predict that in ten years, he'll be making between 80-120k. Now, he's happy with that, but I find it soul crushing.

    With my own biz, hey, who knows what's gonna happen? I may even make 500k next year - all it takes is one phone call or e-mail from the right client. Now, I may not make that (or even close to it), but at least it's realistically possible - I can actually see it happening. When I worked a job, that wasn't happening, no matter what.

    Like you, it would take a lot for me to go get a job again. Like a million bucks. Literally.
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    I'm not sure a million would do it for me. I currently make a fraction of what I used to earn in the corporate world - but, I don't even entertain the thought of going back to it. I was never motivated by money. The predictability and limitation of it didn't bother me about the corporate job - it was all the other stuff that went along with working for others that was the problem.
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    @Dan - When I worked for other people I knew most of my effort was going toward making them money. I like it better when my efforts go toward making me money. My future is more in my control than it is in the control of another person who could decide to downsize.

    @Steve - Same here. Money isn't the sole motivating factor for me. There's so much more freedom associated with what I do now than when I worked for others that it would take a lot to get me to go back to working for someone else.
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    I think Vangogh, when you feel you are getting closer to the ceiling that is the time that you need to be looking at things that can produce income or otherwise automate your income. Because even though as i first mentioned there is an unlimited ceiling on your income. There is still a ceiling on something that is much more valuable than that, your time. I believe that when you feel you are reaching your ceiling, you need to look to break through the ceiling. However if you are comfortable where you are there is really no need to break through. I think that you Wordpress theme project you have been working on is one of these things. It is something that you work on once but can reap the rewards many times over with little additional effort.

    Dan, i do totally agree with you on all points. I earn somewhere around $35-$40K a year now, in 10 year's in the same career path i doubt i will be even knocking on the door of $100K, and this is working in a fairly hand's on always on the move job. Where as in my business if i really applied myself i could essentially far exceed this income. I say potentially because so far i have been responsible for more failure to provide much income from my business then anything else. While i am still operating at a profit it is a very small one.

    While money to some extent is a motivating factor for me, as i want to have a suitable income to provide for my wants and such, it is far from the only factor. The primary factor that probably comes ahead of money is variety, i want to be able to pick and choose what i do when. Which is why i really want my business to go in the direction of having multiple different businesses as part of the whole, this means that i can choose to go to one place one day and another at another time. I am not fixed to going to the same place and doing the same thing each day.
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    Joel that's a good point about raising he ceiling. That's something you can do when you work for yourself, but not so much when you work for someone else. You could of course seek a different job within your company, but even that can be limited.

    Time is an issue. Since my business is currently based on services my money is directly tied to how much time I can work. I've spent much of this year working towards things that scale better and don't have that same 1:1 relationship for me with time and money.
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