Regardless of your own personality type and intentions, there are some very real differences between employment and being your own boss which you need to be aware of
Of course, everyone is not their own boss. Everyone can’t be…but anyone can be. The popular stereotype is that every entrepreneur is a young, dynamic individual who wouldn’t look out of place on The Apprentice. The reality is that business owners come in all shapes and sizes, and simply cannot be classified by sex, age, race or upbringing. While you might see stories in the newspapers about teen whizz-kids who build multi-million-pound apps, what you don’t hear about is the legions of elder workers who start their own business just a few years away from the state retirement age. You might hear about entrepreneurs being kick-started by family money, but you don’t hear about all the entrepreneurs across the world who start after bankruptcy, with no money whatsoever. The point is this: there are no limitations when it comes to who can start a business. In fact, you could be living next door to an entrepreneur and not even realise.
Regardless of your own personality type and intentions, there are some very real differences between employment and being your own boss which you need to be aware of.
Room to Fail
One of the two leading factors stopping people from starting their own business, based on my survey, is confidence. Many simply don’t have the confidence that their business will be a success; that they will attract enough customers to pay the bills; and most importantly for some, they don’t have the confidence that they won’t fail.
This opens up the crux of the difference between employment and self-employment. In employment, it’s rare that you are allowed to fail. Here in the UK, employment rights stop companies firing staff at will, and as such there is a comfort blanket for each of us. If we don’t quite perform, we can be put on ‘performance management’ and coached to help improve our performance. And if that doesn’t work out, there’s always a sideways step into another role, or the opportunity to jump before you are pushed. In business the market is a crueller judge. The market decides whether you are performing or not, and if you aren’t performing, your customers will vote with their feet. The market decides whether you are worthy of bank funding, and whether you are a good employer or not, and you’ll find it extremely difficult to recruit the best talent if this goes against you.
By being your own boss, you’ll need to manage your financial situation, as there is no guaranteed pay cheque at the end of the month. Instead, you will need to cater for seasonal fluctuations in your business, and the risk that you may lose some major customers overnight. You’ll also need to cover your tax liabilities, as these won’t be deducted from your pay cheque.
Next up, you will need to be responsible for finding and keeping customers. In an employed role, you will have support in this. Even if you are at the sharp edge of a sales team, you will still have a marketing team providing supporting material, and the business owner providing a vision and a strategy. In your own business, that’s all down to you. As is keeping the admin side of things in order. And keeping the customers happy.
You will also be more exposed to competition. In an employed role, you might find that you have competition for promotion with some of your colleagues. Depending on the type of business, you might find that this introduces office politics, or other detrimental behaviours. In business, the floor opens. Anyone providing the same service or product as you could theoretically be your competition. You will have people trying to be better than you, quicker than you and cheaper than you. And if they succeed, you feel it in your pocket straight away.
So, there’s the downsides! There are some benefits as well.
I’m sure some of you have worked for that type of manager. You know the one that I mean. The jobsworth who obsesses over details for the sake of it. The micro-manager who might as well do the job themselves because they know best.
Or even worse, the other type of manager. The one who goes against the rule book, just to help themselves. Rather than praise in public and criticize in private, they just tread on whoever they need to, just to get their next promotion. Every good idea is their idea, and every problem is someone else’s fault. Ownership of a task is a rarity; in fact, delegation – or abdication – is key to their success.
By being your own boss, you can choose which of these you want to be. Or of course, you can choose to do it properly.
Strategy, control and choice
You’ll also be able to control your own destiny. You will be in control of what you earn, the hours that you work, the type of work that you do, the type of business that you work in, the type of customer that you work for, and the way that you do what you do. You will be in control of your working environment, your schedule, and can even choose your preferred brand of coffee.
Taking these choices to another level, you will be in control of your company culture, your systems and processes, your management structure, the growth methodology, the number of employees you have, the equity funding that your corporation can raise, and your net worth at retirement.
Business ownership actually opens up a world of control, which can be quite daunting for those who are used to being managed and employed. With that comes a lot of responsibility, and the need for resilience and strength.
This extract from Boss It by Carl Reader © 2020 is reproduced with permission from Kogan Page Ltd.