Since leaving Wall Street and Silicon Valley in the early 2000’s, I’ve mostly worked for myself. The exceptions being during periods where I worked in a more organized startup. It’s been an amazing period of trials and triumphs. There have been ups and downs. Working for yourself can be very rewarding in terms of personal growth, income and freedom of time and creativity. Our society currently idolizes entrepreneurship, but the truth is, it is really tough and it’s not for everyone. Working for yourself may not be the best thing for you.
As one mentor told me early in my career,The great thing about working for yourself is you have total freedom to work whenever you want. You can work any 16 hours of the day you choose! Click To Tweet
The truth about working for yourself is you give up a lot to follow that dream. There are a lot of amazing benefits to working for a company and not being the sole provider.
This is my experience. Your mileage may vary. If you work for yourself, I’d love to hear what your experience is in the comments section below.
Here are some of the things to consider when working for yourself:
Company benefits – Companies usually offer a benefits package such as health insurance, 401k, paid days off, partially paid employment taxes, etc. In a tight labor market those benefits can be pretty incredible, as more companies are also offering life and disability insurance, unlimited paid time off, paid maternity and paternity, paid gym memberships, and even on site workout facilities, cafeterias and napping pods.
When you work for yourself, you give up all of those benefits. If you want any of those perks, you must pay for the yourself. Employees often undervalue those benefits or don’t think about them too much until they’re gone. If you’re an employer, you’d be wise to give employees a summary of the monetary value of their benefits in their annual reviews. It can easily add up to thousands of dollars.
Leadership roles – At a large company or emerging startup you get the opportunity to interact with teams, plan projects and develop leadership skills.
I spend over a decade working for myself, mostly alone on my laptop coordinating with contractors and freelancers around the world. While I developed a lot of project management skills and the unique ability to work with freelancers from other countries (which is definitely a skill to know how to work effectively with people in other cultures), working for yourself, at least as an independent or the beginning of a startup, you don’t get the leadership experience you would at a large company.
Management – In addition to foregoing leadership opportunities, you’ve got to manage your own employees and freelancers. Managing people in your own startup can be a huge headache! The more people you have, the larger the headache. The complexities increase by the square of the number of people you hire. This happens because each additional person doesn’t just interact with you, but with all the existing employees.
On top of that, you get to deal with compensation, HR requirements, hiring and firing, legal compliance, liability insurance, employee infighting and office drama, misbehaving employees, possible harassment, company culture, scheduling, sick employees or employees who just decide not to show up or those that do sub-par work. That’s just off the top of my head. The management issues are never ending. If you’re the CEO or partner, you get to deal with all that, in addition to your regular duties of trying to make money.
Stress – One of the least talked about drawbacks of working for yourself is the stress. It can be very stressful. Everything is riding on your shoulders. People are often looking to you to make things happen. If you don’t make it happen, you don’t get paid. Working for yourself gives you a lot of freedom to do whatever you want, but with that freedom is the chance that you’ll go bust and fail.
Loneliness – As I mentioned in the article, The Lonely Freedom of Working at Home, it can be lonely working for yourself. Working at home has its drawbacks, but even if you work for yourself in an office with lots of employees, it can still be lonely being the boss. No one really shares your stresses, worries and responsibilities. They don’t know what you have to deal with and are looking to you to make things happen and give them security. That’s one of the reasons they work for you in the first place, they don’t want to have to deal with all the stuff you deal with every day. That can be incredibly lonely.
Risk and stability – Working for yourself comes with a lot of risk and instability. Part of the reason it’s stressful is because everything is so uncertain. Everything. There may be some uncertainties working at a job, like if you will get your Christmas bonus in time to put in the new pool, but when you work for yourself, nearly every single thing is uncertain.
You are risking your time, your money, your contacts and relationships and all the opportunity costs, or the things you are giving up to work for yourself.
In the press we often hear people complain about how much CEOs and startup founders make and I wholeheartedly disagree. Founders deserve every penny they make because they take all the risk. Employees don’t risk nearly as much. They don’t put everything they’ve got into starting a company and risk losing everything. If there was no out-sized compensation for that, not many people would do it.
Financial – Among the risks is financial risk. Your new venture has a pretty good chance of failing. The money you put into it could all disappear. The time you spend on it could all be wasted. Not only that, but you give up all the compensation you would have received at a job. No salary, 401k, and all the other benefits. Working for yourself could cost you a lot of money.
It cost me a lot of money because most years I didn’t make as much as I would have made working for someone else. Often, I put a lot more money into my companies than I took out. This is pretty common. Even if you get investors, they’re not going to be too happy if you’re paying yourself a nice salary when the company isn’t doing well. If it’s not doing well, that could risk the relationship with your investors.
Working for yourself you give up a lot. It’s something to consider when thinking about striking out on your own. There are many incredible benefits that include creating something that you can call your own, having freedom of time and creativity, choosing who you work with and a lot of potential financial rewards. The trick is finding what is right for you because there isn’t a wrong answer. Not everyone should work at a large company, but not everyone should work for themselves. And that’s okay.
If you already work for yourself, you can likely relate to the points above. Did I miss any? What would you add? Please share your thoughts in the comment section below.