Benefits of Self Employment
The benefits of self employment are different for different people. It depends upon what your priorities are. For me, the Top-Ten advantages are:
1. More money. In all my last full-time jobs, consulting or non-consulting, I used to put in way more than 40 hours every week. As a senior executive I was "expected" to work long hours during the weekdays, often work on weekends and even check and respond on my blackberry during vacations, holidays and other personal time. My boss once sent me a meeting invitation at 10 PM in the night for an early morning meeting next day. She was furious when I didn't show up for the meeting on time. But now, I get paid by hour. So the more hours I put in, the more money I get. Client wants me to check and respond to my emails from home? Sure. But you bet I will bill if they add up to a significant number of hours. Of course, I don't bill for every minute. That won't be fair. And I am not a lawyer. :)
2. Less stress. I hardly ever had to bring work home. I am not in a rat race any more to compete with my colleagues to move ahead in the corporate ladder. Heck, I don't even have a corporate ladder. Mine is one of those "Little Giants". Folded, I am at the bottom rung....the worker bee; extend it, and I am at the top, the CEO of my one-person company. One thing I was really bad at is play the office politics (no wonder I got laid off). Now I don't have to worry too much; I am in nobody's way. Not that consultants are completely immune to office politics. They do get impacted somewhat sometime; but it's not as bad as being an employee. Plus I have the added advantage of moving on to a different project even after a short period of time, and it doesn't look bad on your resume. In fact, it adds to your portfolio of work. Imagine an employee switching his job after three months and trying to justify that in his next interview.
3. Better Work/Life Balance. Now that I don't have to bring work and stress home, I get to spend my free time anyway I want. When I am on a local project I spend more time with my family or my personal pet projects. When I am on an out-of-town project I get to work-out, catch a movie, visit local touristy places, reconnect with friends or simply slump in the couch to read a book or watch TV.
4. Satisfaction of having my own business. It doesn't matter if you are an one-person company or have employees; you are an "Entrepreneur". When I answer the question of "what do you do for a living" or "Who do you work for", with "I own my own business" or "I work for myself", I see a respect in their eyes; with a slight hint of jealousy...particularly if it's an employee who is not happy with their job or employer...which is pretty much true for 80% of the folks.
5. Tax-deductible expenses. IRS allows many business expenses to be tax deductible. This is a sensitive area because IRS rules often get interpreted in different ways by different people. So, I am not gonna tell you what I claim as business expense. But when you work with a reputed and reliable tax accountant, you would be surprised to see items that you can claim. Even the small items such as business meals and mileage add up to a significant amount over time.
6. Call my own shots. When I was working for the consulting companies, I rarely got to refuse any assignment even when I didn't want them. You can say "No" only so many times. After that you would be in trouble, particularly if you are on the bench (the consulting term for when you are not on a billable project).
Now, I am at full liberty to take an assignment or not, as I wish. In fact, I pursue only the type of clients and assignments I want, at an hourly rate I want. Of course I have to chose less desirable ones once in a while. But I have the liberty to walk away, when I get a more desirable one. The key is to not burn any bridges while doing so. At the end of the day, relationship matters; both in your personal and professional lives.
7. Financial Responsibility. Being self employed has taught me how to manage my finances more responsibly. Now that I can't rely on a regular paycheck, I am more careful about saving for the rainy day to getting the best value for money on my purchases. Now, I understand that some may not consider this an advantage; but for me it is. I am more disciplined now with my finances compared to when I was on a salary.
8. Plan vacations. Since I have been self-employed I get to better plan my longer vacations. I usually plan them for when I know I will be between two assignments. If I am on a long assignment then I plan it to align with client's slow times. Then I communicate with them well in advance. I did have to change my plans once; but that's because client requested it. I reduced my vacation from five weeks to three weeks. What I got in return? An extension of the engagement for another six months. Hey, when you are in business you sometimes have to look at the cost/benefit. Oh another thing, I didn't have to bring my laptop or blackberry on my vacation.
9. No More Annual Performance Reviews. Remember those "creative writing" phases every year, when you scramble to remember what you did in last one year that your peers or boss have not stolen credit for? Remember the smirk on your boss' face when he reads your "accomplishments"? Remember the frustration when you got just the "Satisfactory Performance" with an 1.3% raise and the brown-nose moron got the "Outstanding" rating with a 15% raise and $18,000 bonus? I don't, anymore.
10. No More Annual Performance Reviews. No, it's not a typo. I did list that twice. This time for not having to do the performance review for my team. I absolutely hated it. You have probably heard the saying, "You can make some people happy some of the times.....;but you can not make everyone happy all the time". This can't be more true. I can guarantee you that everyone in your team thinks that they deserve a better rating, raise and bonus than what you gave them. I can also guarantee that your manager thinks that you could have done a better job of rating your staff. Thank god I don't have to do that anymore. Well may be until I hire employees.
By the way it's not all bed of roses. Being self employed has its own nuances. I have noted my own views and views of others that I have collected so far.
- Uncertainty. Sometimes I don't know what lies ahead for me. Many times I wouldn't know if I will have a project after the current one gets over. When I am on a client assignment I truly focus on my work which leaves me very little time to look around for new assignments. So there is a period of time between the projects when I am not earning any money. Fortunately these have been far and few in between. This in fact is a direct result of my focus on the current project which has enabled me to build a good relationship with the client who in turn extends my contract. Furthermore I have been able handle these rare occurrences by diligently saving for the rainy days. I explain this in more detail in the Financial Planning section.
- Instability. This actually is what my wife thinks is a nuance of self employment. I don't. However I do respect her view and understand that there are many folks with a similar view. I believe that there is no such thing as "job stability". Your employer or boss can let you go anytime they want. Or they may create a hostile environment that leaves you with no other option than to leave. When you are self employed and work on multiple projects for various clients, it in fact enriches your portfolio of accomplishments. Whereas, if you are a full-time employee, the same situation will make you look like a job-hopper and go against you. Check out the Self Employment Resume section on how you can present your experience to your advantage.
- Lack of Benefits. When you are employed full-time with a decent sized company you are privy to certain benefits such as Health Insurance, Disability, Vacations, 401K match etc. You lose them once you start working for yourself. You absolutely need to consider these while planning for self employment. I have included a tool in Plan=>Start section to help you make that comparison.
- No Career Growth. You obviously don't get to be a C-level executive in a Fortune-500 company if you are a self-employed professional. Like I said before, this is a choice you have to make for yourself. You only know what your priorities are at a given point of your life. You can choose to be self-employed for lifelong or only for a period of time. Or you may choose to expand beyond self-employment and hire employees and grow into a bigger business. Bottom line is, it's your call.
- Getting Money-minded. Being paid by the hour has it's negative side too. Initially I would feel really bad to take time off for vacation, sickness or just to run errands. I would start calculating how much money I would lose by taking that time off. It took me a quite a bit of self-discipline to change that mindset. I am not completely there yet; but I am trying to. Just keep in mind that your physical and mental health is more important than just making money. Here is a tip: Start allocating paid time off to yourself for every full month of work (like most of the companies do). I will share more tips in the Operate section.
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