10 Myths About Self-Employment

July 24th, 2006 by Steve Pavlina

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.

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.

2. The only reason to build a business is to sell it.

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.

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.

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.

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.

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 a while, 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 backwards 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.

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.

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.

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.

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.



Steve Recommends
Here are my recommendations for products and services I've reviewed that can improve your results. This is a short list since it only includes my top picks.

Site Build It! - Use SBI to start your own money-making website - Save $100 on SBI through Dec 30th with their holiday special
Lefkoe Method - Permanently eliminate a limiting belief in 20 minutes
Getting Rich with Ebooks - Earn passive income from ebooks
PhotoReading - Read books 3 times faster
Paraliminals - Condition your mind for positive thinking and success
The Journal - Record your life lessons in a secure private journal
Sedona Method (FREE audios) - Release your blocks in a few minutes
Life on Purpose - A step-by-step process to discover your life purpose

If you've found Steve's work helpful, please donate to show your support.

Get Steve's Free Newsletter to stay in touch and receive the newest updates

Free Personal Development Insights Newsletter

Get Steve's Free Newsletter

Sign up below to receive my free email newsletter, which is sent about once a month. It includes original and insightful bonus material to help you grow. No spam. No sharing of your email address. Easily unsubscribe at any time.