This episode is about the
pros and cons of being self-employed vs being a business owner.
Both options have advantages and disadvantages, but mixing the two
does not work well.
In the self-employed/freelancer model, you sell your time,
cover your own expenses and keep all profit. This works best when
you have a valuable skill and lots of industry contacts, as you are
able to undercut bigger companies on price but keep your overheads
low. If it works, you get the advantage of a lot of
flexibility to work or take time off. The disadvantage is
that you are dependent on work for income, so there is much less
financial freedom in the long term. You don't build up value in
business itself (nobody wants to buy a job) and it can be hard to
keep your overheads low for longer (as you may need to start
investing in marketing, new equipment etc). So it's a vulnerable
model over the long term.
The business owner model is the idea to create a value generating
machine. The focus here is on developing standards and procedures
to make yourself (the founder) unnecessary to the running of the
business as quickly as possible. The advantage of this model is
that you create an income stream and a source of value (the
business itself) that you can sell in the future, or live from as
passive income. This has the potential for much greater financial
freedom as well as the freedom to step away from the work in the
longer term. The disadvantage is that you have more risk in the
initial period, as businesses take more investment. You also get
much less free time in the initial period, as the startup phase of
a business is more stressful than freelance work.
Either model can give you a lot of benefits, but be careful not to
get stuck between these two models- you can end up with all the
stress and none of the benefits. If that happens, it isn't creating
a business, it's creating a job (and the worst kind of job, because
you can't stop doing it). I hope this podcast will help you be
conscious of which model you are adopting and to move more clearly
to one or the other if you are currently stuck in-between.
The E-Myth Revisited
by Michael Gerber
The 4-Hour Workweek
by Tim Ferriss
Anything You Want
by Derek Sivers