Business Owner vs. Self-Employment

I know someone who stresses that he’s a successful business owner. He brags about being in business for 20+ years and that he survived the 2008 downturn. I tried to explain to him that he makes his income more from being self-employed than through owning a business. It didn’t go over well. My guess is he understood the difference but didn’t want to admit that although he sought out to be a business owner, he ended up being self-employed. This discussion happened a while back but reading Tara Gentile’s blog post reminded me of the discussion.

Employer or Business

There are many folks who like the essence of their job. They like the work they do. The job is great but the employer not so much. You probably know someone who fits into this category, you might fit into this category. Sometimes rather than finding a new employer by way of a new company, they transition to self-employment. The former employee works for themselves and is therefore self-employed.

Now starting a business is a little more than that. Actually, let’s say it different, rather than more. I don’t want to imply any judgment. Starting a business is not changing employer from Company ABC to yourself. Starting a business is well, starting a company.

Mindset

Going back to Tara’s blog post. She not only speaks to crafting a job but talks about mindset, which I think is key. There are different mindsets for self-employed vs. owning a business. Revenue via self-employment is generally limited to how many hours you can work. And that’s why there is often a focus on rate or how much you can charge per hour. The self-employment mindset is based on the concept of trading hours for money.

The personal trainer that I talked about earlier worked 5 ½ days a week directly with clients and his full days were often 12 hours long. In addition to the one on one time with his clients, he also had to do bookkeeping and advertising in the evening and his “days off”. A lot of work and needless to say he hadn’t taken a vacation in years.

 

The business owner mindset should be different. A business owner’s primary objective is to be the most profitable. Businesses don’t measure their success by their hourly rate, they measure it by profit. A different mindset with a different set of goals.

My Concept of Entrepreneurial Roles

Although they can be used by self-employed, my products are centered on starting and growing a business. One of the concepts I try to teach is the concept of company roles. For our discussion, a self-employed person would spend just about all of her time in the role of Chief Operations Officer. But to make a business successful, you will need to step into just about all of the 9 Entrepreneurial Roles and surely all of the 6 Core Entrepreneurial roles.

Self-employed or business owner? Please share in the comments section.