Self Employment

We often hear that small businesses are the engines of job creation in the
United States. In our community many of our small business are in the form of
individuals and self employment. Jef Romine, partner in the inancial !lanners
of "issouri and small business o#ner, stopped by the set of $ood "orning
%eartland to discuss the advantages and disadvantages of self&employment.
'he importance of small business in our economy is sometimes
underestimated because each business is small, but the truth is there is
nothing small about the total impact they have on our economy. 'hey provide
both jobs and innovation.
(ccording to )ntrepreneur "aga*ine there are bet#een +, million and +-
million small businesses in the U.S. that account for ./ to 0/ percent of all U.S.
jobs.
(nd, a recent study by !ayche1, says that small businesses produce 23 times
more patents that larger 4rms.
!erhaps for an e1ample, if you drive some#here and loo5 out your car #indo#s
to the left or to the right you often see farm land. 'he farmers that are running
and operating that land are typically self&employed and collectively they feed
(merica and much of the #orld.
or the ones #ho thin5 that being self employed is the same thing as if you
#ere #or5ing for a normal company, #e #ould tell them that they are
completely #rong. 6#ning a small business and being self&employed is not just
another job. It7s a totally diferent lifestyle. 'he success or the failure of the
business rests on your shoulders. It can be more e1citing or it can be more
#orrisome than #or5ing for someone else. 'he bottom line is that many self&
employed individuals use their business to survive and to provide resources for
them and their families.
8eing self&employed re9uires a personal commitment that is greater than #hat
most jobs #ill generate. 'his can mean very long hours, many days of each
#ee5, and be an enormous source of pride.
Some of the advantages that you #ill have if you are self employed are the
follo#ing:
2. ;ou are your o#n boss. ;ou can have some <e1ibility in #hen you #or5. =o
one is going to 4re you. ;ou have job security. 'his #ill provide you an
opportunity to put do#n roots and provide a sense of stability for your family.
;ou can belong to a community.
+. ;ou #ill have the chance to put your ideas into the business. %opefully your
business is in a 4eld or area that you enjoy. ;our business can be adaptable to
#hat you see that needs to be done. 'his <e1ibility ma5es small businesses
able to change virtually overnight to meet a perceived need.
3. ;ou #or5 hard and enjoy the re#ards of your hard #or5. ;ou>ll never #or5
harder for someone else as you #ill for yourself. I have al#ays said, ?When you
are your o#n boss, you 5no# #hen you are loa4ng or #hen something more
needs to be done@ ;ou #ill participate in very aspect of running the business.
8ut if you #ant to schedule a day a#ay from your #or5, you can do that.
A. ;ou get to feel the enormous sense of pride and personal satisfaction #hen
your business is successful, #hen your business has a good reputation, and
#hen the business gro#s.
,. ;ou #ill have the opportunity to lead others. When you need additional
employees, you get to choose #ho you employ and then lead their gro#th and
development.
.. ;ou #ill get to #or5 closely #ith your customers. ;ou can develop strong
meaningful relationships #ith your customers or clients.
-. ;ou #ill develop a breadth of talents. In the course of running your business
you #ill learn and ac9uire signi4cant s5ills of mar5eting, accounting,
negotiating and selling #hich are sought after s5ills in the #or5force.
0. ( successful business can provide 4nancial re#ard. %opefully, your business
#ill prosper and re#ard you for your sacri4ces. ;ou may have a chance to ma5e
a lot more money that if you #or5ed for someone. ;ou #ill also have a chance
to build real retirement value, if you can build your business and then sell it
#hen you retire.
;ou also have disadvantages, here #e #ill mention B.
2. Ris5 of failure. "ost ne# businesses fail in their 4rst years. When you are
self&employed, it is your o#n money or money that you have borro#ed at ris5.
%aving your o#n business increases the problems associated #ith failure.
+. ;our decisions can be #rong. 'here #ill be no one to bail you out from your
mista5es. (nd as a general rule, you cannot move for#ard #ithout some
mista5es. 'he big 9uestion is, can you learn from your errors and be adaptableC
3. 6#ning your o#n business can re9uire a sacri4ce of your personal life, you
may need to #or5 long, long hours, you may need to #or5 on #ee5ends, and
you may not have a vacation for several years.
A. ;our income stream may <uctuate throughout the year. ;ou may have very
little to live on during the early times.
,. ;our health insurance and pension costs are not included automatically.
When comparing self&employment income to a job, you need to remember the
employee bene4ts that are associated #ith employment such as health
insurance or perhaps a pension contribution to a A/2D5E are not automatically
included. ;ou #ill have to meet these needs from your income.
.. Strict record 5eeping and attention to detail are very important. ;ou #ill
have the ultimate responsibility for such things as the re9uired licenses, sales
ta1 returns, employment and unemployment ta1es returns, payroll information,
and income ta1 returns. 'he details that are recorded on these documents #ill
need to come from your record 5eeping system.
-. Some tas5s may be unpleasant. ;ou may 4nd yourself doing things that you
do not enjoy, but no one else is there to do them. 'his may include 4ring
employees, or saying ?noF to a family member loo5ing for #or5.
0. ;ou may have a hard time hiring 9uali4ed employees.
B. 'here is al#ays a ris5 of being sued. Greditors and customers may possess
the ability to see5 your personal assets if you default on your business
obligations. If a customer or vendor believes you acted in error, he may 4le a
la#suit against you. 'o protect your assets, you can see5 liability insurance for
your business, but some ne# business o#ners may 4nd it diHcult to aford
insurance premiums.
If you need help, there are a staggering number of places that #ill assist
individuals #ho #ant to start and operate a business for no charge. ( simple
search on the internet #ill yield numerous places in either Iir5sville or
6ttum#a. !lus there are many articles and resources available on line and
through the Small 8usiness (dministration DS8(E. I personally 5no# several
individuals that #ill help people #anting to start a business.