Four Myths of Self-Employment
This is the 8th post in our Women of HR series focusing on career. Read along, consider the advice and we invite you to comment with insights of your own.
Have you ever wondered what it would be like to work for yourself? First of all, consider these factors to determine if your temperament is a good fit for self-employment. If the answer is yes, then you’ve cleared the first hurdle, but you still aren’t home free.
Before self-employment becomes a viable option, be sure you’re not buying into any of the myths out there that may lead you astray. As a self-employed home-based business owner since 1995, I’m here to debunk those myths and further help you determine if you should hang out your shingle. Trust me, it’s not for everyone.
Here are four misconceptions of small business ownership that I’ve repeatedly encountered over the past seventeen years:
Consultants make big bucks. Oh, if I had a dollar for every time somebody said this to me I would be rich! Usually, the conversation goes something like this:
They: So, Jennifer, you’re a consultant, right?
Me: Yes I am.
They: Well, our company hired a fancy-pants consultant last month. Geez, the daily fees that guy got! I wish I could earn that kind of money. You must do OK for yourself, huh?
This is one of the biggest myths I encounter about self-employment. People with this mindset lack a fundamental understanding of how small businesses operate. That “daily fee” the consultant charges is the company’s revenue, not the consultant’s paycheck. Out of that dollar amount comes any cost of goods sold (for example, the personality assessments that I purchase from a publisher), utilities, office supplies and so forth. After I pay all my bills and if there is money left, then I pay myself. Some months, there is no paycheck.
Working from home means less daycare costs. Big. Fat. Lie. Sure, now that my kids are older, I can sneak in some phone conferences and a quick check of emails. But if you want to do heavy thinking work, or lead a conference call, then you’ll need someone besides you to handle the daycare. Nothing kills your aura of professionalism like hearing strains of “Mommy, Charlie just threw up!” in the background while you’re trying to conduct a business call.
You’ll have more flexibility in your schedule. Well, sort of. Being independently employed does mean that you can arrange your schedule in whatever way you want it. I have found however, that Murphy’s Law is very much in effect when it comes to client needs. It never fails that a client needs something urgently during the time you’ve blocked out for your “flexible” schedule. And, if you are flying solo like I am, then there are very few to whom you can make the hand off.
The write-offs are a huge perk. Yet more evidence that the person saying this to me doesn’t understand a basic Profit & Loss statement. Yes, there are many things small business owners can write off, but it’s not like the amount written off goes straight into our pockets. The “write off” reduces the tax liability, but it’s not like some amazing rebate plan. Items like meals eaten during business meetings and certain travel expenditures are only partially deductible.
So, still think you’re ready to make the leap into self-employment? Then let me be the first to offer you encouragement. It has the potential to be an extremely rewarding career. It’s a choice I’ve never regretted and hope you will find as much satisfaction as I have. Drop me a line and let me know if you take the plunge.