The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.
If we’re honest, we have to admit that the job market isn’t as secure as it was just a few years ago. There’s not much that we can do about that – but that doesn’t mean that we’re helpless. One of the best ways to remedy an unstable job market is to have your own business.
And here are eight compelling reasons why you might seriously consider doing it for yourself.
1. Unlimited Earnings
It’s regrettable that in jobs your income will be determined by a certain very limited range. For example, even if you do the best job possible in your job classification – even if you exceed expectations – if the salary range for your position is between $40,000 and $50,000, there is very little chance that you are going to earn more than $50,000.
If you have your own business, no such limits exist. You can literally earn as much as your time, efforts, and talents will carry you.
2. Having Creative Control Over Your Work
When you work for someone else, that person or employer will not only have control over the work you do, but often you how you do it. Very few jobs operate as true democracies. There will almost always be parameters and rules – some that are incredibly specific – that will dictate exactly how you do your job. Even if you suggest what might be a better way, the idea may be rejected by the employer, since it is “not the way we do things around here”.
When you have your own business, you have complete control over your work. You can eliminate any process that you think is not entirely necessary, or modify it so that it is easier to do. You can also choose to work on those areas of your business that are most productive, and most fulfilling to you on an emotional level. That alone could make day-to-day work less of a chore.
3. You Can’t be Fired or Downsized
While it’s true that you can always lose clients or customers when you have your own business, you can’t be fired or downsized out of your position. When you have a job working for someone else, either you are employed – and everything is fine – or you are unemployed, and your life has been turned upside down.
When you have a business, there may be times when it takes a downturn, but you can then make every effort to find additional sources of income to make up for what was lost.
4. You Can Blend it With a Full-time Job
You don’t necessarily have to start a business that will become a full-time venture. You can choose to make it part-time, at least until you get to the point where you are willing to take the leap of faith into full-time. But you can also decide that it will remain a part-time activity, and blend it with your full-time job.
5. Choosing Your Own Income Sources
If given a choice, most of us would probably choose pursuing certain income sources over others. If you have a job, that choice will not be yours to make. But if you have your own business, you can choose to pursue whatever income sources are most agreeable to you.
And in most cases this will work to your advantage. People typically earn more when they are doing what they like, and what they believe in. In that way, you can earn more money while getting more satisfaction out of your work.
And speaking of satisfaction…
6. Personal Satisfaction
It’s usually easier to create a work/life blend that works for you on a personal level when you’re self employed. You could not only choose to work as much or as little as you want, but you can also control the specifics of how that comes about. That control that you will have for your professional activities is likely to translate into greater personal satisfaction.
7. An Asset to Sell to Fund Your Retirement
Certain types of businesses can be sold, often for a large amount of cash. For example, a business may have a substantial amount of capital invested in property, equipment, or inventory. The cash flow of the business may even be salable – businesses often sell for X times their annual gross revenues.
The point is, if you have an established business, and you would like to retire, you could probably sell your business to provide additional capital to add to your retirement portfolio. This could the an amount that enables you to take early retirement, or at least to have more funds available for retirement at more traditional ages.
8. An Additional Income Source in Retirement
There are two possibilities here. You can choose to slow down your business activity so that you can semi-retire at whatever age you choose. The extra income can supplement your Social Security income and retirement investment income, and provide you with a very comfortable life.
But the second possibility actually works in conjunction with selling your business. Very often, when a business is sold, the previous owner continues to work in the business in order to ensure a smooth transition from himself to the new owners.
Under such an arrangement, you might be able to make your employment into part-time situation, or you may even be able to make it permanent.
Either way, this will enable you to draw a continued income from your business in retirement.
Considering all the above, there are certainly compelling reasons to have your own business – especially these days, when the job market seems to be permanently unstable.
***Photo courtesy https://www.flickr.com/photos/9731367@N02/6988137520/sizes/n/
