The Pros & Cons of Going into Business for Yourself — Part 1
Most of the articles in this column are aimed at the owners and managers of contracting firms in this industry. However, this begins a series of three articles that are even more pertinent to field crews than you bosses. Consider sharing it with them. You have our permission make as many copies as you need for your employees.
At some point virtually all trade workers think about going into business for themselves. Usually they’re motivated by a desire to make more money or to be their own boss. All too often it happens when they feel they’re not being treated right by their employer. Sometimes there’s a combination of motives.
This is an incredibly important decision, and a very personal one. I wouldn’t presume to tell people whether or not to go into business for themselves — no more than I would try to tell them who to marry or what to name their kids.
What I do hope we can accomplish in the next three articles, however, is to lay out the pros and cons involved in running one’s own business, so people can make an informed decision about it.
Money TalksFirst, let’s deal with the pro side of the ledger. What are the positive things that can happen if trade workers decide to go break out on their own?
Most obvious is the opportunity to make a lot more money. This probably is the number one reason why people decide to leave their jobs and start their own businesses.
No matter how good they are at what they do, and no matter how successful their company might be, there is a limit to how much any employer is willing to pay a trade worker. For example, hardly any well drillers can expect to earn $100,000 a year working for someone else. Maybe, with a lot of overtime, a few top performers might pull down six figures in a year, but it doesn’t happen very often.
However, it’s quite possible for the owner of a successful drilling contractor company to earn $100,000 a year. Some business owners make a lot more. The sky’s the limit when you operate a profitable, growing business.
In addition to paying themselves a handsome salary, owners who build a successful business may someday find that other people want to buy it. If the company is successful enough, it could be worth millions of dollars in the owner’s pocket, plus the owner often gets kept on the payroll as a highly paid manager or consultant. Truly, this is a payoff that is worth striving for. Furthermore, business owners frequently enjoy tax deductions that also benefit them personally, such as a company car, entertainment, country club dues and so on.
When you get right down to it, there’s only a handful of ways to get rich. One is to inherit wealth. Another is to get extremely lucky winning a lottery or guessing right with the stock market or some other windfall investment. If you are a world-class athlete or entertainer, that also could be the path to affluence.
For most people, though, these things are out of the question. If you’re not born right or don’t get wealth bestowed on you through sheer dumb luck, the most accessible path to getting rich is to own your own business.
Being the BossNext to money, people get motivated to start their own business by a desire to be their own boss. Some people just don’t like to answer to anyone else. People who don’t react well to authority ought to seriously consider breaking out on their own.
There’s another extremely good reason to start one’s own company. It’s what might be called the entrepreneurial drive. An entrepreneur is the business world’s version of an artist. The true entrepreneur is a creative person who desperately needs an outlet in which to implement his or her ideas.
Being an entrepreneur differs from simply wanting to be one’s own boss. Many people want to be their own boss for negative reasons — because they don’t like the folks they work for and think they could do a better job.
With entrepreneurs, the desire to break away is present even if they like their jobs and the people they work for. It’s like an artist craving paint and a canvas, or musicians who would hock just about all of their other possessions for an instrument. The entrepreneur has a creative vision about how to run a business, and that’s what drives this person. If they fit the entrepreneurial mold, then the decision to start their own business is already made. Nothing can stop them.
Being entrepreneurs doesn’t mean they’ll automatically succeed. Many entrepreneurs fail in their business ventures, often time and time again. In fact, there are some aspects of an entrepreneurial personality that go against the grain of what it takes to succeed in business. Too often, the entrepreneur is a control freak who doesn’t know how to delegate. S/he may be headstrong with a my-way-or-the-highway attitude. These are not good qualities for running a successful business. Business success usually requires people skills, negotiating skills and compromise. It’s not unusual for an entrepreneur to start out strong because of the brilliance of his or her business ideas, but then the flame fizzles out because of an inability to work and get along with others.
But even when s/he fails, a true entrepreneur will continue to find a way to open up a new business again, sometimes in an entirely different field. If you are an entrepreneur, deep down, you probably know it. And you probably have intended to open your own shop from the minute you went to work for someone else in order to learn the ropes.
Other MotivesAnother positive aspect of running your own business is the opportunity to do it right — or at least what you may perceive to be the right way. Some people disagree with the business practices of their employers. It can get frustrating seeing people above you make mistakes, but they won’t listen to you because, after all, they’re the bosses. In some companies, opening your mouth only will get you in trouble. Owning your own business gives you a chance to do things the way you think they should be done and implement your ideas.
Job security is another reason why some people go into business for themselves. Trade workers in particular get tired of being laid off or not knowing how many hours they’ll get from week to week. They think the only way they can assure themselves of employment is to be the one generating the work. Money often is secondary to such people. I’ve known contractors who earn less money than their employees, but they’re happy just knowing that nobody can fire them.
In fact, a lot of construction contractors went into business for themselves after being laid off or fired. These people didn’t necessarily want to go into business for themselves — it was forced on them. Usually, they are not very successful.
Finally, let’s face it, there’s a lot of prestige and ego gratification that come with owning your own company. If you wish, you can name the company after yourself and put your name on trucks and advertisements that get seen all over town. Most people would deny this as a motive, but deep inside I think most business owners get a kick out of being a big shot.
This pretty much covers the pro side of the ledger. The big advantages of running your own business can be summarized as follows:
- The opportunity to earn big money
- Satisfying the entrepreneurial urge
- Opportunity to operate the way you think a business should
- Job security
- Prestige and ego gratification
Next month we’ll take a look at some of the biggest reasons to think twice about going into business for yourself.