Something Even Better | A Coaching Podcast

The truth about working for yourself vs. working for someone else

January 31, 2022 Stacie Mitchell Season 3 Episode 10
Something Even Better | A Coaching Podcast
The truth about working for yourself vs. working for someone else
Show Notes Transcript

What’s it REALLY like working for yourself vs. working for someone else? It’s time you finally see all the nitty-gritty behind-the-scenes stuff most folks don’t want to talk about when it comes to being an entrepreneur.

In this podcast, I dive into the myths of working for yourself as well as the perks of working for someone else. I made this podcast to correct the typical oversimplification we see in the online business world of “entrepreneurship is GOOD and jobs are BAD.”

As with anything, there are perks and downsides to both, but since we spend most of our time hearing the perks of entrepreneurship and the bad parts of employment – I’m flipping the script and showcasing a more realistic view.

If you want access to the research behind the episode, head over to the blog: The truth about working for yourself vs. working for someone else.

Mentioned on the podcast:
Duped: The Darkside of Online Business
Wantrepreneur: Professor Explains the Fake Entrepreneur Industry

And get access to my free private podcast on “What Do I Really Want?” where I teach you my favorite, super simple exercise for figuring out what you really want ASAP!

What’s it REALLY like working for yourself vs. working for someone else? It’s time you FINALLY see all the nitty-gritty behind-the-scenes stuff most folks don’t want to talk about when it comes to being an entrepreneur.

Here’s the thing y’all: There are people outright LYING about how easy it is to make money in online business. 

Now, don’t get me wrong off the bat here. I LOVE entrepreneurship and I love entrepreneurs. Full stop. I support them, I love them, I coach them, I AM them. I also just REALLY love having a job now too and want to show both sides as realistically as I can.

Because I’ve “done the thing” and been a full time entrepreneur, I feel equipped to at least let you know the real deal of working for yourself vs. working for someone else. Breaking news: it’s not all sunshine and rainbows and sleeping in.

Entrepreneurship is a dream that so many have, and I totally get it: Entrepreneurship equals full-on freedom – or at least that’s what’s sold to us, right?

It’s this idea that when you’re working for yourself, you never have to do work you don’t love ever again. Which, FALSE!: Unless you have money to invest in hiring out the admin stuff, the marketing stuff, the taxes and bookkeeping, etc., you’re pretty much guaranteed to do work you don’t love at some point in your own business.

Or that you’ll never have to answer to a boss. FALSE!: You’ll be your own boss (and consider how harsh you can be to yourself sometimes!) and most likely, you’ll have clients to answer to in some capacity too.

Now I’m definitely NOT saying that you can’t be successful working for yourself, but I do think that many folks online sell entrepreneurship as an identity first-and-foremost, and by doing so, they leave out the bad bits. Because…it’s hard to sell working for yourself as an entrepreneur when you fully showcase the parts that REALLY suck, right?

Instead, when we sell entrepreneurship as an identity you SHOULD want for yourself, you see the examples of folks who have already made it. People who now make 6 figures or millions, and promote their fancy lifestyles, with fancy vacations and homes and clothes, and who usually talk about only working 10 hours a week – except for those certain outliers like Grant Cardone.

Most entrepreneurs don’t show the struggles it took to find success or the privileges that allowed for that success. If I had a dollar for every successful entrepreneur whose partner made 6 figures plus while they were starting and growing their businesses…I’d have 6 figures plus! 😅 It’s easy to invest in and work hard in a business for however long it takes to succeed when you have lots of disposable income y’all! Just saying! BUT to be clear – this isn’t true for every successful entrepreneur either!

And there’s a big reason for this: it’s much easier to sell entrepreneurship (and all the services and products that come with selling it) if you’ve bought into the idea that entrepreneurship and working for yourself is THE best path to follow. Because selling this new identity of entrepreneurship - freedom, wealth, ease - is EASY to sell, right?

What if entrepreneurship is just one path to what you most want for your life with several other, maybe even better, paths available to you?

Working for yourself vs. working for someone else: Is entrepreneurship really worth it?

Common myths we’re told about working for yourself:

  • No one can tell you what to do ever again!
  • You can take time off whenever you want!
  • You can just focus on the work you love!
  • Your income potential is limitless - entrepreneurship is the best way to create wealth!
  • You create your schedule and you’re totally free!

The realities of working for yourself vs. working for someone else:

Let’s break down the realities of working for yourself vs. working for someone else that practically no one ever talks about:

Working For Yourself Myth #1: No one can tell you what to do ever again!

Ehhhhh…not really true! If you’re a business, you have clients or customers – you have to sell SOMETHING. So while you ultimately make the decisions, you can’t always get “your way” on everything. And you have to sell what your customers or clients will pay for – otherwise you don’t have a business; you have an expensive hobby! 😬

Working For Yourself Myth #2: You can take time off whenever you want!

Unless you have money to hire a team to do the work for you, it can be REALLY hard to take time off as an entrepreneur. If you stop marketing, you stop making money. And someone has to do the client work! Even if you sell “passive” digital products, there’s still a lot of work that goes into making enough money to live from that. And it can take years to get to the point where you feel solid enough to take a lot of time off from your business.

Working For Yourself Myth #3: You can just focus on the work you love!

There’s a lot about being an entrepreneur that IS NOT FUN. Taxes, legal stuff, contracts, chasing clients for payment, bookkeeping, potentially writing a LOT (which I enjoy, but not everyone does!), technical stuff (websites, payment processors, and automations, oh my!)...honestly, the list sorta never ends. And again, unless you have money to delegate it all out – which most people don’t in the beginning – you will be doing quite a bit of work you don’t love.

Side note: This is something that people don’t talk much about when it comes to coaching businesses; about half your time is spent on marketing or admin. This can be a real pain if you just want to coach!

Working For Yourself Myth #4: Your income potential is limitless - entrepreneurship is the best way to create wealth!

While this is technically true, making money as an entrepreneur isn’t always easy. There’s a lot that goes into having a successful business. And getting to that success typically requires a certain amount of money to invest into the business – before you’ve even made any money back.

In fact, the stats show us that only about 40% of small businesses are profitable, while 30% are breaking even, and 30% are LOSING money. Not so great, right? 

And even more research to squash this myth of the wealthy entrepreneur: “Most entrepreneurs enter and persist in business despite the fact that they have both lower initial earnings and lower earnings growth than in paid employment, implying a median earnings differential of 35 percent for individuals in business for 10 years.” To be clear, this research mentions that the reason that entrepreneurs persist is for the non-cash benefits of the work – so there’s that!

While I was able to make about ~60% profit as an entrepreneur in my first year going full-time, I just don’t think that’s the norm for many folks! Also that 60% did NOT account for the cost of my health insurance.

Bottom line: There are definitely some other benefits to being an entrepreneur, but it’s typically not the quickest path to wealth that we’re told. In fact, you’ll hear whispers about entrepreneurial poverty because it is a real thing!

Working For Yourself Myth #5: You create your schedule and you have total freedom!

There’s a hard truth here that no one ever seems to talk about: if you want to make money, you have to provide value. And most of the time, in order to create value, you need to work. And when you’re NOT working, you’re not providing that value…and thus, you’re not getting paid.

So while yes – you CAN create your own schedule – you aren’t totally free, at least not in the way it’s typically presented to us. You still need to work to make money. Even if you create passive products, you have to provide customer service for those products, market those products, and keep making them better over time (if you want to keep making money anyway!). And if you have clients, it’s likely they expect something from you: in either your time, your service, a deliverable, or all three.

You still have responsibilities as an entrepreneur. In fact, you likely have MORE responsibilities than you did when you had a job. Honestly, it can be a bit of a bummer to learn this after seeing the opposite sold to us all day, every day.

The perks of working for someone else:

Note: Clearly not every job will have every benefit I’ve listed here; I tried to choose the most common benefits I’ve seen for full-time jobs.

Health insurance

This might not apply if you live in a country other than the United States, but health insurance is expensive for us Americans, and many jobs provide access to better plans and pay for at least part of the cost. 

And if you don’t have health insurance and you live in the US, you’ll always live in fear of your health taking a turn – even if you choose to enroll in a plan through the marketplace or on your own, the premiums and deductibles are usually really high. Medical bills here are expensive and can completely bankrupt you. Scary stuff.

401k plans or other retirement options, sometimes with “free” money!

There are quite a few employers out there that offer some sort of retirement option, and sometimes they even match some of the money you invest – basically giving you free money.

This is nothing to sneeze at – this is part of your compensation and can help you build wealth. If you’re self-employed, you have to set up these investment accounts (which honestly, get yourself a financial advisor regardless of your situation, it’s worth it and actually not that expensive) and you have to be the one investing your money.

Many folks will tell you that your business is an investment, but it’s a risky one. About 50% of all small businesses fail in the first five years. And I swear I’m not trying to be a Negative Nancy, I just don’t want you to bankrupt yourself because you want to create more financial security, you know?

Potentially less taxes to pay and with less headaches overall

Important disclaimer: I am NOT a tax, financial, or legal professional and this does NOT constitute financial or legal advice.

From TurboTax: “In addition to federal, state and local income taxes, simply being self-employed subjects one to a separate 15.3% tax covering Social Security and Medicare. While W-2 employees “split” this rate with their employers, the IRS views an entrepreneur as both the employee and the employer. Thus, the higher tax rate.

Basically, as an entrepreneur you’re probably going to need a tax professional to help you figure out your quarterly taxes, you’ll have to pay those taxes each quarter, and you may end up paying MORE taxes than you did as an employee. It’s just one more thing that isn’t particularly “fun” about entrepreneurship and working for yourself.

Paid time off

If you want to take paid time off as an entrepreneur, you have to plan for it, usually months in advance. Because…when you’re not working, you don’t automatically still get paid. It’s a conundrum. 

Same for if you get sick, or you become disabled. In fact, if you’re self-employed, you might want to invest in quite a bit of insurance for allllll the things that can happen. Some employers automatically offer disability insurance, many offer paid sick time, and the majority offer paid time off – though to be honest, I wish they offered more in the US. But that’s a post for another day.

A built-in team

Entrepreneurship is lonely. Period.

If something isn’t working, or a client does something annoying, or you’re just having a really bad day…it’s just you (unless you have the money to hire team members, and even so, you’re the one who has to make the final decisions!).

As someone who is pretty introverted, I didn’t foresee how much of a problem this would be for me. But not having someone that is “in the trenches” with you sucks. 

Of course, you can join a mastermind group, and make entrepreneurial friends, but unfortunately, it’s not exactly the same as having someone who’s actually on your team. At the end of the day – it all rests on your shoulders.

When you have a job – unless you work for a tiny company – you have others in the company working towards the same goal. And you usually have someone above you helping guide your decisions. It makes a big difference!

Selling entrepreneurship as an identity: How working for yourself became #goals for seemingly everyone

I hate to say this, but I never really wanted to be an entrepreneur growing up. I’m always sort of envious of the folks who said they’ve always been entrepreneurial – rocking their lemonade stands, or selling the most Girl Scout cookies, or whatever.

That was never me. I honestly think I was meant to be an academic more than anything (maybe I’ll get that PhD someday??). I read a LOT as a kid, and was always a bit dorky and “on the straight and narrow” – risk averse really, you could say!

So how did I even decide to quit my job and take a shot at working for myself in the first place? 

I’m pretty sure it started with listening to Brooke Castillo’s podcast and reading Martha Beck’s books. I just really liked life coaching – and because coaching was pretty “rare” back then (this was back in 2012), while I wanted to be a life coach, I really didn’t have any idea how.

It took 5 more years before I saw a Facebook ad about “creating my laptop life” that I wondered if I really COULD create my laptop life. I joined my first online business program…and the rest is history, right?

But I didn’t know at the time that this was all part of the Entrepreneurial Industry: selling entrepreneurship as an identity above all else. It was less about having a great business idea that people needed and were willing to pay money for, and more about how to become an entrepreneur, period. It was a bit like putting “the cart before the horse” – building a business for the sake of being an entrepreneur, not becoming an entrepreneur because you built a solid business.

Some have called this phenomenon wantrepreneurship – wanting so very badly to be a successful entrepreneur, but not really understanding what that means because we’re sold entrepreneurship as “the dream” that brings freedom, massive income, work we love, and all the other good stuff like travel, passive income, 4 hour work weeks, I could go on.

We’re sold blueprints on exactly how to make entrepreneurship work for us, but in reality, most successful entrepreneurs are already fairly business savvy, already have a great idea with the skill sets and expertise to make it happen, and have the entrepreneurial traits (and let’s be real, typically a good amount of privilege too) that allow them to experiment their way to success. I still think investing in learning new systems and approaches is a good thing on your path to successful entrepreneurship – this is really more about examining your motives for entrepreneurship and your personal values!

And unfortunately, the research on The Entrepreneurial Industry backs this, as seen in the research paper by Hartmann, Spicer, and Krabbe called  “Towards an Untrepreneurial Economy? The Entrepreneurship Industry and the Rise of the Veblenian Entrepreneur”:

“The industry grows its own market by encouraging greater entry into entrepreneurship and persistence in entrepreneurial ventures, irrespective of their observable ex ante likelihood of success. In doing so, it has transformed entrepreneurship from a generally gainful economic activity driven by the pursuit of (potentially) valuable opportunities into a largely wasteful form of conspicuous consumption motivated by aspirations to ‘live the tech entrepreneur lifestyle’ and the socially attractive identity of ‘being an entrepreneur’. This form of wasteful entrepreneurship is what we refer to as Veblenian Entrepreneurship. That is entrepreneurship that masquerades as being innovation-driven and growth-oriented but is substantively oriented towards supporting the entrepreneur’s conspicuous identity work. For this reason, Veblenian Entrepreneurship differs from innovation-driven entrepreneurship in key respects. These differences make it a priori unlikely for a Veblenian Entrepreneur to succeed (as defined by conventional standards) and to contribute to economic growth or any other socially desirable outcomes. Instead, Veblenian Entrepreneurship creates a range of undesirable effects for both individuals and society. Taken together, this presents a novel interpretation of which entrepreneurship as an activity, defined by symbolic manipulation, tokenism and consumption.”

In this research paper, they really dig into the idea of “muppet factories” and how the Entrepreneurship Industry doesn’t actually work for most people. The majority of businesses that are started from consumership — being sold the idea that you too (said in my best infomercial voice!) can be your own boss and a successful, wealthy entrepreneur if you just work hard enough – those folks typically don’t end up being successful entrepreneurs. By the way, I’m hearing the “womp, womp” noise in my head as I write this. Honestly, it all reminds me of the diet industry -a heckuva lot of failures with only the “best, not typical results” as testimonials.

This really digs into the American Dream (anyone can make it if you just work hard enough!), and the prosperity gospel (if you’re truly good, you’ll be rich!), and completely leaves out the challenges and inequalities that can get in the way of creating wealth. 

Bottom line here: We are sold the idea of easy wealth creation and the freedom of entrepreneurship because it is so enticing and easy to sell. But with that, we sweep the bad parts of entrepreneurship under the rug along with the all the good parts about simply being an employee. 

And I’m not trying to dissuade anyone who really wants the whole entrepreneurship package - good and bad - to stop trying. This blog/podcast is about helping people see the full picture.

There are pros and cons to working for yourself AND working for someone else

Here’s what I want to see more of in the world: nuance.

I want to see less black and white thinking, and more honesty about our options, how there’s always pros and cons to every choice we make, whether we like it or not.

Entrepreneurship could be the best choice for you. But it also may NOT be the best choice.

Working for someone else doesn’t make you a failure. I just finished watching On Becoming a God in Central Florida – all about a shady pyramid scheme in the 90s – and over and over again they made people feel ashamed of having a “J-O-B” when they were recruiting their downline – spelled out because clearly “job” is a bad word and should never be said aloud.

Working for yourself can be great – and also not great. It depends on what’s most important to you, how much stability and security you have in your life, and your overall personality, values, and business-savvy – a lot goes into it.

Working for someone else can be great too, or not so great. It depends on where you work, what work you do, how you do your work, who you work with – a lot goes into it too.

To me, this is about examining what you’re really after: More money? More freedom or flexibility? More autonomy? And then, take what you really want and make sure that entrepreneurship is the best way to get those things. Sometimes it will be, sometimes not.

There’s no right or wrong. There’s no one option that’s better than another. But that more moderate idea just doesn’t sell so many products or services now, does it?

If you want to learn more about all of this check out the podcast Duped, where they cover The Entrepreneurial Industrial Complex, The Freedom Paradox, and much more in great detail.

And if you struggle with knowing the best fit for you, check out my free private podcast on “What Do I Really Want?”  This episode takes you through my favorite exercise for finding more clarity in any situation. I seriously use it several times a week to coach myself! 

And if you know someone who needs to read this, please share it! Maybe they are struggling to get a business off the ground, or they’re wondering if it’s time to get a job or to quit their job and pursue their own business.