You’re thinking, “Wait a minute – I thought this was an entrepreneurial site. What kind of demotivating crap is that?!” If you’re thinking that, then you probably think entrepreneur, business-owner, and self-employed are all interchangeable terms. And that’s how they’re often used, so it makes sense that people would think that. But in the minds of many business owners, there is a big difference between being “self-employed” and being an entrepreneur. A lot of people with entrepreneurial ambitions have dreams of breaking away from their 9 to 5 jobs and starting their own businesses. This is an admirable objective, and anyone who has done it is a hero. Regardless of the outcome, it takes guts, fortitude, and drive to have the courage to go it alone and give up a steady paycheck for a chance to do something more. Too often though, people end up self-employed rather than living the life of a true entrepreneur. So what’s the difference? Here are two fictional stories to illustrate:
The Story of Joe
Joe began working at a local print shop while in high school and continued working there while he attended college. He enjoyed the work, even though it didn’t pay very well, and his boss was an alright guy. While in college, Joe took some business classes that got him thinking about owning his own business. He had learned the printing business inside and out, so he started to think about the possibility of opening his own print shop. After checking into the logistics of such an endeavor and writing a simple business plan, Joe realized that he could definitely make it work.
A year after college, with some money he had received from an inheritance and a small-business loan from his bank, Joe opened Joe’s Printing! He so loved the idea of having his own business that Joe poured himself into his work. He knew he’d have to work very hard in the beginning to get new clients and deliver quality work to them, and he didn’t mind a bit. Eventually he hired one, then two press workers to help out in the shop while he went out and sold, and before long he was making a decent living.
Flash ahead 20 years: Joe is still working his business daily and tending to his clients. He’s got four employees now, and managing them can sometimes be a hassle, but what can you do? He can’t afford to pay for top-notch help, so he’s got to deal with whatever he can get. Joe hasn’t taken a vacation in years. The last time he went out of town with his wife and kids, it was a disaster. He spent weeks trying to console upset customers about orders that were wrong or didn’t get done, and he’s pretty sure the kids working the presses threw a party at the shop at least one night while he was gone. He works about ten hours a day, six days a week, but he makes pretty good money, and he’s his own boss, so it’s worth it. Right?
The Story of Annette
For some reason, even before she had children of her own, Annette always loved kids’ clothes. In fact, her friends teased her because she would stop at baby stores in the mall even though she wasn’t expecting – and didn’t even have a boyfriend! While she was in college, Annette worked at a department store – in the baby clothes section of course – and she learned all she could about manufacturers, brands, inventory, and merchandising. She took courses surrounding business and marketing, and even after college she read any book, blog or magazine she could find to learn as much about being an entrepreneur as possible. She had no doubt what she wanted to do after graduation, and with a helpful loan from her parents, she opened her clothing store, Baby Oh Baby, about a year after college.
Before opening the store, Annette got help from a mentor she had found through networking, to devise a business plan that included a detailed marketing plan as well as expansion and sales goals. She knew that she wanted Baby Oh Baby to be huge someday, and she was ready for the hard work it would take to get it there. One of her first tasks was to open her online store and begin her Internet marketing, in conjunction with the marketing of her brick and mortar location.
Flash ahead 5 years: Annette now owns six Baby Oh Baby stores throughout her state, with plans for three more in the next year. While she still works very hard, she loves every minute of it, and because she’s hired the best managers she could find, she’s able to take time off when she needs it most – to spend time with her husband and their new baby. Last week, she was approached about selling her company to a huge baby clothing chain, and she’s seriously considering it. Her biggest decision is what business she would start next if she sold now? She just can’t imagine not being an entrepreneur!
Self-Employed vs. Entrepreneur
Do you see the difference between these two business owners? Both own their own businesses, but Joe basically just created a job for himself. He’s self-employed, which is in many ways better than working for someone else, but he hasn’t created the freedom that entrepreneurship should bring. Annette is an entrepreneur. She has created a business that probably can’t run completely without her but that doesn’t need her to devote every waking hour to keeping it going. One of the primary differences between these two fictional characters is that Annette is passionate about the focus of her business. Joe knows his business well, but probably wasn’t in love with the product/service even in the beginning. Another key difference is in the planning. There’s no reason Joe couldn’t have planned for expansion – both through opening other shops and by opening an online store, but it wasn’t part of his vision, so didn’t enter into his plan.
It should be stated that there are people who are perfectly happy owning a little store and making a decent living without the excitement and pressures that come with building something big, and there is nothing wrong with that. We all just want to be happy in the long run. The important thing is that you plan and run your business in such a way that it gives you what you want to get out of it. That way you don’t look back 20 years from now and realize being self-employed sucks!
Matthew Toren is an Award Winning Author, Serial Entrepreneur, and Investor. He Co-Founded YoungEntrepreneur.com along with his brother Adam. Matthew is co-author of the newly released book:Small Business, Big Vision: “Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right” and also co-author of Kidpreneurs.
You’ve just hit the nail on the head. While it takes gut to go solo from a job, it takes more than guts to get that business of yours running without you.
This is a great piece. I love the examples. We are having a team meeting tomorrow and I will be using this as a tool !! Thanks for the post
This is such a practical example which allows us to consider the importance of creating a business model that enables the entrepreneur to grow into becoming a business owner.
Being self employed should be the first stage if financial resources are limited and depending on what the operational requirements are. Some key thoughts which i gained value from are:
1. Carefully considering a sound well thought through business plan.
2. Through growing your business market share, it allows for cash flow to be applied in recruiting good quality people.
3. An operational structure that is not dependant on the efforts of one person allows you to free up valuable time spent with your family
[...] What’s the difference between self-employment and entrepreneurship? To be sure, small business owners fall into both categories but it’s important to understand the difference between these two kinds of business owners because what they get out of their businesses is very different. Are you creating a job for yourself, or are you creating a business that can someday be sold and create a life of freedom for you and your family? Where does your business fall? Youngentrepreneur [...]
Great Article!
I loved the two examples: one who just created a job for himself and the other who built a viable, energetic business.
I started my own business in China 6 years ago and have seen myself functioning in both roles – the starting phase being a fun but volatile time; then the mid-phase where I was just hiring whoever and trying to learn the ropes of now being a manager rather than an entrepreneur; THEN learning after a year or two that I need to hire talented people and that I need to stick with what I’M best at (BUILDING rather than just managing).
This has changed the dynamics and atmosphere of my company – I feel like there is more of an excited-vibe in our whole team.
[...] What’s the difference between self-employment and entrepreneurship? To be sure, small business owners fall into both categories but it’s important to understand the difference between these two kinds of business owners because what they get out of their businesses is very different. Are you creating a job for yourself, or are you creating a business that can someday be sold and create a life of freedom for you and your family? Where does your business fall? Youngentrepreneur [...]
[...] What’s the difference between self-employment and entrepreneurship? To be sure, small business owners fall into both categories but it’s important to understand the difference between these two kinds of business owners because what they get out of their businesses is very different. Are you creating a job for yourself, or are you creating a business that can someday be sold and create a life of freedom for you and your family? Where does your business fall? Youngentrepreneur [...]
Matthew, what a great article! You just reminded me of the “worst case scenario”. Ending up like Joe, is not what I want my life to be.
I’m in the early stages and working on launching my first business. I think I’ll be self-employed at the beginning, but then definitely will work on being an entrepreneur.
Thanks for sharing this awesome post!
I agree with @Amy, this article is very valuable mainly because of the fact that it unveils a truth that is often not told just to let us think that a home-based business would be the same as being responsible for an important company. Besides, another important aspect is that it includes examples and testimonials. True people describing their own lives and situations and that is what we need to trust in a message.
This article speaks to my heart. Right when I start feeling like I’m getting into the self-employed category, I have to refocus and follow the entrepreneur attitude. I definitely want a life outside of the business and want it to grow without me being there every waking second.
[...] What’s the difference between self-employment and entrepreneurship? To be sure, small business owners fall into both categories but it’s important to understand the difference between these two kinds of business owners because what they get out of their businesses is very different. Are you creating a job for yourself, or are you creating a business that can someday be sold and create a life of freedom for you and your family? Where does your business fall? Youngentrepreneur [...]
Great stuff, this is how we should pre-qualify every business idea that comes our way. Am I just creating a
new job for myself?
Robert Kiyosaki, Ray Croc, & Michael Gerber all abide by the laws of true Entrepreneurship.
Definition of a millionaire? Any person who makes $1M per year Without working for it. -Forbes.
It is true that there are a lot of people who don’t want to have a boss. It is also true that there are people who say that being self-employed sucks. But the truth is that there are a lot of people who are self-employed that doesn’t understand how to be self-employed. This article will make people realize that being self employed sucks especially if they don’t what to do, where to start and how to become successful.
Thanks for sharing!
Alex
It’s so tough trying to swallow the idea of working a little harder today, putting a couple extra hours in tomorrow, and meeting a few more people next week to take full control of your schedule and “earn” time. I like how you used the two examples as they really helped drive the main topic home!
Cheers!
This is sort of the same thing that Robert Kiyosaki talks about in his book – the difference between been a self emplyed and being a business owner.
While both will generally start as the same (unless it’s a big business venture and you got the capital to hire people) but business owner will move on from that starting point, while a self employed person is forever stuck there.
I’m working in my own business. well, I’ trying. It’s very difficult, in my country more for the high taxes for all.
But the pay in normal work is very, very low, so the self employment is my only way for live well. And it’s working, but are hours and hours in front of the computer.
I can totally relate to this post. Till last year, despite being a internet startup founder, I was self-employed and it overwhelmed me. Taking care of every little aspect of my business left little time to focus on expansion and growth and I was stuck in a rut despite making good money. I am slowly transitioning to being an entrepreneur and can now focus on the bigger picture.
V interesting Article!!
I’m currently self employed but am in the building phase. Im only focussed on acquiring new business, and leave the day to day to an ops manager. Were in year two and growing at a strong steady rate. It’s all annuity income so we get richer everyday. My goal is an exit In a few years; but I don’t see how I will grow in that time and be able to step away. It doesn’t seem practical. Surely there needs to be a period where you totally invest/immerse yourself… And once the beach he’s has been established and is stable there you can proceed to the next project?
Any ideas on timeframes/ practical pathways etc?
All sounds good in theory.
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