Self employed vs business owner

Why you should know the difference before seeking self employment opportunities.

I remember when I started working for myself at age 24. It felt good to say I had my own business. But in reality, back then, I was really self employed.

In fact, I was a contractor with one source of income and the added burden of extra paperwork when it came to paying my tax!

Nevertheless, being self employed was the first step towards achieving my dream of becoming a business owner of a mortgage manager like FinancePath.

One of the most important things to remember when going out on your own is to do what you love. Your work whether you are self employed or a business owner should be built around your strengths and talents. Because if you're not 100 per cent committed to your job, you won't be successful.

Before starting out on your own, ask yourself these questions:

1. What is my personal skill set and how can this benefit others (i.e. your potential clients)?
2. What do I want my business to look like?
3. How will my business be different from my competitors?
4. Am I happy to buy myself a job by being self employed, or do I want to build a business where others work for me?

Once you have thought about these key aspects of going solo, learn the different skill sets required to be self employed versus those needed to be a business owner. For example,

WHAT DOES IT MEAN TO BE SELF EMPLOYED?
Self employment is when you convert a skill into an income, but without a boss. Ultimately, you become both the employee and the boss. This means you are not only responsible for delivering your product or service to others, but you must manage things like tax, insurance, licenses, setting and adjusting your rates, and making superannuation contributions.

WHAT DOES IT MEAN TO BE A BUSINESS OWNER?
As a business owner you are not reliant on earning an income from your own personal exertion. Instead, many small business owners or entrepreneurs hire out others to perform tasks for them. This frees you up to focus on what's important securing new revenue and growing your business. Ultimately, business owners should aim to implement management systems and automate things like payroll, tax, timesheets and human resources so that your business can continue to operate effectively in your absence.

Think about which occupation is best suited to you before you start looking for self employment opportunities or preparing to start a small business.

When is the right time to transition from self employed to business owner?

Believe it or not, one of the biggest issues facing many self-employed is not finding enough work, but actually over work. As your client base and sales grow, you might suddenly feel yourself being stretched too thin. In fact, operating solo often means taking a day off can be problematic, while booking a vacation seems virtually impossible.

If this sounds like you, you might be ready to switch from being self-employed to expanding your business. This is a good time to speak with an expert about your financial position and expectations for the future. Look for someone who can also help write your business plan that way you will have peace of mind knowing your next move is the right one for your finance path.

To find out more contact us today for a free 10-minute money management consultation.