Running your own business is less risky than a full-time 9 to 5 job.
The other day, I published a tweet which resonated with many people:
As of now, it has 101 likes and 13 retweets so I thought I’d expand more on its content via email.
The point my tweet tried to make is that relying on one source of income is risky
Since most full-time jobs involve a single employer — it’s a one single point of failure — meaning, you just need your employer to fire you to lose your income.
With a business, you usually have more than one customer and in the majority of cases: tens, hundreds, thousands, and even millions of customers who are your revenue sources.
Depending on the kind and size of business, you’ll need all or the majority of your customers to ‘fire you’ for you to lose your income.
On the surface, 9 to 5 jobs seem to be more stable and less risky than businesses or even being a freelancer but that’s not really true.
It’s an illusion. You are relying on one employer who can fire or replace you at anytime, for any reason (specially in the U.S), and you often don’t see it coming.
A business that is lean, profitable, and has low operating expenses is way less riskier than any full-time job you can find.
And if your customers are going to fire you — you will see that coming way ahead of time.
Obviously, it’s much harder to build a business than to get a full-time job, but riskier, it is not.
In order to fail, you’ll have to make a series of bad decisions and provide low or zero value to your customers.
With a full-time job, you might be fired due to external circumstances (such as COVID-19) or internal that are beyond your control (the company downsizing, a new manager getting hired..etc).
You get my point.
The takeaway I’d like for you to consider is not to put all of your eggs in one basket.
If you currently have a full-time job, get a side hustle.
If you currently have a business, provide more value and don’t f#%k up.
Remember, successful people are not risk takers.
They are risk mitigators.
p.s: if you liked this post, please consider following me on twitter @adambader 🙂
As you said it’s harder. I think the risk is that you don’t make it in time to build a sustainable business. Then you burned through your savings and need to get a job again. Or you burn out side-hustling it. Switching jobs seems to be far easier than developing businesses till sustainability.
Yes, it's much harder.
This is why most people don't run businesses. However, most people think they need to take crazy risks to start one.
For example, if you spend a year or two saving an emergency fund, eliminating your expenses, and at the same time, dedicating some free time to building your business while maintaining your full-time job, you'll make it easier.
I don't think it's wise to quite a job and start a business. If someone takes a look at their schedule, they will find that they have enough time to work on a business. This time is often spent on social media, Netflix, and other things that should be less priority.
The goal of my post was not to urge people to start businesses but was to diversify their income streams. If you love working a full-time 9 to 5 jobs, that's fine. What you should consider is freelancing on the side, creating and selling a digital course, buying a rental property or investing more into your 401k because having one source of income is not a smart strategy.
It's good to diversify your income sources but my experience is that building a profitable business is really really hard and takes a lot more time and effort than a job.
Furthermore it is unlikely you will be fired every day which happens in business each time your customers churn.
Jobs provide INCOME STABILITY: once you sign that contract you get paid constantly. Business gives you no such guarantees.
I agree with you that you shouldn't put all your eggs in one basket but in my experience the 9-5 job basket is usually the most reliable over the long-term even though it is not very glamorous!
Sadly, in California and other places in the US, you don't have contracts. You are an employee at will; meaning you can leave or they can fire you anytime and for any reason.
I do agree building and running businesses are hard. However, they are more diversified (when done right: multiple products, multiple customers).
If you can't start and run a business then use some of them money from your full-time job to invest in a rental property or the stock market. Again, most people don't invest.
You can also so much more with little capital or downside: freelancing, consulting, digital courses..etc.
Indeed...I am a big fan now of the "side hustle" where you get a job (I work part time) for some income stability and then do something else on the side to boost income, learn new skills, etc.
Good for you!
This is correct. Lots of folks talk about "risk" whenever they are anxious or scared, but that's not even same as risk.
Starting your own business is always difficult, I understand you perfectly. I remember when I started my company in Florida, I spent a lot of time collecting information on how to run a business properly. I have received a lot of good advice, one of which is that it is much more profitable to cooperate with a factoring company than with a bank.At the beginning of the pandemic, my company really started experiencing financial difficulties because we work with customers on a deferred payment basis. Before, we gave our clients a small delay, after carefully checking and analyzing them to the best of our ability. Working with https://factorforyou.com/florida-factoring/ company, we get flexible financing, which allows us to significantly increase the deferred payment for customers. So, feel free to write to me if you have any questions.
That's a great insight. Followed you on Twitter 👍
Thanks Ben!
I've been following you on Twitter for a long time. I didn't know you were here.