Self-employment differs from business ownership

A trader in Mombasa waits for customers. A business that requires the proprietor to be present to manage its day-to-day operations is a form of self-employment. File
A trader in Mombasa waits for customers. A business that requires the proprietor to be present to manage its day-to-day operations is a form of self-employment. File 

Recently, I had a very interesting chat with one businessman on the sidelines of an entrepreneurs’ workshop.

This man had read some of my books and from the way he spoke, it was evident that he perceived me to be very successful and comfortable in what I do.

He was further impressed by my story when I was picked during the open discussion to say why I chose self-employment and what my first experience in business was.

“How did you thrive in self-employment for all those years since you quit employment?” so he asked me. “I have been at it for less than two years and I’m a bit fatigued. The terrain is a bit rough and I wonder whether things will be better any time soon.”

I laughed and curtly but jokingly told him: “Before you leave one employer and join another, you must be absolutely sure that your new employer will treat you better than the former. Your new position must be senior or with more benefits than the former. Perhaps you made a mistake of taking a job that is not as good as your previous one?”

“No! No! But I told you I resigned to do my own things. I am not employed by anybody. I am a businessman,” he said with a reinforced assertion.

“But you have just told me you are self-employed. In other words, you started a business and it employed you. So you are an employee under somebody and that is you!” I replied with equal emphasis.

I went on to explain that perhaps he misunderstood my presentation. He perceived that I left employment to be self-employed. The correct position, I teasingly told him, was, I left employment to start a business, not to be employed. I went on to explain the difference.

It is a general observation that many professionals and employed people who leave their stable and well-paying job to invest lead worse and miserable lives than when formally employed. In hindsight, many regret quitting employment since they end up being self-employed, working harder and earning less.

Their high expectation of enjoying freedom and money that comes with success in business fades just after few months or years in business. Even if the venture is successful and profitable, many still feel empty, caged and fatigued.

This is why — they seek in self-employment what can only be found in owning a profitable business. In self-employment, no matter how profitable your venture is, it will never give you coveted benefits such as freedom, total security, high growth potential and less stress.

When you are self-employed, you are technically an employee, but one with so many responsibilities ranging from administration, operations, fund raising, human resource management and all other functions of a business. Basically, this is very stressful with or without money.

It becomes a nightmare when you have to work twice or thrice as much as you worked but earn less than you used to in employment. Perhaps, you left a company maintained car, club membership, free Blackberry, entertainment, per diem and other benefits. On the other side, when you start a business, which many people have successfully done while in employment, you don’t have to work there. You simply own it and establish systems to ensure that it can run without your involvement.

Owning a successful business and not self-employment is what will give you freedom, financial security and way to become wealthy. It is what many people go for, but end up in self employment, which has limited growth potential.

You can only swallow what you can bite. But when you own a business, potential for growth is infinite. When it matures you can use its profits to start many more, unlike self-employment where you must always be there.

However, the self-employed can become business owners through putting in place systems that ensure they don’t have to be present for things to run smoothly. They need to hire qualified staff and establish a clear chain of command so that their absence does not hurt the business.

If you can’t afford to take a week, a month or two away from your business without disrupting its operations, then you are not a business person. You are simply employed by a terrible employer-YOU. Start thinking of how you can become a business owner to enjoy the goodies of an enterprise.

Mr Kiunga is the author of ‘The 7 Pillars of Financial Success’ and ‘The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market’.