How Risky is Working For Yourself?
Is it safer to work for yourself than for a big company? A few years ago, the answer would have been unequivocally no. Those seeking job security were better off with a corporate job, regular pay cheque, defined workplace conditions, holiday and sick pay.
Perish the thought of an ambitious young entrepreneur forgoing a university education and “safe”’ career in government, teaching, or the professions. Or not doing a trade.
That answer is no longer as clear-cut, at least in some industries, and depending on your definition of risk and how you define starting a venture.
For most, the biggest risk of a corporate job is being axed. But there are others:
- Your pay is deflated by stealth thanks to no or low pay rises over several years, and an ever-increasing workload. You do much more for the same or less as the cost of living rises.
- You’re asked to take on your boss’s role and responsibilities for nowhere near the same pay. Role “deflation” increases career risk.
- Conditions are eroded as the company takes advantage of a weak labour market to reduce costs. Penalty rates and other perks are re-negotiated.
- Your employer has poor training programs or you become so specialised in a job you are virtually unemployable – at least at the same rate – if fired.
- Your new boss goes out of his or her way to sink your career. A once-promising journey up the corporate ladder is derailed because you now report to a buffoon.
- Your physical and mental health suffers from workplace stress.
- You make a poor return on the huge investment of university fees and other training programs. Graduate salaries remain flat for years and rapid pay increases are rare. You end up earning $45,000 after spending $70,000 at university, and face years of student debt.
On the flipside, the budding business owner:
- Is able to build a portfolio of clients because of rapid growth in the micro-jobs market.
- Can start ventures cheaper than ever before thanks to new technologies and a growing emphasis on lean entrepreneurship and getting into the market faster.
- Can take more calculated risks because it can cost far less to develop proof-of-concept in many tech-based industries compared with five years ago.
- Is better placed to combine launching a venture with a few decent-paying micro-jobs to cover the bills.
- Finds the flexibility of self-employment and being his or her own boss removes a layer of stress rather than adds to it.
- Is able to earn a higher salary much faster and build a financial buffer if the business slows or fails – a redundancy payment, so to speak.
- Is able to take risks with a venture or portfolio of micro-jobs while his or her partner has full-time employment.
Of course, the full-time employee who is good at his or her job and has worked for a secure company for years still has much more job security that an entrepreneur launching a risky start-up venture. High failure rates and the prospect of losing capital are significant threats.
But I’m interested in the shades in between: comparisons between the self-employed, who contract to companies or build a portfolio of regular micro-jobs, and full-time workers who feel their job security continues to weaken as companies restructure and redefine their workforce.
Have we finally a reached a point where it is safer to be a contractor, freelancer, consultant or other professional who has several employers, but no concrete guarantee of recurring work? In a growing number of industries, where jobs and conditions seem less secure, the answer has to be yes.
What’s your view? Is it still much safer to have full-time company work than work for yourself? Has the gap narrowed in recent years, and how do the self-employed reading The Venture feel about their job security? Is it as much of a risk as it once was to work for yourself? And why has the risk gap between full-time and self-employment closed in recent years?
*Original Article by Tony Featherstone: http://www.theage.com.au/small-business/managing/blogs/the-venture/how-risky-is-working-for-yourself-20140122-318vj.html