We all know that working for yourself has a lot of benefits that you can’t get from working for someone else. The ability to better control your company’s destiny, the independence and freedom you can gain, and the flexibility in hours are just a few of the possibilities that might be gained.
However, I was thinking recently about another major benefit that working for yourself can provide. But what fun would that be to just share it outright with you?
A personal anecdote would make it all the more dramatic and amusing and make it feel like you’ve learned some kind of valuable lesson in the process…
The garage sale
Every year, our development has a monster garage sale. I say monster because we have over 1,000 homes in the development, so even if 10% are a part of it, that’s still over a 100 homes running the sales at the same time.
Fortunately, though, I would guess that twice that amount participate. It draws people from all over, and it gets packed!
The streets are congested and people are parking everywhere making an even bigger mess. I tend to get a little claustrophobic in situations where there are too many people, but I do look forward to it.
Why, you might ask?
Because you have what any business wants… a ton of traffic.
So we had our garage sale and, as you can figure, we did pretty well and got rid of a bunch of stuff that we don’t use anymore.
But there’s someone in our family who looks forward to these garage sales more than I do… our daughter.
She put so much of her old junk for sale, which really surprised me. What 6-year-old kid is willing to part with their stuff? In fact, almost half of our total profit went to her.
The lemonade stand
My daughter impressed me more though with her excitement of running a lemonade stand. She’s done the stand before and it did pretty well for her. More importantly, she started to understand a couple of the basics of working for yourself.
This year she was even more into it. For weeks, she’d been planning the details. Mrs. R2R took her to the store and she used her own money to make some investments into the business. She bought lemonade mix, small bags of chips, and bottled water. She had me make up some signs for her on the computer as well to print out.
Our daughter set up shop in the garage with a table and everything by her side. She had the bottled waters on ice in a cooler, along with the pitcher of lemonade, and she laid out a few of the bags of chips so people could see ’em.
We had two days of perfect weather. No rain and it was hot out. People were walking from street to street with money in their pockets ready to be spent. And, a cold glass of lemonade or an ice-cold bottled water sounded great to a lot of folks.
The only thing that might have hurt her sales was that our next-door neighbors who are at the top of the street were selling hot dogs, waters, and desserts. I’m half-Italian so you’d think I’d know a couple of guys that could have a nice discussion with them about this, but unfortunately, I have no good connections.
Regardless, we let her do her thing. We sat just outside the garage and collected money for everything people bought. In the meantime, our daughter was inside the garage at her table greeting everyone when they walked in and would casually mention what she was selling.
I’m slightly biased, but she’s a cute kid so that probably helped, but she went through a couple gallon pitchers of lemonade, some bottled waters, and some bags of chips.
It was a good couple of days of sales. She wasn’t going to get rich from it, but she did well and enjoyed doing it. I was especially impressed with her talking to people… she bottled up her shyness and talked to everyone!
Now, of course, you know I’m not just going to leave it at that. I had to figure out a lesson for her in all of this fun. So after a break from the customer influx on day two, here was our discussion…
Me: When you work for an employer, you get a set amount of pay every hour (I didn’t go stray into commissions and all that jazz). Let’s say you get $10 for every hour that you work.
Her: That sounds pretty good!
Me: It is pretty good, but you need to know that $10 is the most you’ll ever earn for that hour no matter how hard you work. But, if you go a different direction where you’re working for yourself and start your own business – kind of like your lemonade stand – what do you think is the most you can make in an hour?
Her: I don’t know… $20?
Me: Maybe or maybe a lot more. Here’s what’s cool – when you work for someone else, you have a set amount you can make. But, when you’re working for yourself, there’s really no limit to the amount of money you can make in an hour.
Sure, we didn’t go into all the details and the pros and cons, but it got her thinking and that’s all I want. What she does with that information and understanding is up to her, but where else would she learn these things – school? Not likely.
Working for yourself
Just to reiterate, when you’re an employee, you will always have a max you can make in an hour. Yes, you could get commissions, bonuses, and all kinds of other cool payouts, but regardless, there will always be some kind of a ceiling.
If you start your own company though, things really open up. In fact, if you get it rolling well enough and have the right systems in place, there’s no reason why you can’t start another company or two as well. The sky then becomes the limit and you have the opportunity to make more money.
There’s no limit to the amount of money you can make when you’re working for yourself.
Why do you think that attorneys and doctors spin off their own practices? Sure, they’ll gain some independence to run things how they want and that’s very important. But they also stand to make a lot more money. And the sooner you can make a lot more money, the quicker you can accumulate a lot more money.
I currently have three businesses. The first is my book publishing business, which I started years ago solely so I could make more money on each book I sold and have more control over the operations. It isn’t a huge business, but I do receive a royalty check every month and hope to have a third book out in the next couple of years to continue that stream.
The second business I own is for the Route to Retire blog and brand. This is a long-term investment. I’ve talked about how I knew going into this that it wasn’t a get-rich-quick routine, but the good news is that the profit should continue to increase year over year. In a few years, I anticipate that this site will provide a good supplemental stream of income for us – probably not enough to live off, but enough to make it worth our while.
The third business is our most important right now and that’s our real estate company. We formed that a handful of years ago to help form some protection and separate our personal assets from our properties. It’s also made it a little easier to treat it like a business, which gives us more power in taking advantage of some of the benefits it can provide (such as write-offs). Once we find our next two deals, we’ll be in a really good spot with this business.
All of these companies should help my daughter understand why working for yourself can be both profitable and provide some freedom and flexibility.
Unfortunately, I started these a little later in the game. If I had started these businesses or others in my twenties, I probably could have quit my job years ago. Right now, I see the light at the end of the early retirement tunnel, so I’ll continue to juggle being both the employee and the employer.
Fortunately, for my daughter and some of you younger folks reading this, you have a great opportunity to take control of your future today. Find your passion and go after it. Build a business that you love.
It’ll take some time and hard work and there’ll probably be some rough days and growing pains, but the rewards can be tremendous. Among other things, you gain the freedom to be in control of what your company does, you can possibly make your own hours (or have a little more flexibility to them), and you just might find that there’s no limit to what you can make in a single hour of working!
Do you currently have your own business or considered working for yourself? Has the idea of no maximum to your hourly “wage” been a thought you’ve considered?
Thanks for reading!!
27 thoughts on “Another Reason Why Working for Yourself is a Smart Idea…”
I actually prefer the thought of both. A business has no maximum but it’s a) not for everyone as you have to be self motivated, b) can be feast or famine. I prefer to smooth income with a w2 paycheck and boost peaks with a business. Currently my wife has her contracting business and I have the blog. The blog is currently breaking even, so definitely a long term play there.
That steady paycheck is definitely something that is hard to let go of. I think the smart move is to do both at the beginning like you prefer and then once your business builds up enough, think about dropping the W2 job to focus solely on your own business. Your point makes sense though because starting your own business is not for everyone.
Your daughter has that entrepreneurial spirit, I can tell. Reminds me of my childhood, I used to sell all sorts of stuff from when I was super young trying to make a little here and there. I remember one time going to the country side with my grandparents (in Korea), and catching frogs and tadpoles and selling them to kids in my town!
Selling frogs and tadpoles to other kids? Now that’s some entrepreneurship!! 🙂
It’s never too late, believe me. Of course, it’s better to start early, but it’s never too late.
When I came to the States I was 30 years old, my daughters were 5 years and 11 months. None of us could speak English. 4 years later I can interact with people and my kids speak, read and write in both without a single problem. They’re true bilingual. Of course it could have been better for me to learn the language in my childhood, but it wasn’t late in my 30.
The same for my friend who cam when he was 51 years old and now has a small business. It’s harder when you are older, but it’s not late.
And you daughter got a really good life lesson. Not only about working for herself, but working hard, knowing about competitors and so on.
Next time when you have to deal with your daughter’s competitors you can call the Russian mafia 😉 I can put my strongest Russian accent on and call my friends Yuri and Boris 🙂
You’ve accomplished a lot with your family in a short time, Friendly Russian – very admirable!! I agree wholeheartedly that it’s never too late to start a business.
Love the Russian mafia comment! Made me chuckle out loud when I read that. 🙂
This is AWESOME!!! Teaching your daughter to be an entrepreneur by letting her do it and by discussing it. Excellent parenting, Sir and Madam Mom. Keep up the good work!
Thanks for the compliment, Nancy! At least we’re doing something right… I’m sure there’s plenty we do in other aspects of parenting though where people think “ummm, really??!” 😉
Great post Jim!
I’ve started a number of micro-businesses over the years, and while none of them really took off, I thoroughly enjoyed all of them.
A dollar earned at your own business is worth 10x that in self-accomplishment.
Now that I’ve quit working a “day job”, I’ll probably be starting many more of these micro businesses over the coming years.
So true, Mr. Tako – it just feels good to be doing something for yourself instead of working for the man all the time. Can’t wait to see what kind of micro businesses you get rolling!
I had always thought of entrepreneurship as so much riskier than being employed by someone else for the longest time. I’m sure this was supported by the lending industry buying a home, car, etc which doesn’t look as kindly on doing business with those that are self-employed.
But now I’ve come around to wanting the control over my life and work and not depending on outside circumstances and people. Plus, the skills you learn from starting a business, even at 6, are invaluable.
I love the story of your daughter’s lemonade stand! I think my kids would love to have their own little business doing something like this and would learn a lot.
Hi Kathryn – that does seem to be the impression that we’re raised to have. Ironically, if you’re dependent on a job with an employer, you’re probably more vulnerable to risk than if you’re working for yourself.
Good post Jim. It sounds like you have three diverse businesses operations. That was a great lesson that your earnings are limited when your are an employee no matter how much effort you put forth. As a manager, I won’t share that with the troops. For me, I currently have a job and am trying to launch a business. Hopefully with a combination of effort and luck I will one day just have a business.
I’m a manager as well and I understand the idea of not sharing that info with the guys and gals you manage. 🙂
Good luck on the new business!!
That’s a really nice way how to explain business fundamentals to your daughter. Moreover, considering that you have more income streams that really eliminates most of the risks of going broke. You haven’t mentioned anything about the stock market, you don’t want to consider it over long periods of time?
Hi Alex! Honestly, I hate the stock market… I don’t trust that I don’t have any control over what happens in it. That said, the bulk of my money is in it because the employer match at my company is extremely good. But I’m trying to build up my other streams to mitigate the risk of having so much in the market.
I see, well I guess if you have the control you will control almost every aspect of a business and getting a 10% won’t be hard in that case. Interesting view about the stock market.
We can’t have a lemonade stand here. Some kind of city code. 🙁
Here, I found something on the internet.
– …this entrepreneur was a 7-year-old named Julie Murphy. Her business was a lemonade stand at the Last Thursday monthly art fair in Northeast Portland. The government regulation she violated? Failing to get a $120 temporary restaurant license.
I agree that working for yourself is the way to go. You’re enriching the boss when you’re working for someone else. When you’re working for yourself, you control your own destiny.
I’ve heard of places that crack down on kids stuff like lemonade stands… a little silly in my opinion.
That’s great she has such an entrepreneurial spirit! Good teachable moment right there you discussed.
At the end of the day, you build equity with your business which can then be sold for multiples of revenue or profit. That is the next level wealth creation that people should really try and create.
She’s definitely a kid that gets it. I’m excited to hear about the lessons you’ll be instilling in your child… you have a lot of great perspectives on entrepreneurialism.
Did you take 30 cents of every dollar she made to illustrate taxes, too? 🙂 It’s something people frequently don’t understand when starting to work.
It’s an awesome lesson to teach your daughter when she’s so young. I think that for some people, the entrepreneur thing is just not appealing though. Yes there are pros and cons to both, but the important thing is educating them sufficiently so they can make their own decisions. 🙂 Seems like you’re on that path!
Haha, love it, Dave! But, I’ll definitely get the lessons in taxes started in the next year or so! 🙂
I do agree that entrepreneurship is not for everyone, but I do want to make sure she is comfortable enough with the idea of it so she can make an informed decision on which path she wants to go. If I had a better understanding of that growing up, I probably would have started working for myself much earlier in life.
I made the same mistake… not starting a business earlier in life. So now I have been talking to my 13 year old son about working for himself eventually by starting his own businesses.
That’s awesome to hear, John!
Every time I come across a reading with this topic I could not help but remember Steve Pavlina’s article ” 10 Reasons You Should Never Get a Job’. It has inspired me to work harder and to become my own boss. Congrats on your three businesses Jim.
I hadn’t read that before, Bernz, but really liked it! Here’s the link for anyone else wanting to check it out: https://www.stevepavlina.com/blog/2006/07/10-reasons-you-should-never-get-a-job/