Posted by Mark Attard on 13 July 2016
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.
About: With more than 15-years experience in the finance and property industry, now it’s time to grow our business even further. So that we can help you - no matter what stage of life you’re at or where in Australia you live.
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Most business owners start out with a common goal of working for themselves. They are motivated by different things, such as the desire to have more creative control over their work or to make more money. Regardless of their primary motivation, millions of Americans who run their own business would agree that there is no reward without risk.
An entrepreneur is defined as a business owner who takes on greater financial risks than usual. Even though small business owners are commonly referred to as entrepreneurs, these two roles are not entirely the same. Small business owners are more conservative, while entrepreneurs thrive on change and innovation. The following are the most significant distinctions that can be made between small business owners and entrepreneurs.
Risk Tolerance
One of the main differences between entrepreneurship and small business ownership is the amount of risk that is involved. Small business owners are usually seeking personal income and do not want to take a lot of risks with their money. Small business owners prefer safe investments that will almost guarantee a return, and they tend to follow an established business model. For example, a small business owner may choose to invest in a franchise business that has a proven track record and is not much of a gamble.
Entrepreneurs are essentially innovators who are up against unknown and unforeseen risks. They are trailblazers who want to offer customers something they have never seen before. Entrepreneurs are passionate about their vision, which is usually focused on the next “big thing.” The most successful entrepreneurs are not afraid of taking financial risks, are very resourceful, and are always looking to improve their knowledge.
Career Objectives
Small business owners are just trying to make a living and pay the bills, but entrepreneurs set their sights much higher. While they do not all share the same goals, most entrepreneurs are striving toward financial freedom or social change. Entrepreneurs are looking to create inventions that revolutionize the way things are done. They are often technically minded, which allows them to derive simple concepts from complex systems. Entrepreneurs are looking for growth, whether that means growing their profits, diversifying their staff, or expanding their company.
A small business may be passed down from generation to generation, and often takes on a sentimental meaning to both the owner and the community. Small business owners are driven to make improvements, but are not interested in making any major changes. Small business owners get smaller returns on their investments by playing it safe, but their profits are more reliable and consistent.
Business Strategy
Entrepreneurs may have a higher risk tolerance, but there is always risk involved when starting a business. To help mitigate this risk, it is important for both small business owners and entrepreneurs to choose the best business strategy. Entrepreneurs typically offer new and compelling products or services which they hope will become highly valued. They aim to stand out and differentiate themselves from the competition. The most successful entrepreneurs study the competition and become familiar with rival products and services. They are also flexible, keeping up with the latest technology and using customer feedback to respond to new trends and make improvements.
Small business owners have a much simpler strategy. They are mainly focused on ways to promote the business, gain loyal customers, and generate more sales. For example, small business owners may gain a competitive edge by simply offering the lowest price on a product or service that is in high demand. Like entrepreneurs, small business owners can learn a lot by listening to feedback from their customers. They should also be taking advantage of the latest technology to make their business strategy more effective.
Daily Activities
Both entrepreneurs and small business owners are self-employed, but this does not mean they have a lighter workload. In fact, business owners often juggle more tasks than their employees. Beyond daily operational activities such as budgeting and planning, business owners must stay on top of their legal responsibilities in order to maintain their compliance with federal and state laws.
Small business owners take on the daily responsibilities of a manager. They are typically involved in every aspect of the business, from marketing and sales to interacting with customers, clients, and vendors. Small business owners are usually performing repetitive tasks while working toward long-term goals. Entrepreneurs are mostly interested in the short-term. They are more likely to be involved in forward-thinking strategies such as sales calls and marketing meetings. Entrepreneurs are constantly looking for new collaborations and ways to grow their business. They are sometimes referred to as serial inventors and innovators.
Investment and Profitability
Entrepreneurs seek out multiple investors to obtain the capital that is needed to launch their startup company. They may also take on equity partners, get help from venture capitalists, or raise money through a crowdfunding campaign. Small businesses are commonly backed by a line of credit, such as a business or home equity loan. In addition, small business owners are likely to invest their personal savings or to get financial assistance from family and friends.
An entrepreneurial venture usually revolves around a new product or service. Even though entrepreneurships have a relatively high failure rate, those that survive can become extremely lucrative. Entrepreneurs often delve into uncharted territory where they can tap into the potential for high returns and rapid growth. On the other hand, small businesses deal with products or services that are already well-established, which means there is not usually an opportunity for a massive amount of financial gain. Small business owners strive for consistent profits rather than high returns. For entrepreneurs, the possibility of maximizing profits is worth the gamble.
Economic Impact
A small business affects its surrounding community in many positive ways. Small businesses help to stimulate the economy by creating new jobs and supporting other local businesses.
Entrepreneurships also drive economic development, but on a much larger scale. They open up new industries and strengthen existing markets. As they advance technologies and create a demand for their products, entrepreneurs are also increasing the employment rate, improving regional and national productivity, and generating wealth.
Employee Profile
Small business owners are defined by the size of their company, but a company launched by an entrepreneur is not necessarily larger than a small business. An entrepreneurial venture may have one or hundreds of employees. The difference is that small businesses do not usually have the opportunity for major growth, while entrepreneurships are designed with expansion in mind.
When it comes to compensation, entrepreneurs are willing to pay top dollar for the best talent. Entrepreneurs sometimes pay for additional training so that their team members can maintain a high level of competency. Small business owners usually cannot afford to pay their employees more than the market rate. In fact, some of the smallest businesses can legally pay their employees less than minimum wage.
Personal Goals
Entrepreneurs are driven by passion, innovation, and opportunity. They often seek out major change and have a huge impact on today’s modern economy by creating and expanding markets. Entrepreneurs view their company as an asset that they can refine and sell in order to move on to the next grand scheme.
By contrast, small business owners do not typically plan on selling their company. A small business is often treasured as a family legacy and a source of personal pride. Generally speaking, a small business owner is not looking to build an empire, but just working to pay the bills.