Milton from Office Space: Source: http://www.youtube.com/watch?v=RZuzQkRnCDY
In my last post in this series, I compared and contrasted the income and tax situation of working for the man versus working for yourself. After adding up the benefits and tax effects (and not counting additional tax breaks that your business may be eligible for), the main effect was mostly a wash. Yes, self-employed people have to cover their own benefits, and yes, self-employed people get smacked with the pension contribution twice. Even then, there was not a big difference in net income at the end of the day.
There is, of course, more to it than that. In this post I’ll take a look at some of the other, more intangible benefits that we both lose and gain, when we decide to follow the more solitary path of working for ourselves.
Working environment
This is very circumstantial and will depend on the sort of place you work at. For me, there were both positives and negatives. I got along well with all of my coworkers and my boss (who as of the time of this writing has also left the company), my desk was comfortable and has a lot of space, and the working environment was decent. I have had a mix of good working spaces and less-than-ideal working spaces, and while this one wasn’t the best, it was fine. It was an open concept with some desks facing each other at a 45 degree angle, so I didn’t quite like having to look at someone else’s head the whole day, but other than that it was good.
Aspects to a corporate working environment
+ Social interaction
+ Free coffee
+ Environment designed for work
– Fluorescent lighting
– (for some) hostile coworkers / bosses
– Noise & chatter
Career
I had been at my company for seven years before I decided to take the leap of faith. Some of those years were while I was still completing my university degree, so there was a lot of history there. I know that trying to take the leap right out of school would have been a mistake, since I would not have had any real working experience. Taking it 1 or 2 years after graduation would also have been a mistake, since things were still progressing rapidly, I was advancing quickly, and I was still learning a lot.
When did it finally become the right choice for me? When the company stalled, projects dried up, and I felt I was experienced enough in terms of skills and abilities to go for it, I asked myself the following questions:
Where could I be in the next two-three years if I continue to work for this company, or if I change jobs and continue my career at a different company?
Where could I be in the same timeframe if I decide to work for myself?
I felt that the best move for my career at that point would to be take the leap of faith, and differentiate myself far more than had I just continued as a software developer at some other company.
A question often asked of people in the corporate world is if they are a leader, or a soldier. Call me an outsider, but I prefer to be neither. I don’t have an innate desire for telling other people what to do, and neither do I just want to do what other people tell me what to do. I’d rather be a collaborator, and that’s not always possible within a hierarchical structure. It’s only within the free-er markets outside of the hierarchy that you can actually collaborate, rather than simply leading or following.
Aspects to a corporate career path
+ More clearly delineated — the path is marked, and the steps to get there are known.
+ The corporate world can be the best environment for making rapid and early gains.
+ Economies of scale and coordination benefits mean that your skills can sometimes be leveraged more effectively within the corporate structure.
– Seniority blocks progress — jumping ship may be required.
– Others directly decide your progress and advancement.
– Gains taper off after some time. Do you want to be in the same spot in your 40s?
Lifestyle
The biggest differences between working for the man and working for yourself has to come down to the lifestyle. Again, this will really depend on the sort of place you work at, so I will draw from my own personal experiences. Your mileage may vary. 🙂
The biggest benefit to me of working for myself is that I can work from home, at the library, at the cafe… wherever I choose. I set my own hours and working schedule. The problem is… this benefit can also be a drawback. At my job, all I had to worry about was getting my work done. Others were responsible for deciding what I worked on, what my schedules and deadlines should be, and how I should get there. Now, I need to decide all of that on my own. If I don’t manage my time effectively, I’m the one that ultimately suffers in the end. I don’t feel well and want to take a sick day? I’ll have to eat that cost. You bear both all of the costs and all of the benefits when you decide to work for yourself.
Aspects to the corporate lifestyle
+ Compartmentalized: Your office is for work, and your home is for playing around and relaxing.
+ Get paid for doing your work, and enjoy some insulation from the free-market realities of customer payment delays, losses, and lawsuits.
+ If everyone else is putting in 60%, you can put in 80%, look good, and still spend some time goofing off every day.
– Rigid work schedule and vacation time.
– Rush-hour commuting.
– Do you really want to spend your time goofing off when you could be working on your own projects?
I don’t think the grass is greener on either side of the fence; rather, I think that there are pros and cons to both. However, I do believe that true freedom is only found in working for yourself or within a company/partnership at a certain level. Whether that is important to you will depend on your life circumstances and what you are aiming for.
Dear reader, what are your own personal advantages and disadvantages to working for the man? Would love to hear them. 🙂
As someone who did it a long time ago, I think you need a very strong reason to go into business. This is not a casual decision because it will affect you in ways you have not even thought of. You work longer and harder, but hopefully you enjoy what you do. If you are successful it is all worth it otherwise you could lose your investment.
Hi Krantscents,
That is what I love about digital businesses; the primary costs are opportunity costs. It doesn’t cost much of an investment at all to go into these businesses. On the other hand, you’re competing globally.
The #1 reason is definitely enjoying what you do. Not much point in doing it just for the money if you don’t enjoy it. May as well stay under the man in that case.
I made rapid gain the first 7 years into my current career and it was nice. Eventually, I decided to not put as much into the job and aim for less raises. Life is too short to spend that much time in the office.
Once you have seniority, the company will expect more from you and you really need to multiple your impact. The way to do this is to get into leadership roles. It’s good for the company and your career, but it’s just not for me. I don’t like telling people what to do either. It’s great to hear your viewpoint on being self employed. I really enjoy this series.
Waiting for you to take a trip into the dark side, Joe 🙂
Going it alone as an entrepreneur seems like such a great transition from working for the man. As much as there are benefits to being your own boss, there are also challenges, and you’ve listed the major ones here. In the end, being your own boss will pay far greater dividends than staying in the safe cocoon of a full-time job.
Definitely agree, Anthony. You will learn a great deal just by embarking on the adventure.
I think you really nailed it with the lifestyle issues. One of the things I loved about the corporate lifestyle was the compartmentalization. Being able to shut off the ‘work brain’ at 5 PM and not have to turn it back on until the next morning is something I really miss.
Sometimes I miss being able to sit back, relax, and not worry or feel guilty about it because I’m still trying to build things up, but something I have noticed is that I have far less of a desire to play video games or watch TV or stuff like that. Maybe I’m getting too wrapped up in my “career”, but seriously, I feel no need to “escape” and I don’t feel the need for downtime.
At the same time, I feel much more of a desire to get out there in the world and “escape” in forms of doing different things. I finally got around to picking up skiing this winter, and it was great. Pretty scary in the beginning! 😉
Definitely pros and cons to each.
I think I’d be happiest with a mix of both – work from home 2-3 days/week and go in to the office a few days a week. Now… if only my boss would agree to it…
I actually think a mix is awesome if you can swing it! It wasn’t an option at all for me.
I think the important thing for you is that you posses some very marketable skills and you are tenacious. You will do great!
Thanks, Barb! I love your series about how we gotta ignore the Joneses and be happy with our own thing, because I think that’s a big component of it all. You’ll never escape the rat race if you always have to have a more expensive car, bigger house… even billionaires can impoverish themselves on that stuff.
Kevin, I’ve been on both sides of the aisle. I have worked for fortune companies most of my life; and there was time when I ran my businesses. I have to agree with you that working for yourself is challenging but fun. You own your success or failures. When you work for a man, sometimes, your fate is directed by others. That’s not the case when you take the rein of your life.
Hi Shilpan,
One thing I can say for sure, is that the last couple of months have been FAR better than they would have been had I not made the move. Don’t regret it for a second. 🙂
Awesome write up!
I spent my entire childhood watching my father run his business and it is something that continues to resonate with me. If you have the motivation, and prowess to be self-employed, then I think that you will do far better than you ever could working for someone else. You did an excellent job of comparing and contrasting the two lifestyles! Great article!
Thanks,
Timothy
Hi Timothy,
Thanks! I think it’s great that you had that kind of a role model growing up. I’ll continue to compare and contrast and keep you guys up to date on the journey. 🙂
I dont think I have a big enuff pair to go at it alone. I do not like working for the man but fear it what limits me. If I only had to support myself it would be different but when you have 2 little kids looking up to you for food and guidance, it makes you double and triple think things. I enjoy the steady paycheck that the man gives me.
Providing for the kids is a very noble thing to do. So long as you keep the gap between income and expenses high, you’ll be building up that base and you” be in a better situation to make the decision as time goes on.
I’m at a good spot at my day job now. I don’t have to do any grunt work, I have flexibility on the work I want to do, good hours, and I love the automatic paychecks each month. My decision on when to walk away will depend on how much I can save and possibly starting a family. For now I’m happy and I’m very grateful for the job I have now because I’ve had corporate jobs that I didn’t enjoy with bad hours and low pay. Makes me appreciate what I have now.
Definitely. It’s hard to find that. It wasn’t all black and white — I walked away from some nice perks, like good coworkers, a decent working environment, though morale was also degrading and many things were going bad, too. If you can do the mixed approach, that may be best and helps you to keep your options open.
I was surprised the other day to see a 20K cash injection into my 401K plan for the 2011 year. It was profit sharing, and I have to admit I will severely miss that if I no longer work.
I will miss my colleagues and daily social interactions.
Haha, I would miss that, too. I haven’t seen a bonus in a long time, since the company won’t pay out if they’re not profitable. I also miss the 5% retirement savings match. 😉
excellent post Kevin – loved every bit of it and was nodding my head for the most part through. the biggest benefit of self employment is the ability to design a lifestyle / schedule that fits YOUR preferences, thus a more satisfying / fulfilled lifestyle
Thanks, Sunil! It’s hard to put a price on the freedom and lifestyle benefits. It’s also a great experience.
For me, it’s the relative stability, and the work itself, which I really enjoy. Entrepreneurship is the holy grail for Gen Y, and yeah, I get the urge to be part of that sometimes given that my day job largely consists of covering startups and writing about new ventures – but I’m not really of that personality type, uncool as it is to admit.
No, everyone’s of that personality type, believe it or not. You don’t have to be one of ‘those’ guys that I think we’re both thinking about. You really just need something you love and some persistence. We’re all entrepreneurial in many things, including who to date and marry, where to live, where to go to school…. the list goes on and on.