Thursday, March 11, 2010

Are you a Business Owner, or Self-Employed?

Just because you have a business license and you are the boss you answer to doesn't necessarily mean you own your own business. You can even have a staff of employees and still be self-employed.

What's the difference? Well, the key difference between a business and being self-employed is that a business makes you money when you aren't there, being self-employed you have to be there to make the money.

Being a Business Owner
When you are a business owner, yes you can or cannot be very involved in your company. You may show up everyday to make sure employees are working, to ensure that processes are running smoothly, and to grow your business but if you decide to take a vacation or skip a couple of days of work, guess what; the business keeps right on making money.

A business is a process that can be taught, duplicated, and sold. This is how we get franchises and licenses. You are authorizing others to learn your business process and then duplicate it to make themselves money, and you even more money.

Being Self-Employed
When you are self-employed, you may be the boss but if you are the key component to the business and it cannot operate its day to day functions without you being there, then you are still self-employed. This can be the case of a highly skilled worker that owns their own business but hires individuals around them that are simple support staff. If that individual doesn't have other individuals that are trained in the same trade and a decision making team (that has the power to execute their decisions) in place then every decision has to go through the owner and that becomes in-efficient and destroys the whole purpose of having a business.

A business is a process that can be taught, duplicated, and sold. If you have to show up everyday and complete the majority of the work, make all the decisions, and the business makes no money when you aren't there; then you are self-employed.

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