Here is what no one tells you about running your own business.
Always on the clock
Alicia and I were recently celebrating our 7th wedding anniversary in Curacao. On the day of our anniversary we held a client call. Because when you own a business, there are no days off. Every day blends between work and not-work.
Clients won’t pay on time
Entrepreneurship is like chewing glass while staring into the abyss. The abyss fades, but the chewing glass never does. – Elon Musk
Regular people have to pay their bills monthly. Clients will pay their bills whenever they damn well feel like it. That could be this month. That could be 6 months from now. Imagine not getting paid for 6 months. This is standard for businesses.
You can be fired at will
While normal employees can be fired at will as well, there are still laws that dictate the employee must be warned beforehand and given a chance to change. Your clients do not have these laws restricting their foot up your ass.
Even good things that happen can get you fired, like having your client contact be promoted. When the new contact comes in, they might just bring in a new company to work with and kick your company out.
You’ll get used to the feeling of being near-fired every week. Or you’ll not have a business anymore.
There is a stupid amount of paperwork to file every year. Forms with the government, IRS, and clients will eat up free time and energy. It never goes away and there’s no one else to do it.
15% additional income tax
Did you know that self-employment also comes with an additional 15% income tax on top of everything you already pay?
Starting a business is already one of the harder endeavors. That’s why so few people do it. Now take all the stress, long hours, and uncertainty and pay the government 15 cents more on every dollar you make.
Before you start a business, you’ll know next to nothing about taxes. After starting a business, you’ll quickly be an expert. You’ll know what percentage of your home is deductible, what purchasable items are deductible, and what tax breaks to take advantage of.
Yes there are a lot of deductions, but they are to help offset the ridiculous 15% self employment income tax increase. The end result is that you’ll still pay more in taxes than the average person. And in addition, it’s a lot more work.
The buck stops here
The average employee gets to say “it’s not my job!”. As the owner, everything is your job. You’re now a marketer + engineer + designer + customer service + HR + manager.
It’s not only 6x the responsibility, it’s 6x the blame.
Eat what you kill
Paul Graham calls it “default alive or default dead”. If new customers or clients are constantly coming in through the door, your business is default alive. If not, your business is doomed at some point in time.
One client fired you + Other client hasn’t paid $30K invoice + Other client numbers look terrible this quarter = oh god I fainted.
People will no longer be able to relate to your problems. No shoulders to cry on. No sage advice given.
Other people get paid every two weeks like clockwork. You haven’t been paid in months.
Other people clock out and forget about work until Monday. You’re in a hotel in Mexico on your supposed vacation taking care of an emergency.
Other people complain about a co-workers drama. You’re wondering how you’ll survive this month.
No road map
There’s no instruction book. The only qualified people to teach how to succeed are busy with their own businesses.
How do you know you’re doing well? You stay in business for another month. How do you know you’re doing poorly? You’re out of business.
The only constant is change
The world is changing so fast that what was true a year ago is no longer true today (yet another reason college is a scam). Over the next few years, the taxi and trucking industry will cease to exist due to self-driving cars. The hotel industry is facing heavy competition from Airbnb. Neither travel nor real estate agents saw the writing on the wall when the internet ravaged their industries. Cable companies see dwindling subscription numbers as the public chooses Netflix and Hulu. Manufacturing is forever-gone due to advances in robotics and 3D printing.
On top of all the headaches of owning a business, you also have to change your business with the times or die.
Is starting a business right for you?
For me, it 100% was worth it. I enjoy the challenge and the ambiguity. Most people don’t.
The rewards are off the charts better than a typical office job. But that’s only if you succeed. Most people don’t. That’s why new businesses are being started at a 40-year low. It’s a hard road.