Starting your own business is less risky than a job

The common wisdom is that starting a business is risky, but I think that’s untrue.  In fact, thinking of a job as secure can actually be dangerous thinking.  On the contrary:  I think that having a regular job is risky.

For example, with a typical job, you’re tied to 1 employer, who can decide to lay you off, outsource your position, or otherwise get rid of you at any time and typically “without cause.”  Your employer decides how much to pay you, what benefits you get, and how much you have to pay for your benefits.  And while employer benefits may be nice, there’s a reason why those benefits are called golden handcuffs.

And if your sole employer decides to get rid of you, you’re out of luck.

In contrast, as a business owner or independent consultant, you’ll have many customers/clients.  If one of them doesn’t have work for you, the effect isn’t devastating.  You can typically pick up work from other clients, or spend your time marketing to get additional clients.  Although you income as a freelance consultant will be variable, you also have more control over how much you make; if you want to make more money, you can work more, raise your rate, or leverage your time across multiple clients.

As for benefits, you can buy health insurance, disability insurance, and life insurance on your own or through your s-corp or LLC, and can also fund your retirement through your business entity.  And since, you’ll own your own business, you won’t have to worry about cuts in benefits, or the fact that most employer-sponsored life insurance isn’t portable.

On a related note, you can take a look at an interesting article on myths about self-employment.

 

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