Pieter Scholtz

Financial Freedom | Owning A Business VS Being Employed

Starting your own business can be a daunting venture. There are many things to consider, and one needs to understand the difference between business ownership and being employed.

Here are some key points to consider before making the big jump into entrepreneurship:

1. Security:  Being Employed Does Not Provide Job Security

This is probably one of the biggest factors preventing people from taking the leap into business ownership.  Many prefer the safety and security that a traditional corporate job can provide, however that is a great misconception. A corporate job can only provide you with as much security as the extent of your notice period. This means you are only as secure as your contract states. If your contract has a notice period of 30 days, you only have 30 days of security.

With your own business, it is not quite the same. When you own your own business, your security is directly proportional to the level of planning, input and effort that you have put into your business. Business ownership is hard, it is not for the faint-hearted, but if done correctly can provide you with years of security and success.

2. Earnings: Understanding the Risks vs. Rewards

Many people get stuck in what is called the ‘Underwater Phase’. Here, one spends too much time worrying about the disparity in income between their last corporate salary and their first entrepreneurial income and whether or not it will match that of the corporate. One then focuses too much on the time it takes to break even on your previous corporate job earnings, resulting in you never taking the leap of faith.

Most neglect the fact that the earnings they are able to achieve in their own business, very often exceed that which they earned in their corporate jobs.  Owning your own business is an ideal vehicle within which you get to build on your Nett Asset Value or build wealth.

3. Control: Determine the Destiny of Your Business

Owning your own business means you hold the keys to the success of your organisation because you control the vision, direction, and legacy of your business. You decide where and how to invest and what products you want to offer. You also govern your pricing, the opportunities you take and how fast you want your business to grow, all of which are in your hands.

The stark difference between traditional corporate employment and owning your own business is you lose that control over the business’s destiny when you are formally employed. In traditional forms of employment, you are working towards the goals of your employer.  Ideally, all employees should be aligned to the vision and goals of the employer, however, these may change over time and may then not be aligned with your own personal ambitions.

4. Personal Growth: Personal and Professional Growth When Running Your Business

Running your own business will require you to experience massive personal growth – not only at the start but throughout the entire lifetime of your business.

When you own your own business, you become multi-skilled because you need to embody every role in the business, from Finance to Sales and Marketing to Operations and HR. Running your own business will require you to embark upon a lifetime of learning and development, and particularly in the early stages, this growth trajectory is very steep. Your business will only grow to the level that you grow.

5. Flexibility: Balancing Personal Time and Accountability in Business Ownership

The initial phase of starting and managing your own business requires an enormous amount of time and hard work. Because you control all your business operations, you are more in tune with the amount of time it takes to complete tasks and responsibilities. If you know completing a monthly budget takes 12 hours, you can choose to either complete it in one day or over several days, which allows you to enjoy other personal freedoms as you see fit. That said, it is worth noting that your own business – especially in the beginning –  does not give you too much freedom. It provides you with the flexibility to be able to do things that are important to you and the family that you might not have been able to do in corporate. Because, the ultimate goal of the business is to have a commercial, profitable, enterprise that buys you both time and freedom.

To get there you need consistent cash flow in order to build a team of people and systems to ensure that the business can operate without you. Only then will you have the freedom to explore that which is important to you.  Until then you might have some flexibility but not freedom.

A bonus point and possibly one of the most crucial points to note is the financial rewards that come with owning your own business. But with this comes the understanding of the type of business you want to run.

 There are two main types of businesses, namely:

  • Capital-based businesses
  • Cashflow-based businesses

Here, understanding which type of business you want to run is key to your success. If you want to run a more capital-based business, your goal would be to grow the business enough to sell it at a huge capital gain. For a cash flow-based business, your goal is to eventually generate passive income to replace your current income, by investing in income-generating assets (such as other businesses, property and stocks) outside of the business.

Be that as it may, understanding your business is key. Because at the end of the day, the main objective to owning your own business is to provide a solution to a problem that the market has and to then to provide an ongoing service to the market.  The fruit of this will be the creation of wealth within the business as well as personally.

Starting your own business can be daunting and challenging and is not for everyone.  You need to understand the risks and rewards and be willing to take personal ownership and accountability for all the results from the business. This rests with you and no one else.


Scroll to Top