This is an incredibly important decision, and a very personal one. I wouldn't presume to tell people whether or not to go into business for themselves - no more than I would try to tell them whom to marry or what to name their kids.
This is the first in a series of articles on the positives - and pitfalls - of starting your own company. What I do hope is to lay out the pluses and minuses involved in running one's own business, so people can make an informed decision about it.
First, let's deal with the plus side of the ledger. What are the positive things that can happen if contractors decide to break out on their own?
Most obvious is the opportunity to make a lot more money. This is probably the No. 1 reason why people decide to leave their jobs and start their own businesses.
No matter how good they are at what they do, and no matter how successful their company might be, there is a limit to how much any employer is willing to pay an employee. For example, hardly any sheet metal contractors can expect to earn $100,000 a year working for someone else. Maybe with a lot of overtime a few top performers might pull down six figures, but it doesn't happen very often.
The trappings of successHowever, it's quite possible for the owner of a successful company to earn $100,000 a year. Some business owners make a lot more. The sky's the limit when you operate a profitable, growing business.
In addition to paying themselves a handsome salary, owners who build a successful business may someday find that other people want to buy it. If the company is successful enough, it could be worth millions of dollars in the owner's pocket, plus the owner often gets kept on the payroll as a highly paid manager or consultant. Truly, this is a payoff worth striving for. Business owners also frequently enjoy tax deductions on products and services that benefit them personally, such as mileage from a company car or entertainment expenses.
When you get right down to it, there's only a handful of ways to get rich. One is to inherit wealth. Another is to get extremely lucky winning a lottery or guessing right with the stock market or some other windfall investment. If you are a world-class athlete or entertainer, that also could be the path to affluence.
For most people, though, these things are out of the question. If you're not born right or don't get wealth bestowed on you through sheer dumb luck, the most accessible path to getting rich is to own your own business.
Next to money, people get motivated to start their own business by a desire to be their own boss. Some people just don't like to answer to anyone else. People who don't react well to authority ought to seriously consider breaking out on their own.