Pretty basic question for an SEO right? It would be nice if the answer were equally as basic or simple. It's an important question, even more so since a sweeping update by Google knocked out unsuspecting webmasters.
Beyond the stuff we know got hit (some RIGHTLY so), we probably will never know the true ramifications with respect to how many "little guys" had their livelihoods or potential livelihoods destroyed by a heartless, unforgiving, and sometimes inaccurate algorithm.
Evaluating the Risks
I know people who worked their rear ends off and had their business fail, in addition to people who were lazy and failed. Sometimes it's timing, sometimes there's some luck involved (though luck is generally brought about by hard work), and sometimes it's just a matter of working harder or spending more then your competition.
The risks are plentiful for the self-employed and they only scale up if you:
- have a family to support
- have a mortgage
- need to buy health insurance
- have limited capital to invest
- can't afford to lose on a few of your bets
Ways you can combat those issues are to:
- live below your means
- work a part-time job at night or during the day
- have your spouse work part-time
- not buy every single device that Apple makes :)
- be prepared to work longer hours than you'd like
The problem is that self-employment, especially if you've worked in the corporate world before, has all the allure of the pipe dreams sold in The 4 Hour Work Week (I guess Tim Ferris doesn't count self-promotion as work, even though he does it about 100 hours a week :) ).
You might think self-employment is all about working less, spending more time with your family, going to the beach while everyone else is in a cubicle, and all that jazz. While it certainly can be at some point, it is not how you will start out 99% of the time.
Self-Employment Screw Jobs
Start looking around to find an accountant who will tell you what your tax liabilities will be as a sole-proprietor or a single-member LLC. If you really want to take a kick to the shins, get a quote for health insurance and see how much it doesn't cover.
A friend of mind recently pointed out to me that all the individual health insurance plans do not cover maternity costs. You can get coverage for that under a group policy but unless you have employees you are going to be paying roughly 4x the cost of an individual plan for you and your family.
He lives in the US, is self-employed, and has a family. The American dream right? For he and his wife to have a second child, they would need to get a group health plan at least 60 days prior to the wife becoming pregnant. Say that everything works out to be on-time, they are looking about an increased cost of about 20-25k over the course of a 9 month period to have a child in the United States!
All of that is assuming a perfect pregnancy and a 100% healthy baby. The point is to layout just one large, large risk you might be unaware of ( rubbish health insurance ).
Another thing to keep in mind, beyond the health insurance, is that unless you start one there's no retirement benefit, no paid vacation time, and no paid sick time. It is a really good idea to purchase short-term and long-term disability insurance for yourself as well.
It's Not an Either Or Question
The smartest thing to do would be to starting whittling down your household bills now and start slowly building your business. Keep your day job and work at night, you'd be working 15 hour days if you started from scratch anyway so why not do it now but get paid (with benefits) for your time?
Once you begin to make some cash on the side, see how far you can scale it (reasonably) before you need to make a decision on whether to fully jump in or whether to keep it as a side gig where you can eventually outsource a good chunk of the tedious work.
Some people loathe the idea of a boss and that's fine. Even good people have bad days so it's not always going to be peaches and cream but if you are in a spot where there is mutual respect and fairness then I'd say hang on to it until you can financially manage to go out on your own.
Even when you are "the boss" working for yourself if you have any level of success you will soon be "the boss" with employees of your own. And many successful businesses don't have 1 boss, but rather hundreds or thousands of them - their customers.
Maybe it's Not for You
Self-employment is not for everyone. It takes awhile for it to really pay off professionally and personally. When you first start out you may not have enough capital to outsource things like:
- web design
- link building
- content creation
Not being able to outsource all that upfront is probably a good thing. Many attempts at outsourcing fail because the outsourcer is not competent themselves in those particular tasks. Having experience in these areas is helpful because if a freelancer or staff member leaves you hanging, you'll be able to keep things running efficiently while you search for another staff member.
Working for a family business or a steady corporation isn't something to be looked down upon by any means. The key to mitigating the risks on both sides (getting laid off for example) is to be financially prudent, continually invest in yourself (earn a degree, start a side business), and be loyal to whom you work for or with. If you do those three things you will typically be ok in any reasonable situation.
Start Off as an Apprentice
Maybe you know someone in the SEO or PPC industry that might be willing to have you work with them for awhile or perhaps you aren't ready to fully go at it on your own just yet. Most employers realize that the best employees sometimes are the more motivated and ambitious ones and with that comes the risk that those employees will look to move up and on at some point.
Starting off this way has risks too (might not be as stable as a large corporation for example) but you can learn a lot about the overall and day to day processes that make that particular person or group successful. I'm not for the idea of building your personal brand on the back of someone else's brand equity but if your brand develops from the hard, quality work you do for someone else then that's great.
I wouldn't go in with the sole purpose of using your position to quickly build your brand and bolt. I'd go in with the purpose of working your butt off for someone who gave you a great opportunity and see what develops from that. Usually the latter will result in both sides being more than happy.
This part is more relevant if you have a non-working spouse or a spouse who might work part time. Little things that can really add up to time sucks include:
- paying the bills
- making the monthly budget
- dealing with household vendors
- scheduling and rescheduling family appointments
- doing the household shopping
You should be focused on your business and the associated responsibilities. If you are doing any of the above, try to transition that to your spouse or significant other. It's not just the hour or two it might take for you to do those tasks but it's the stopping of your business activities and the mind-flow disruption associated with starting and stopping tasks frequently.
Evaluating the Decision
In this weak and unstable economy it is really hard to reasonably project out 5 years on a life changing decision. There are so many variables to take into account that it's difficult to give a tailored answer to each situation.
If you are at the point where you need to make a decision or want to make a decision down the road, there are some key points to keep in mind but financial variables are some of the most important variables in this equation.
It's fine to want to do something and have the drive to do it but if it's going to potentially create a financial hardship quickly then it is really the wrong decision. There are a few really good options for someone who is on the fence for financial reasons.
We covered some of the reasons above, such as:
- learn and work on your business part-time while keeping a day job
- see if you can start by working with an experienced person in the field
- take up a part time job and/or see if a part time job is a good option for your spouse or significant other
- start living below your means and save some cash for rainy SEO days and for investing in knowledge + small ventures
The other elephant in the room is stress. The stress of being the breadwinner is stressful enough, but if you have no safety net or if your business is brand new (thus more unstable than 9-5 corporate stuff) as well then it is really stressful. This is something to keep in mind and something you might want to try and emotionally reconcile before you start.
You might also find that doing it part-time and maintaining a "day" job is a really good fit emotionally and financially. If Google blindly swings an ax, and you get hit, you can rest assured that the sun will still come up tomorrow and will that direct deposit on Friday :)
The point remains that there are many options available to you to help figure out if working for someone else or yourself is really the best fit. In either case, working and studying harder (and longer) than others is a solid base to start from :)
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