One of their recent topics of discussion was the distinction between being a business owner and being self-employed. This topic is related to my earlier post about stepping out of that job mentality and into an entrepreneurial mindset. Like me, you may be tempted to believe that being self-employed automatically makes you an entrepreneur but this not the case at all. Entrepreneurs are business owners (in varying degrees) and there is a distinction. When you are self-employed, you are employed in your own business and with that comes the job mentality I discussed previously. This may suit you just fine but if your goal is to own a business or series of business that generate wealth for you then you will be better suited making that shift away from being self-employed to being a business owner and entrepreneur.
One distinction between the two models is fairly simple and a good illustration of what the two models really are. When you are self-employed, your income is dependent on what you put into your business. I am an attorney in private practice and the amount of money I make each month is largely dependent on how much time I bill each month. If I am sick for a week then that is money I have lost.
In contrast, a business owner’s income is dependent on the efforts of people running his/her business and the systems in place to ensure that the business ticks over without constant and direct input from the business’ owner. Again, using my practice an example. If I were more of a business owner then I would employ an attorney and perhaps a paralegal to run the various aspects of my practice and I would focus on select clients, allowing my employees to build the balance of my practice by servicing more clients and generating income in addition to my own. Then if fell ill for a few days, the impact on my practice would be minimal and I would still receive an income as a result of the efforts of my employees. Of course you really need to take good care of your employees and also bear in mind that the idea is not to divorce yourself from your business altogether but rather to free up time to build businesses.
A big advantage of being a business owner is that you have time to create new businesses and develop those into further income generators. As a self-employed person you rarely have time for other businesses because you are working so hard to meet your budget or just cover your bases that there literally are not enough hours in a day.
So an important question you need to ask yourself when you step out on your own or into your own business is whether you are going to be self-employed or whether you are going to be an entrepreneur? While you are pondering that question, perhaps get yourself a copy of Robert Kiyosaki’s book, The Cash-Flow Quadrant. Kiyosaki deals with these two categories of people in his book and were referred to quite a bit by the good men at Internet Business Marketing.