I believe most people have some kind of dream of owning their own business. I hear people say this all the time, how they dream of owning a restaurant, a boutique, a retail store, or a service business. I have to say, there is some kind of exciting or romantic notion to the idea of owning your own business and being your own boss. But for most people, it's just a dream, they will never own a business or work for themselves. Some for financial reasons, but I think for many, it is because of fear, the fear of failure. Everyone has some fear of failure, but not everyone is willing to face that fear head-on and take action. It takes courage, drive, determination, and motivation to start your own business.
I am a serial entrepreneur. I have owned many businesses in my life, including sole proprietorships, partnerships, an LLC, and a corporation. Each of these business types have their advantages and disadvantages, but by far the most popular business structure is the sole proprietorship. According to the Small Business Administration, 70% of all U.S. businesses are sole proprietorships. Probably because sole proprietorships are the easiest and least expensive type of business to start.
Owning your own business seems like it would be very freeing, allowing you to have more time to do things that you would like to do. I found that nothing could be further from the truth, at least in the beginning. Starting a new business takes a vast amount of time and energy to get it off the ground. It often requires working 70-80 hours a week. It's a lot of late nights and weekends.
One of my longest ventures was a retail computer store (a sole proprietorship). I, like many of you, had always dreamed of owning my own business. When I opened my computer store, I thought my dream had come true. Prior to this, I had other side businesses that I worked on in my spare time while holding down a full-time job. These “side hustles” were mildly successful home-based businesses. But this was my first true retail storefront, a brick and mortar location, with offices, a showroom, inventory, and walk-in customers. I remember thinking how great (and maybe a little scary) it was going to be to finally be my own boss.
When you're a sole proprietor, you have to wear many hats, which means your job description includes everything from the janitor to the manager. I had to vacuum the floors, clean and straighten the store, order the inventory, purchase office supplies, pay bills, do bookkeeping, answer the phones, price the products, stock the shelves, wait on customers, repair and build computers, and handle outside sales, service, and deliveries. I get exhausted just thinking about all the work I had to do. Another downside to the computer business was the challenge of managing the inventory, which was expensive and it constantly changed in price. Most of it depreciated in value very quickly while it was sitting on my shelves.
I started my business not only expecting to have more time but to also make more money, hopefully, a huge amount of money! Because most of the rich successful people I knew were business owners, in my mind, I believed I was going to be rich too! My real goal was financial freedom for me and my family. Unfortunately, I was not making a lot of money. I was only eking out a living. While the business was profitable, I was working so many hours if you divided what I was paying myself by the hours worked, I was probably only making a little above minimum wage.
Replacing One Boss with Many Bosses
One day my wife, being frustrated with her own job, said to me, “Well at least you don't have to go to work and have a boss breathing down your neck all day.” I replied, “No, I have to go to work, where I have many bosses breathing down my neck. They're called customers.” A large portion of my business was repairing computers that customers brought into my store and believe me, people don’t like to go long without their computer. I definitely would get an earful if I didn’t get a customer’s computer fixed in a timely manner.
While you might think when you own your own business, you work for yourself, not true, you actually work for many people, these people are your customers. These customers can sometimes be way more demanding and unreasonable than any boss I've ever had. Especially when their computer is down and they need it for their job or to run their business. I’m sure you have heard the saying “the customer is always right”, this is good in theory, but it is not always accurate. No matter how well you treat your customers, there are always going to be a few people who will complain or be unhappy. I always tried to satisfy these customers and most of the time I did, but there are a few who can never be satisfied! That being said, I had many wonderful regular customers and met thousands of people during my ten years in business, many of them I now consider friends. Customer service is obviously the most important aspect of any business because without them we have no business.
Trading Time for Dollars
These past business experiences have taught me that being a business owner and being self-employed are not the same thing. For many years I thought I was the owner of a small business, but as it turns out, what I really owned was a job! I was literally “self-employed.”
While I thought I was gaining freedom with the ability to work for myself and not having to answer to a boss. I soon found out that I had to be there every day just like any other job. Also if the work doesn't get finished during the day, I had to stay late to complete it. Being that I had a small business with no other employees, it was all my responsibility. I began to realize I was only trading my time for dollars. This is what you do with a normal job. I did not want a job! I wanted personal and financial freedom! I realized that I had to do something different. I needed a way to make money without having to be there all the time and doing all the work.
As I took stock of my situation, I recalled the one other venture I had done simultaneously to running the computer business. A few years before, I had bought a duplex as an investment rental property. Which was profitable and had been very easy to manage. I began to compare the two businesses.
|Retail Store||Real Estate Rentals|
After comparing these two business models, I realized the real estate business was the best way to reach my goal of financial freedom.
Like the video stores and record stores of the ’80s and ’90s, the computer business had run its course. After 10 years in business, it was time to move on. I made the decision to close my store and I began looking for more property to buy. Within a few months, I had found a good deal on another duplex that needed some renovations. I purchased it and began focusing my efforts on building my real estate business.
Over the last 12 years, I have bought many additional properties. I now own a growing successful real estate investing business, not a job! These properties offer passive income, appreciation, and tax-saving benefits while requiring very little of my time to manage. I no longer have to trade my time for dollars. I have finally reached my goal of financial freedom and I love having more free time to spend with my family and being able to do things I enjoy doing.
Sole proprietors aren’t the only ones who fall victim to the “owning a job” dilemma. Most of your high paid professionals are in the same boat. Doctors and lawyers may own their private practice or firm, but they too, are “self-employed”. They have highly-specialized skills, and cannot hire someone off the street to do their job for them. These jobs also require many years of extensive and expensive education and training. This is part of why they charge so much for their services. No one else can do their job for them. They must trade time for dollars.
If you have a business that will run smoothly every day without your daily input then you own a real business. If you find yourself trading time for dollars then you own a job!