People often ask me “what’s the difference between being self-employed and owning your own business?” The simple answer is scale; if you are the only one working in your business then when you aren’t working you aren’t making a profit in most cases. It’s that simple.
One friend of mine worked at an audio/video retailer when he was in college. Many of his customers would ask if he could come out to their house and wire the system for them, so he decided to strike out on his own and become self-employed as a custom audio/video installer.
For the first few years he ran the business alone. Then as things started to take off, he would hire friends and acquaintances to help out part time, paying them under the table. Things went along that way for probably the first 5 years or so.
Time to Expand Your Business Operation
That was 25 years ago when he first became self-employed. But, somewhere along the line my friend decided it was time to expand his operation into a small business. He got more serious about things, became a licensed electrician so that he could wire homes for audio, video, electrical, custom lighting systems, alarm systems, etc.
And, he began to hire employees; front office staff to book appointments and manage the books, installers to manage field operations, etc. He leased several work vehicles, rented a space in order to keep inventory, tools and equipment. Soon he found himself running a true business versus simply being self-employed.
A Matter of Operational Scale
Today, my friend is running a business with 14 employees, annualized sales of over $2 million and, best of all, when he goes on vacation for a couple of weeks, the business can continue to operate and make money without him!
That is truly the benefit of expanding your small business if you are willing to put in the work and accept the additional risk of having employees and increasing your operating expenses.
Making the Decision to Expand Your Business
Is it time for you to expand your small business? If so, make a list of the pros and cons and be sure you have a solid business plan first.
Many self-employed persons make the mistake of expanding without truly anticipating the investment and steps necessary to expand and soon find themselves in over their heads, with high expenses and uneven revenues required to support the expansion successfully.
But, talk to any successful business owner and they will probably recall fondly that period of time when they took the steps to transform their enterprise from a single person operation into a true business operation!