Is “Working For Yourself” The Only Way To Get Rich?

“Keep moving. Slower or faster does not matter as long as you do not stop.” – Confucius

Contrary to popular mythology, most self-employed business owners are not getting rich. In fact, the average income of small-business owners is virtually the same as that of employees. According to the National Federation of Independent Business (NFIB) Small Business Policy Guide, both workers and employees make a median income of $30,000.That’s the most common income of both groups, but it doesn’’t tell the whole story. If you want to know who is making the big bucks – who, for example, is bringing home more than $100,000 a year – the answer is clear: It’s the self-employed.

Also, people who employ themselves are more likely than their wage-earning counterparts to move up and down the income scale. When the economy is strong, entrepreneurial earnings go up faster. During recessions, they take a bigger financial hit.

Risk varies for entrepreneurs depending on where they begin.

If you are in the bottom 20% of wage earners, starting your own business will probably give you a higher average income than the fellow workers you left behind. If you leave a high-paying job ($60,000 plus), chances are you will end up earning less as a self-employed businessperson than you would sticking with the 9 to 5.

Note: This last statistic doesn’’t belie what I said before about there being more high-income entrepreneurs than employees.

What does all this mean? Simply this: Quitting your job and going it alone is no guarantee of riches. Most entrepreneurs do no better than employees when it comes to earnings.

The decision to keep a job or go out on your own should be about psychological preferences, not financial ones. You can get rich – or at least achieve financial independence – either way. The trick is to develop a financially valuable skill, to use it to achieve a higher-than-average income, to save a good portion of that extra income, and to invest wisely.

In future messages, we’ll talk more about what “investing wisely” means. Today, spend a few minutes considering the more fundamental question: Are you happier as an employee or an entrepreneur? Think about whether it’s more important to you to work on your own or with others … to have a sense of structure or to enjoy a sense of freedom … to have a boss or be one … etc.

There are benefits and drawbacks to both of these work styles. So think about it carefully. It’’s a very important consideration.

[Ed. Note.  Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]
  • Matthew

    Afraid the statistics don’t back you up