Employment vs Self-Employment: Why Being Employed Isn't Always the Best Option

In today's world, there are more and more opportunities for work, be it online digital work, or physical employment. There are more companies in existence today than there's ever been and the opportunities are endless. Even so, we can't help but wonder... which is better between employment and self-employment? Moreover, is being employed always the best option? Let's take a look.

The Elusive Nature of Employment

Despite the apparent proliferation of work, well-paying, stable, and sustainable jobs have become increasingly fleeting. Companies are increasingly devising ways to cheat employees out of their pensions, health benefits, and severance pay. A case in point is Elon Musk's recent forced acquisition of Twitter which left more than 3,000 staff members laid off with no severance pay. Employment is very elusive and that tilts the scale towards self-employment.

The Capital Constraints of Self-Employment

Self-Employment, on the other hand, has huge capital constraints in the beginning. For instance, the average cost of setting up a company in the United States is anywhere from $500 to $1500. As such, for entrepreneurs that are just starting out and looking to also secure a rented shop, a business license, supplies, furniture, fittings, etc., the cost can burgeon easily to unaffordable proportions.

Looking for Capital as a Self-Employed Entrepreneur

These costs, among many others, both expected and unexpected, push entrepreneurs to look for capital and seek funding for their startups. This funding is, however, not easily accessible to all as angel investors and venture capitalists have an appetite for only the most lucrative business opportunities. As such, entrepreneurs with seemingly dull ideas fall off the venture capital bandwagon and may end up unable to even get their businesses through the first year.

The Ever-Increasing Threat of Mass Layoffs in Employment

Employment can be very daunting, especially when you think of the potential threat of mass layoffs. An excellent example is the recent tech layoffs where thousands of employees have been laid off from solid companies such as Google and Microsoft. One of the biggest disadvantages of being employed is that you could be sacked anytime and this could happen en masse in such economically precarious times as these.

The Faltering Performance Assessment Mechanisms in Corporates Globally

You would think that companies make accurate performance assessments to inform their layoffs but unfortunately, this is mostly not the case. More often than not, companies will sack thousands of employees on a whim, in a desperate attempt to cut costs, and may even let critical talent go. A beautiful example is Elon Musk's purge at Twitter where he sacked even critical talent without thought, only to later consider re-hiring them.

The Value Proposition of Self-Employment

Self-employment proposes value mostly in the economic potential one has. As a self-employed individual, there are no limits to how much you could earn in the future. There is also less bureaucracy and more flexibility to make decisions. You get the chance to steer your own business ship, so to speak, and to create your own destiny.

The Experience and Expertise Needs of Self-Employment

Even so, self-employment necessitates that you have the expertise and experience needed to run a company. Your first company or business may fail if you lack the knowledge and business acumen to start and successfully run a company. However, one could start out by being employed, gaining some knowledge and experience, and when the time is right, venture into self-employment.

Employment Benefits as a Factor to Consider When Choosing between Employment and Self-Employment

Employment at a good company that offers health and other benefits can be a big plus. Companies that know what they're doing will ensure they have a concise and comprehensive benefits package to attract the best talent. Said benefits can be an additional layer of value that a company presents to its employees, beyond just pay or compensation.

The Pitfalls of Employment Benefits

On the other hand, employment benefits may lead an individual to overly depend on a company for their health facilitation and other important tenets of their lives. For instance, an employee may depend on their company to pay their health bills, and on contacting a terminal illness or chronic condition and being laid off as a result, lack the ability to cater to their own health needs.

The Danger of Depending on Company-Provided Health Benefits

Moreover, the risk of depending on company benefits including health, is that when one is fired or retires, they may lack the ability to get adequate and full health facilitations for themselves, including health insurance, medicine and treatment funds, etc.

Self-Employment as a Vehicle for Learning

Self-employment can be a very valuable way to learn how to run and operate a business and gain some invaluable experience. One has the opportunity to learn the operational, functional, and managerial sides of the business, and this could set them up for future success in a big way.

One will also gain experience be it in matters legal, compliance, financial management, and so on. This knowledge may be unavailable or remain untaught in an employment setting where an employee is only confined to a certain department or on the performance of specific tasks.

Employment vs Self Employment: Which is Better?

The Pros and Cons of Employment

The Pros of Employment

• Employment benefits, including medical cover and insurance.
• A steady flow of income.
• Career progression and possible promotion.
• The access to and ability to deploy a lot of resources.
• The satisfaction of working towards something greater than your personal goals.
• The comfort of working alongside like-minded and talented people.

The Cons of Employment

• The ever-luring possibility of being laid off.
• Bureaucracy in the organization.
• The risk of overly depending on employee benefits such as medical cover.
• Stagnancy in personal development and growth.
• A heavy reliance on what one is told to do with limited flexibility.

The Pros and Cons of Self-Employment

The Pros of Self-Employment

• Freedom and flexibility to deploy resources as you like.
• Huge gains in experience and expertise.
• The possibility of earning as much as you like with no cap on how much could earn in the long term.
• The joy and freedom of following your personal goals.
• The satisfaction of providing jobs for others.
• The excitement and wonder of building something from the ground up.
• The ever-increasing motivation of achieving the impossible.

The Cons of Self-Employment

• Limited resources and capital constraints when starting out.
• Exposure to significant risk.
• No constant flow of income and unsteady pay, if any.
• The need to invest a lot of money, time, and effort to see your startup grow.
• The increasing cost of setting up a company, paying taxes, and legal fees.
• A lack of benefits such as medical cover etc.
• Slow progression in business growth as compared to employment where there are a lot of resources and enough talent to achieve goals faster.

Which One Do I Choose between Employment and Self-Employment?

In the end, neither Employment nor Self-Employment is perfect. Both have their advantages and disadvantages and sometimes it is better to assess your current situation and see which is better for you. A good approach would be to start off by being employed, amassing some resources, expertise, and experience, and then venturing into self-employment.

Why Being Employed Isn't Always the Best Option

Being employed could have you spend all your best years working for a company that could one day sack you. You may help someone build their empire your entire life and then get laid off when you could have used that time to build your own empire.

Why Self-Employment Could be Better

Self-employment can be very lucrative. With the right team and with adequate funding, startups have the potential to become billion-dollar companies. They can also work very flexibly and tackle very specific problems by bringing together experts in that field and putting them in an environment where they get all they need to achieve their goals.

Startups also do not have a lot of bureaucracy and the distance between employees and managers can be very small ensuring that communication is bolstered and executives can work with employees to meet their needs. As such, when possible, self-employment is the better option due to the potential it posits. What do you think? Comment below.