Many professionals and Small Office/Home Office owners don’t understand the distinction between building a business verses creating a job for themselves. While either route can be satisfying and fulfilling, it is important to choose the path you prefer. The "rules" and priorities are very different for each, as are the long-term results down the road. Many professionals believe they are creating one type of enterprise, but are actually creating the other. This can result in frustration and unexpected (and unpleasant) surprises when planning for retirement or other significant events.
While the following distinctions are only tendencies and most business people use a mix of all these traits, this list may help:
1. A business can be sold; your job ends when you retire. In creating a business you are creating an enterprise that has assets and a "life" of it’s own. Other people can buy it, run it, build it up or merge it into their own enterprise. When you create a job for yourself, the enterprise is largely dependent on your being there ever day. You are the primary asset, and when you leave, the business has little inherent value.
2. A Business markets its inventory; a Job markets your skills. A business has an inventory of something…books, tapes, a staff of consultants, something that can be counted and managed. A job markets your skills and your personality. You are the primary inventory or product that is sold.
3. A Business has a relationship with it’s banker; a Job has a relationship with it’s clients. In building a business, you will typically need a line of credit, a merchant credit card account and other services from your bank. You’ll get to know you business banker on a first name basis. Creating a Job requires superb personal relationships with individual customers and clients. You probably know your clients better than your banker.
4. Businesses develop formal accounting standards; Jobs are run out of a checkbook. In developing a business, other people (your banker.) will want to see accounting records and expect them to use standard accounting principles.
In building a job, you want your paperwork to be minimal, simple, and invisible so it never interferes with your ability to serve your clients.
5. Businesses develop policies and procedures; Jobs have standards and boundaries. As a business evolves it becomes more complex, requiring policies about personnel, vacations, retirement plans and so forth. A Job is largely about YOU. You have personal standards and boundaries that help you run your life, and your work is a reflection of that.
6. A Business is likely to have a 5 year Plan; A job is more likely to have Goals. A Business Plan is likely to include a formal market analysis, demographics, product develop statements and marketing programs. A Job is more likely to have a goal of increasing income, a full practice, or writing a book in the coming year.
7. A Business is more likely to be incorporated; a Job is more likely to be sole proprietorship. As a legal entity, a business is likely to have filed legal papers, set up a legal headquarters, and have a Board of Directors. Jobs are much more likely to be owned and operated by a single individual or a couple of partners, sometimes very informally.
8. A Business is more likely about strategy; a Job is more likely about passion. People who enjoy creating a business tend to be analytical, calculating and precise in their decision process. People who prefer creating their own job tend to enjoy the freedom, the individuality, and have a love or vision about the work they can do as an individual. The different approaches are often obvious after even a brief conversation with the owners.
9. A Business tends to require more financial investment; A Job may require little cash, but may have required we invest our whole heart. Creating an enterprise that will continue as a profitable business typically requires some initial cash investment. Creating a home-based job may only require a phone number, a checking account and perhaps a fax machine.
10. Business have vacation pay, Job’s don’t. This is the "acid test" in many cases. Businesses establish policies and have financial reserves for health insurance, vacations and retirement. Most small business operations that are actually more like Jobs, have no formal provision for these things. If the owner goes on vacation, the income stops. Health insurance and retirement are the personal responsibility of the owner/operator.
Knowing where you come out on these distinctions, and where you would like to be, can clarify many other business decisions. Do you want to hire employees. Should you incorporate. Can the business legally buy your car for you. These decisions can often be made more easily once you understand the distinctions between building a business verse creating a job you love.
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