#39: Why You Should Get A Job And Not Start A Business

SAM: Hello and welcome back to another episode of the lazy entrepreneur, I’m your host Sam Priestley and once again we’re joined by my lovely co-host and partner in life, Emma Priestley.

EMMA: Hello.

SAM: Emma today I thought we’d flip what we normally do on the head and talk about why you shouldn’t start your own business and why you should just get a job.

EMMA: Oh, how safe of you.

SAM: Well that’s one of the benefits! Or is it? Yeah let’s talk about this because I’ve never really had a job, you have. You’re probably in a better position to tell me the benefits and you’re also in a better position to tell me what my fantasies about having a real job are complete nonsense. So I got this idea what it’s like to be a professional in the working place. High-powered and I feel like life in the city is a cross between Suits and then a peep show or something. On one hand I’ve got this idea there’s something glamorous to it and it’s full of stability and well paid and you get rewarded for working hard and you’ve got big budgets you have these amazing Christmas parties and you’ve got a corporate credit card where you can go out and get your champagne at the bars and lobster lunches and boozy breakfasts. But on the other hand I’ve got this side that it is a slow bureaucracy that gets nowhere and most people hate it and you’re stuck in a sweltering desk using spreadsheets that don’t really work and doing work that there’s a good chance you’re superiors see it and decide not to use it.

EMMA: Yeah well there’s a lot of truth in all of that.

SAM: And I’m not just talking about city jobs as well. I mean there is a benefit to just having a basic job. I lied I did have a job for a while I was a caretaker and to be honest I actually really enjoyed it because I made me a bit of money and there was no thinking about it. It was very much turn up, do your work, go home and just get on with your life.

EMMA: It was just money.

SAM: There was no stress about it and it was quite fun, you get to have a chat. Loads of tea breaks. I used to have ride-on lawn mower racing, it’s great fun. So yeah so let’s talk about a few things, so I’ve got a couple of ideas and there’s a few myths I think that people have about jobs that I want to talk about, so one of them is stability as you said. The idea that if you’ve got a job, it’s quite stable and you don’t have the variance, so our income each month is quite different. It’ll go up and down. We don’t know how much we’re going to be earning next month, whereas if you got a job, you’re told how much you’re gonna be earning and unless you get fired or get promotion you’re gonna earn the same amount.

EMMA: Yeah it’s more likely to stay the same or go up.

SAM: And there’s a reason why mortgage companies are more likely to give a mortgage to the employee than to the boss who owns their own business and that is because of the stability and they can count on it, which kind of makes sense because if the business is struggling, it’s generally gonna be an employee who gets paid first. The first person to take a pay cut or not to get paid at all that month is gonna be the guy who owns it.

EMMA: Yes.

SAM: In a good business anyway, I’m sure there are some dodgy ones where that’s not the case but definitely when I’ve been in businesses that’s been struggling with the cash flow, making payroll is the challenge and the people who will get their payment delayed will be the boss followed by the managers followed by the assistant managers and then finally being the average people at the bottom are the ones who are most likely to get paid.

EMMA: Prioritized.

SAM: And even if the business goes bankrupt, they’ll be paid right up until it goes bankrupt. I suppose the other thing as well is that you get paid immediately. As soon as you’ve got a job, you start earning straight away, whereas if you’re starting a business, it might take six months, it might take a year. It might take five years before you can pay yourself a salary.

EMMA: I mean there aren’t many jobs out there where you do get paid straight away, if you’re in a very big corporate, the chances are it’ll be delayed a long time and when I say long time, I mean you’re not necessarily gonna get paid on payday when everyone else gets paid.

SAM: Okay, but you should be right?

EMMA: HR is very slow and there can be a lot of issues, so whether it’s losing some of your paperwork, whether it’s some tax issue, maybe you have to pay a lot of emergency tax in your first few months of being paid and then you might be able to get some of that back.

SAM: That’s a bit ridiculous isn’t it? How can they get away with that? Because if you’re living paycheck to paycheck, or you’ve been out work for a little bit and suddenly you got a job, you need that money.

EMMA: Oh 100%.

SAM: You need that money to pay rent because any any non-employment benefits are going to stop as soon as you get the job, and then you got to wait a month for them to pay you and then if they don’t pay you for whatever reason you got to chase it up and eventually get paid a bit later.

EMMA: Yeah and that’s the other thing is the benefits.

SAM: Yeah that’s all true but you’re still getting paid quicker than we’re getting paid for Pipehouse Gin.

EMMA: Definitely.

SAM: And you do know when you sign up to the job what it is you’re gonna get paid.

EMMA: Yes there’s a contract.

SAM: There’s a contract and it says you will get paid this amount per year, and, to some extent you can rely on that.

EMMA: Yes.

SAM: Whereas when you start a business, you could be a millionaire in a year or you could have made nothing in a year.

EMMA: Or you could have made a huge loss.

SAM: Or you can make a loss, or you could have made loads of money but will have to reinvest it all back into the business. One of the other things about getting a job and having a traditional route is it is the traditional route. It’s what we’ve been trained to do. We know how to apply for a job, we know that you know once we get better doing interview or whatever and we build up our CV it’s gonna be easier to get the next job.

EMMA: Yeah and there is support for that.

SAM: There’s support, you get taught it a school, your careers advisor isn’t telling you to start a gin distillery, they’re telling you to go and get a job or go to the grad scheme.

EMMA: Yeah.

SAM: And there’s a whole grad scheme of stuff isn’t there, like set career routes that you start on and provided you put one foot from the other for the next 20 years, you’re gonna end up somewhere better than where you started.

EMMA: Yeah.

SAM: Whereas if you start a business, it works for 12 years and then it has to close down for whatever reason. You’re not necessarily any more qualified to start another business or to get another job, which isn’t totally true because you do have a lot of skills you’ve learned that should make it easier to start the next one, but it’s less tangible. You can’t really put that on your CV that you ran a business for 12 years and therefore you’ll be good at signing the next one, and therefore you should be paid more than someone who’s starting a new business. Like having a CV of loads of career stuff on it does have value to it.

EMMA: Yeah.

SAM: And more value to a bunch of failed or successful businesses that I have on my CV.

EMMA: Yeah and also the other benefits of having corporate experience or previous company experiences you can get access to things like loans and mortgages and credit cards and being able to rent a house, etc a lot easier.

SAM: Yeah, yeah. I briefly mentioned mortgages before, but it’s really difficult to get a mortgage if you’re self-employed. It’s even more difficult to get a mortgage if you’re earning a lot of money but you’re not paying yourself out.

 

EMMA: Yes.

SAM: So let’s say you have a business that earns a large amount of money. You might decide to only pay yourself a small fraction of that for whatever tax reasons and keep the rest in the business and just invest through the business but a mortgage advisor won’t be able to say, oh I can see your business is very successful and at some point in the next eight years you’ll be able to liquidate it at a lower percent tax rate. You can use entrepreneurs relief and get all this money out at 8% rather than pay it out now at 50%. Therefore I’m gonna give your mortgage for this amount. He’s gonna say, oh well you paid yourself this amount a year, so therefore I can offer you a very small loan.

EMMA: Yeah and the way it works for mortgages for people that work for themselves is to have a lot of money upfront.

SAM: I remember when I moved to London at first, I was running my business and I think I had 50,000 pounds in the bank. I had another 100,000 pounds or whatever in the business and the business was making something ridiculous like ten thousand pounds a month and I still had to get my parents to guarantee my rent on a flatshare in London because none of that was good enough for the loan agent, and they said I’d pay six months up front.

EMMA: Did you?

SAM: Yeah six-months upfront.

EMMA: That is a huge amount of money.

SAM: Well yeah because for whatever reason my entrepreneurial wasn’t good enough for them whereas if I’d had a job and I was earning a quarter amount of money, that wouldn’t have been an issue.So we talked about some of the benefits of having a job, let’s now talk about why these benefits might not be as real as they look on the surface. So stability is one of the big ones is that it’s considered very stable to having a job and that’s true up until you lose a job or you get fired and you can’t always predict that whereas with the business I will see it a year or two years in advance that the business is going down so I have a long time to prepare or to work harder, whatever is. Well with a job you could be happily working there one day, planning your next holiday and then the next day not have a job anymore.

 

EMMA: Yeah, you’re made redundant with no warning.

SAM: With no warning, no probation. For a lot of these things can be totally out of your control, you could be working for a huge chain and they go bankrupt. Like how many big businesses have gone bankrupt in the last few years in England?

EMMA: Well yeah. I mean, we’ve got a friend who accepted a job that was full-time and within three months the whole company was shut down. And they knew when they hired him that’s what was gonna happen but they still hired him anyway.

SAM: Yeah.

EMMA: And it was just a nightmare because he had no rights because he hadn’t gone through probation yet. He was too new.

SAM He didn’t get any redundancy or anything like that?

EMMA: No.

SAM: I think someone was yesterday or the day before was telling me that he got a job, moved to a new town for it, got there and was meant to start on like the Monday. Didn’t hear anything, phoned up on like the Friday and he was told the business had gone out of business, gone through liquidation and had no job. And he’d moved for it.

EMMA: That’s crazy.

SAM: Yeah but what can you do about that? Yeah, so jobs aren’t quite as stable as people think, and it’s not that they’re less stable than being self-employed, I think you’re much more stable in a full-time job but you think that you’re more stable than you are.

EMMA: Yeah.

SAM: When you’re self-employed, you’re always a bit worried that things are going to go down and you can see that ebbs flows of the business and your money.

EMMA: Along with the economy and politics and everything else that happens.

SAM: Yeah and so what you find is that a lot of people who are doing quite well with their own businesses tend to start stockpiling money and building up these big reserves because they know there is danger ahead, whereas people in full-time jobs we saw it with the recession that you got these families with say three months salary in the bank lose their job after 25 years and then three months go by and they haven’t got another job, and that’s it. Can’t make their mortgage, lose their house, got expensive car payments. They just never saw this lack of stability that was in their job, they got too used to it.

EMMA: Yes a false sense of security.

SAM: Even when you were working at PwC you were basically living paycheck to paycheck, paying off your overdraft with the next month’s salary. Yeah and if you’ve been out of a job for two or three months, what would you have done?

EMMA: I would have had to have left my flat share because I wouldn’t have been able to afford it.

SAM: Move back to your parents, not everyone can move back to their parents. If you got family imagine that. Well we met people who they’ve got kids and something’s happened and they have to move back to their parents in their 30s. And I’m not saying that can’t happen if you’re self-employed but at least you see the warning signs early on and you are always aware that there is that sense of instability.

EMMA: I think it makes you a bit more resilient.

SAM: Yeah because you’re constantly being faced with stuff going wrong.

EMMA: Whereas you’re not resilient at all when you’re in a corporate job.

SAM: Yeah because your performance doesn’t directly relate to what you’re getting paid.

EMMA: It definitely doesn’t.

SAM: And I feel like you’re by necessity self-employed, your income isn’t tied to your expenditure. It’s not like when I get some money in the bank I’d go and spend it. I have to choose how much I pay for rent, what car I get based on my expectation for how much I will be earning over the next year or whatever is but that is going to be completely wrong. My prediction is not going to be right and I’m gonna have to under predict and so then any money above that just gets added to whatever stockpile I’m building whereas if I know I’m earning whatever it is, four thousand pounds a month, I will be planning to spend that 4,000 pounds a month. I’ll be saying, well what flat can I afford to rent for four thousand pounds a month? And then getting the nicest one I can find. Whereas you don’t have that luxury as a self-employed person and so therefore you’re forced to be a bit conservative with your financial planning. So that’s one advantage. I also think that’s one advantage that isn’t quite a big advantage as we think it is. I think the other one is that you don’t have to think that much about your job, because well if I’m a caretaker, I don’t care that much about my job and I can go home and switch off, that’s not true with most professional jobs. You’re kind of indoctrinated into always being on and taking ownership for your role even though you’ve got no ownership in the company. So, back when people had BlackBerry’s, I had friends who had BlackBerry’s which they couldn’t turn off. They physically wouldn’t turn off, you turn off the work ones and they just turned back on and you couldn’t put them on silent and wherever they were they were meant to be on call and it wasn’t even that unusual. So yeah I’m always on call when I am self-employed and I’m completely I can always be working, there’s always more to do, but I think the same is true at work and if you’ve got a big presentation coming up next week, you’re gonna be working more hours than you should do if you’re trying to get a promotion, you’re gonna be putting in extra slog. If you want to progress in your career, you can’t just cruise.

EMMA: Yeah, absolutely.

SAM: Same as being self-employed. If you want to progress with your business, you can’t just cruise, you’ve got to work at it. But really they’re not that dissimilar. Because while in your career maybe the role you’re doing, you don’t have ownership of your own career progression and working on that and building that up, getting promotions is a job in itself. It’s like running a business. So we’ve got that. I think another advantage that maybe isn’t a big advantage as we think it is that it’s very easy, a set out and understood process.

 

EMMA: Yeah it’s low risk.

SAM: So going into a grad scheme, finishing university, going to the jobs fair, going to interviews at thirty companies and then being hired by one of them, seems like because it’s so set forward and everyone is doing it, that seems low risk and a good route to take.

EMMA: Yes the sensible route to take.

SAM: But as with everything, if everybody’s doing it, then it’s probably going to be undervalued, you won’t get paid as much you could do, there’s not gonna be that much room for creativity, and setting yourself apart. You’re entering a pyramid that is gonna get smaller and smaller the further up you’re going, so that might look like you’re on a logical career progression, not everyone can progress each step. Only half the people or whatever can get that promotion.

EMMA: Only the best, the real fighters.

SAM: Yeah or the luckiest, the people who happen to pick the the industry that’s gonna take off over the next few years.

EMMA: Yeah like freelance web developers.

SAM: Yeah or even more niche, like some type of programming language in a random computer science related field that suddenly gets really popular versus another type of computer science and programming which people stop using.

EMMA: Yeah.

SAM: So there is a lot of like luck and then you know you’re competing with everybody out there, they say what we said starting a gin business, well why are you making gin? It is so crowded. Well why are you getting a job? That’s a most crowded marketplace out there. You’re literally competing with everybody else getting a job. If you’re going onto a grad scheme, you’re competing with every other university graduate out there, how competitive can it get? So yeah it is a well understood route but that’s not necessarily an advantage, that just means everybody else is doing it and so there’s more competition. It’s harder to shine and you’re probably gonna be undervalued.

EMMA: It’s also making me think there’s something in the older you get as well, if you stayed in one career path, it’s quite likely that your skill set will become obsolete.

SAM: Yeah think of all these adverts on TV for retraining.

EMMA: Yeah and I think if you’ve got your own business, you’re entrepreneurial, you’re much more likely to be adaptable to that whether that’s an opportunity you see in a business or whether it’s adapting your current businesses to change.

SAM: I think that comes back to what we talked about in stability, is that if you’re doing a business that’s becoming obsolete, you see that a long way off. Whereas if you’re working in a job that’s obsolete and becoming more obsolete you only really realize it when you lose a job and can’t get another one.

EMMA: Yeah and I think that’s particularly affected by age.

SAM: I mean age is a huge one. So I’ve been thinking about age quite a lot, that when you’re in a career the benefits of youth are you know enthusiasm, energy, the benefit of age is you know wisdom, experience and the contacts you’ve made. And as you get older you lose some of that energy and enthusiasm but you do build the wisdom and all that kind of stuff.

EMMA: So it works well together.

SAM: And then there’s at some point where benefits of your age no longer outweigh the benefits of youth.

EMMA: Yes.

SAM: And then your value in the marketplace starts dropping, so if you’re the CEO of a massive business, your age, you don’t need as much enthusiasm and youth because your wisdom and contacts are worth a lot. But if you’re in a normal job that most people are doing, your wisdom, contacts, and experience isn’t gonna keep being worth more and more over time.

EMMA: Yes, you will be replaced.

SAM: You will be replaced by someone younger who will be paid less than you and has got more energy and enthusiasm and willing to make up for your wisdom by just working harder and you’re gonna be made a bit obsolete. Whereas you don’t really get that as a self-employed person. I mean how many is quite popular in sort of motivational forums and stuff to have memes and posts showing the aged that certain famous business people got into business. And so stuff like, you know, KFC the guy who started that was already retired from one career. There’s all these people who start their business at a really late age and succeed really well. Whereas you don’t get many 65 year olds joining a grad scheme at a bank and ending up as a partner.

EMMA: It doesn’t work the other way around.

SAM: At some point there is a tipping point where age and a career don’t really go that well together. People get forced to retire don’t they? You might want to continue working at 70.

EMMA: That was the other thing I was gonna say, at what point do you want to stop working and if you’re in a career path you might not have a choice.

SAM: Yeah, a lot of people don’t get that choice.

EMMA: Whereas you choose when you retire, maybe you never retire. That’s that’s how you think of work.

SAM: Maybe you never retire, you will be working forever. I mean if I’m not enjoying working it means I need to find something else to work on.

EMMA: It’s not an invitation to stop working, just to change.

SAM: I mean there aren’t really any studies on life expectancy for people who keep working past 65. I tried to look into this stuff before but I do believe that retirement and doing nothing and going from working full-time for a job to sitting with your feet up all day watching TV is really not good for you. I don’t have much data to back that up, but it’s something I believe and that’s why I don’t plan on retiring because I think work to some extent is good for you.

EMMA: I think there was something at work about people retiring and health care continuing for the first couple of years because that’s the most high risk of them having a heart attack and being really ill, that’s what was discussed about work. I don’t know the stats behind it.

SAM: Yeah I did look into it on a previous, for a previous podcast and they were conflicting studies and I mean it came down to what sort of job you were working. If you’re in a high-risk job or a physical labour job, then actually retirements good for you. Or if you’re in a high-stress job, then retirements good for you. Whereas if you’re not in either of those and you’re in quite a healthy job, that’s you know not too stressful on your body or your mind, actually working is good for you. But again there needs to be some more research into that. But you know I believe it. So are you happier self-employed or do you wish you had a job again?

EMMA: No I mean when I first started to be a freelancer and really realized I wasn’t at work, I used to have nightmares about having to go back to work.

SAM: Yeah I imagine it’s a bit like cuz I get nightmares about missing an exam at university, you know I haven’t been at university in a decade or something. I still have that dream. I imagine you might get that about work.

EMMA: Yeah I do.

SAM: Sleeping through your 6 a.m. alarm clock or whatever, or getting in trouble from the boss.

EMMA: Or being forced to go back and just absolutely hating every minute.

SAM: Whatever you’re going, I think that’s a good point to end it on. You’ve heard it from the experts, someone who’s been both self employed and having a job, she much prefers the self-employed route.

EMMA: Yes.

SAM: Although there are benefits to having a job, I think the benefits of not having a job and doing stuff for yourself outweigh them. And on that note, goodbye.

EMMA: Bye.

SAM: Thanks as always for listening, if you have any feedback email me at hello@sampriestley.com If you would like to leave a review I would be forever appreciative. I will forever love you. Goodbye.