Just because you think you were making all the money for the boss and can make all the money yourself, is not a reason to go into business for yourself. First, you must get it out of your mind that it is bad for someone to make money from your labor/work. (I am going to use construction for most of the following examples, but any industry can apply to most of this.)

This is for several reasons. One, all businesses need employees who make them money, that is what makes the business. You are going to have to do the same thing. Find people to hire either as an employee or subcontractor that will make you money. You may still need to be someone that another company can make money from your work. For example, you may want to be a subcontractor to a larger business. You want them to make money off of your labor or they will not want you to do work for them! Business is about making money. If you have the idea that someone making money from your hard work is bad, then you are in trouble already.

Second, there is so much that goes into a business, people are so busy thinking negatively that their boss is “making all the money” and that you (employee) are “doing all the work”. In most cases, that is a huge myth.

Let’s start with what it takes to be the “guy who makes all the money off his employees while the employees do all the work”.

I am using the contracting industry as an example. Someone has to go out and get the business! Advertising, marketing, whatever it takes to get the business. Then they have to estimate the work and give a written proposal to the prospective customer. Then they have to plan the job, make sure the right people are doing the job and that the job is done on time and to the satisfaction of the customer. Then they have to collect the money, pay the taxes, pay the vendors, and pay the people who “do all the work”.

The business owner is also the one that has to take full responsibility for everything! If the “employees who do all the work” make a mistake, the employee is not responsible for paying for damages, the employee is not the one who loses the customer and the money, it is the business owner who suffers and pays for mistakes. The business owner needs to worry about client retention. Doing the advertising/marketing, bookkeeping, keeping up with insurances and laws, hiring and firing, running the business, covering employees and overhead even when business is slow, are just a few of the things that the owner does behind the scenes that most employees never realize until they try to start their own business!

So where do you start? You may say “oh well, I have business already, my friends and family have been telling me forever to go out and do this business”,  Well, let’s look at that. First of all, do you have enough friends/family to keep you working steady for the next 10 years? Also, if you have already been doing work for them “on the side”, you may have been doing the work at too low of a price, since it was side work and extra cash for you. Now you have overhead to worry about, plus making sure you make enough money to pay all your bills and taxes.

Taxes are now higher for you. Did you know that the 7.5% that has been taken out of your paycheck all these years for FICA has been matched by your employer? Yes, 7.5% has been taken out of your check and given to the Government, but the employer has also been paying 7.5% on your behalf as well, for a total of 15%. Now you are responsible for the whole 15%, plus you must pay the 7.5% on any employees you hire. Then there is unemployment insurance, and workers compensation and liability insurance that must be paid for. (NOTE: FICA tax may vary from year to year, this is an example of a particular year).

Now, are you going to run the business out of your house or an actual business location? Now you have more overhead. Do you have a business phone? You really should always separate business and personal with everything, right down to your phone.

So let’s begin with getting customers. Where are you going to get the customers? Do you have money for advertising? Oh that’s right, you have friends/family. Well, keep in mind, when they find out your prices are going to be as high as any other contractor they hire, you may not have as much business. Also, realistically, they cannot keep you busy forever. Marketing is a good way to get business. Joining a networking group, getting ahold of friends and family and asking them to help you get business, seeking out other contractors you can work for or with are just a few ways to start.

Don’t look at all contractors as your competition. They actually are not. It is amazing how much work you can get from your “competitors”. Some contractors only do certain work.   There is work that they either don’t have the resources to get done, or they turn it down because they don’t really want to do it. Maybe too small of jobs. So work a deal with them, you can sub for them and then they don’t have to turn those jobs down. Or maybe they will just refer those jobs to you. Remember to reciprocate. There will always be a job that you can’t or won’t do that you could sub to them or refer to them.

I am VERY pro small business!  I do not ever want to discourage people from starting a new business. However, if you jump into a new business without taking all factors into consideration, you may certainly fail.  If it is your dream to own a business, DO IT! Just make sure you are fully educated on all aspects of business.

More to come!  Keep following Step Up Referrals!  We are on Facebook, Twitter and our website is

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