You’re Self-employed EVEN if You Work for Someone Else

Corn Dog


in Career

You report to work everyday as required by the company. You work on assignments and projects given to you by your boss or by other managers in the company. Your paycheck comes from your employer, and your retirement plan and benefits package are handled by them as well.

You’re an employee, right?

Not necessarily!

You’re working for your company to support yourself and your goals right now. But your dreams, ambitions and goals are your own, and like the world we live in, they will change as time goes on.

This isn’t the Post World War II era anymore, and the job-for-life phenomenon ended long ago. Today, not only are job changes frequent, but so are career changes. We’re all responsible for managing those changes and all that goes with them.

Translated, even though you may work for someone else, you’re really self-employed! Over the course of your working life, you’ll be required to make all kinds of decisions about training and marketing yourself, taking different job and career paths, managing your money and a host of decisions that have far more in common with the self employed than they do with salaried employees.

This requires thinking in strategic terms, beyond the job and beyond the moment.

Career advancement

We might be tempted to believe that one of our employers’ basic functions is to provide us a career path, a ladder that we can climb steadily and faithfully so that we’re able to increase our earnings and become all that we’re meant to be. For better or worse, that isn’t the case.

An employer will only advance us as far as it benefits the company. Complicating this is the fact that some jobs are static—customer service, administration and clerical jobs—no matter how well you do the job you can only earn so much money. Other jobs are relatively static; for example, an accountant working for a computer software company is only going to go so far, and it probably won’t be anywhere near the corner office.

In reality, how far we advance in both position and income depends mostly on us and that sounds eerily close to self employment. Think of yourself as self-employed and always be doing the following:

  1. Constantly improving jobs skills, even if it means doing so on your own time and at your own expense. They’re your skills, not the company’s!
  2. Taking on major projects that will raise your value to the company (and also increase your skills and abilities)
  3. Positioning yourself as an expert, even apart from your company
  4. Letting your company know that you want to be advanced by both income and position as circumstances warrant. In sales, this is referred to as “asking for the order”

We can never afford to be casual, assuming that the company knows best and will take care of us in due time. Like a business owner, we need to take action to make things happen.

Income security

Synergistic meeting fodder aside, you and your company are not “one”. That fact becomes painfully apparent upon receipt of a pink slip. No matter how long we’ve been with them, or how valuable we may be at the moment, all employment is subject to company financial condition. Should that go south, all bets are off.

Ultimately, it’s we who are responsible for our income security, not our employers. We do this by accepting that in reality we actually work for ourselves, even though we may be employed by someone else. How do we best manage that?

Think of your coworkers as you customers. Should your company cut you loose, your coworkers may be your best contacts, not only for new employment opportunities, but also as references. This will be all the more important if your employment terminates over less than favorable circumstances.

Promote yourself. Make an effort to get noticed (and stay noticed) by competing employers. Not only can this raise your “street value”, but your employer may recognize what’s obvious to its competitors and reward you accordingly.

Maintain networking connections. Do this on an ongoing basis even when it doesn’t seem necessary. Keep your contacts up to date, including and especially with former coworkers who have landed at competing employers

Diversify income sources. This is just as important to an employee as it is to a business owner, and may be THE single most important step to securing our incomes. Always be on the look out for- and ready to pursue- additional income streams. This can include part time work, contracting assignments or developing a side business.

Working for a company doesn’t mean you’re taking an oath of dependence on them. Give your company your best effort at work, but pursue your own goals off hours.

Financial security and planning

Just because you have a steady paycheck and a retirement plan at work doesn’t mean your that fiscal house is in order.

If you were running your own business—which you actually are, except you may only have one client at the moment—you’d need to make sure that you would remain financially liquid in a variety of circumstances.

This would require that you maintain at least three viable savings vehicles:

  • A cushion of three to six months living expenses to cover either a rash of expenses or a short term disruption of income
  • A stash of unrestricted funds to have available to put into high percentage investments, business ventures or other income opportunities as they arise
  • Tax sheltered savings, such as your company sponsored plan, for longer term retirement planning

In the event that you lose your job, all of the financial concerns attendant to self-employment could suddenly fall on your shoulders. Are you ready?

Personal responsibility

If you were running your own business, you’d be facing financial and business pressures typically unknown by salaried employees, which is a big reason why everyone isn’t self-employed.

There are many things you don’t have to worry about when you have a steady paycheck, and that might breed certain behaviors that aren’t exactly conducive to survival in a less structured financial situation. Since we should always be keenly aware that just such a situation could be right around the corner there are certain practices we should be avoiding:

  1. Thinking more of ourselves than we should–none of us are irreplaceable
  2. Failing to be sensitive to the operating and survival issues of our employers
  3. Going into debt under the assumption that the cash flow to service it will always be there
  4. Putting all of your eggs in one basket, be it a career or an investment
  5. Failing to concern ourselves with contingency planning under the assumption that “my company takes care of that”; it may require having independent life insurance, disability coverage and other plans which won’t disappear with the loss of a job
  6. Mistreating or dealing less than fairly with people in both our professional and non-business dealings. Everyone is a potential client, personal reference or business partner!

    A steady paycheck still affords a certain amount of insulation, but as we’re seeing in the past few years, the walls of that cocoon are getting thinner all the time. The lines between salaried employment and self-employment are becoming more blurred as employees have greater responsibility and less job security than at any time in a couple of generations.

    Recognizing that you’re really self-employed is one of the best strategies to keeping your finances and your life on track in a business environment that’s changing all the time.

    Still think you’re an “employee” because you have a steady paycheck? Or are you really closer to being self-employed than you generally admit to yourself?

    Kevin At Out of Your RutThis post is from FiscalGeek staff writer: Kevin Mercadante. I’m very excited to have him contributing to the site. You can find out more about him at his own blog

    ( Photo courtesy of whoohoo120 )

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Budgeting in the Fun Stuff 2010/03/30 at 11:29 am

Great points! I think it boils down to “nobody cares as much about your money as you do”. Developing new skills and networking are never futile things to do.

Case in point would be my husband. He’s a teacher and wouldn’t need to develop new skills to continue teaching, but he wanted options. He’s finishing up graduate school this summer, which will give him many more opportunities for advancement.

[email protected] 2010/03/30 at 4:20 pm

Yeah, it’s really about seeing your career not as a given, but as a dynamic process. It could also mean preparing yourself for something better while your employer is stuck in neutral. So often we’re growing and the company isn’t. If you’re too much of a “company man” you could get stuck either in a company that’s stagnating, or even behind a boss who’s not going anywhere.

It’s a good idea to think of yourelf as self-employed, but with single client–subject to change. Change is where we all need to have an entrepreneurial streek!
.-= [email protected]´s last blog ..7 Reasons Everyone Needs to Have a Blog =-.

Robert Muir 2010/03/30 at 5:27 pm

Outstanding post! I would add #7 as follows:

7. Treating your job as a J.O.B. In other words, watching the clock and thinking that “work” is over at 5pm. Spending night after night in front of the PS3 or idiot box. Thinking that as long as you can drag yourself into “work” and be semi-alert at your desk at 9am, then you’re doing all you need to do to succeed.

The day you switch your world view to that of an entrepreneur, is the day you finally take charge of your career an start directing it. You’re either at the controls, or you’re a mere passenger being driven by the whims of others. Are you free or a puppet?

If you found this post interesting and want to know more, then read two outstanding recent books that expand on the concepts tremendously:

Linchpin by Seth Godin pierces the heart of this post by describing how and why you should think of yourself as self-employed.

Crush It! by Gary Vaynerchuck describes how to succeed in the new self-employee paradigm by branding yourself and using new media.

Both fascinating works.

.-= Robert Muir´s last blog ..New update for XP Mode allows for non-VT PCs =-.

[email protected] 2010/03/31 at 5:08 am

Bob – AMEN on all counts! Very true, that zombie like state that we often bring to the job benefits no one, least of all ourselves! We can raise our value in the company and even outside of it, by bringing fresh ideas to the job.

One caveate here though, if you’re with a company that doesn’t embrace new ideas, it’s time to look elsewhere or even to direct self-employment. Maybe not right now, but prepare for it. You’ll die on the vine if your in a stagnant organization–that’s often how people become zombies in the first place.
.-= [email protected]´s last blog ..Payoff Your Credit Cards ““ But Set the Stage FIRST =-.

LeanLifeCoach 2010/03/30 at 8:21 pm

Interesting perspective. I’ve had family and friends criticize my view that there is no such thing as job security for years but its true. Only you have control over your destiny!
.-= LeanLifeCoach´s last blog ..Financial Intervention With Aging Parents =-.

[email protected] 2010/03/31 at 5:10 am

LLC – That’s the bedrock of all assumptions here, that there’s no job security. Some want to pretend that it’s still the 1950s, and we still have job security, the company will take care of us, the company will promote us, etc. But we have to approach the job as entrepreneurs, looking for opportunity, not security.

Capitalized opportunity is often the best security anyway!
.-= [email protected]´s last blog ..Payoff Your Credit Cards ““ But Set the Stage FIRST =-.

Monevator 2010/03/31 at 5:06 am

Super article – a lot of people have a bizarrely trusting attitude towards their employer.

Be good, even great at work – but you best look out for yourself, because nobody else is.
.-= Monevator´s last blog ..Ask the Chancellors: The verdict =-.

[email protected] 2010/03/31 at 5:11 am

Is it trust, or is it inertia?
.-= [email protected]´s last blog ..Payoff Your Credit Cards ““ But Set the Stage FIRST =-.

Ken 2010/04/01 at 3:41 am

Great points here. To be productive in today’s job market you need to be continually improving and adding new skills. I have been guilty of ‘relying on my job.’ In the last 6 months I have had 2 pay cuts and I am starting second job today. It pays to have an extra credential or other skill because things are fragile in today’s market. Great post!

[email protected] 2010/04/01 at 5:08 am

Ken, well done! You’re reacting to a negative situation in a very positive way. We’re only victims to the degree that we allow it to happen. The foray into a second job may produce even better opportunities that you hadn’t thought of.

Spedie 2010/04/01 at 8:33 am

This is an excellent article.

You know what? I’ve never, in my whole life, been promoted. But, my income has doubled in the last not quite 4 years. I started at about $47K per year and now make over twice that.

How did I do it? I gained new skills and left my old companies behind when there were no promotion opportunities.

Ultimately, I am in charge of my own destiny. I’ve known this for a long, long time.

Always be prepared to modify your plan.

[email protected] 2010/04/01 at 4:35 pm

Spedie – Good story! Moral of the story: if an employer won’t promote you, you need to promote yourself!

That really captures the whole self-employed aspect of being an employee. WE have to be ready to take control and take action, not sit tight waiting for the boss to say it’s OK. We can either move to another employer who might place a higher value on our services, or consider a side business as a way of fully employing our talents.

But always, the action has to be driven by ability–and what ever it takes to develop it. Gaining new skills, as you said Spedie, it the key to it all.

Darren 2010/04/02 at 12:42 pm

Great article. I agree with the first commenter (Budgeting in the Fun Stuff) that nobody cares about your money than you do. As such, you should think about working harder on yourself than for your employer.

And regarding job security, I believe it was General Douglas MacArthur who said, “Security lies in our ability to produce.”

[email protected] 2010/04/02 at 2:09 pm

Darren – re: MacArthurs comment, I’d say that matters no less on an individual basis than on a national level.

Tim 2010/04/13 at 6:51 pm

Gaining new skills is really extremely important, not only for your career, but for you as a person. It would give you a feeling of accomplishment which no amount of money can give. And whenever a person stop his formal education when he graduates from college, it is only through the new skills and professional wisdom that he improves his knowledge.

[email protected] 2010/04/13 at 7:18 pm

Tim – So true! A career has to be thought of as a dynamic PROCESS, not a job or an appointment. That’s part of the entrepreneurial side of it, being able to look down the road and have a vision for where you want to go with it. That takes constant education, experience and new skills.

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