If you think that starting your own business means you won’t have a boss, you’ll work on your own terms and earn money effortlessly – read this article carefully, twice, at least!
Popular yet simple question: why do people set up companies? If the first thing that came to your mind is “for money” or “to do what they love” – this article will interest you. In addition, if you already have a business or are thinking about starting one – it is a must-read.
“I want to do what I love“
If you love to do something, setting up a company where you intend to do it is the WORST idea! Why? Because after that you will stop doing what you love!
Let’s dive into it…
A man who loves fashion design and sets up a boutique must write a business plan, fill out a bank loan application, hire people, calculate taxes, pay salaries, prepare documents, reply to emails… And we haven’t even started gaining customers yet! In all this, there is not much time for clothes design.
If you want to design clothes … hire someone who will pay you for designing clothes. You will come to work at 9 am, you will spend the whole day doing what you love, you will leave at 5 pm without worries. So much for the first myth of entrepreneurship. But we’re just getting started…
Getting away from the boss
“I don’t want to have a boss! The one I have is an asshole, he doesn’t let me go on vacation and makes me work overtime. I will be my own boss! ” I have to say it: when you work for yourself, your boss is … a client. And he doesn’t care if you want to go on vacation. Working overtime? You agreed on a specific equivalent for the project, you should know how much time it will take you. Can’t you count it? The customer doesn’t care. You broke your arm and you can’t design clothes? Who cares?! For sure not the customer.
Meanwhile, a full-time employee has paid vacation, paid sick leave and paid overtime. I know you question your employment now, life isn’t perfect.
You make a lot of money on your own?
“I have the same earings and much more work to do all the time! I will earn as much as I want in my own business! ” I’m sorry but… NO. If your speciality is designing clothes, you’ll earn … less. Why? Let’s talk about mathematics.
Let’s assume that during eight hours you design 10 dresses. The time you spend on work is 100% (it does not have to be eight hours – we all know that you are taking breaks). You are an expert, so I also set your efficiency to 100% – it can’t be done better and faster. Your employer sells dresses for PLN 100 each. You have generated PLN 1,000 in income, 20% of it (PLN 200) is in your pocket. The employer claims that the remaining money went to acquiring customers. A specialist spends the whole day (again: 100% of the time) selling what you have designed (and because he is a specialist, his effectiveness is 100%). A rip-off, right? You will earn much more on your own?! Let’s count.
For simplicity, we divide your time into three parts. You spend 20% designing dresses with 100% efficiency. This gives 2 dresses of PLN 100 each (I absolutely skip the fact that as a less known company you would have to lower the price to make your customers trust you). You spend the remaining 80% of the time looking for clients (40%) and doing all administrative tasks (40%). But because you are not good at it, your effectiveness is 50% (which is extremely optimistic, right?).
The grand finale of calculations. A seller working 100% of the time with 100% efficiency sells 10 dresses a day. You, selling 40% of the time with 50% efficiency, will sell … two dresses. You earn the same amount, but you do things you don’t love 80% of the day. Congratulations!
Don’t forget about the security of these PLN 200. Eight out of ten new businesses fail. I don’t know many jobs where you have an 80% chance of getting fired… Did I miss something?
Does this mean that you should not start your own business?
Absolutely not. But before you do that, answer me one very important question. What is the ultimate goal of the company’s existence?
Most of the entrepreneurs I and infuture.fashion team asked, start their own company to “make money” or “free themselves from the boss.” But if you still think of the company as a place where (comparing to a full-time job) the life is better – think again.
The ultimate goal of the company’s existence is to grow. You need to build scaling procedures from the very beginning. It doesn’t feel lovely but business is not a romance.