Self-Employed vs. Business Owner – Which Mindset Will Empower You Most? by @artistsedge

by Debra Russell | Featured Contributor

Many WAHMs and solo-preneurs think of themselves as self-employed.  Why? Because that’s what the IRS calls you.  When you file a Schedule C and your income is 1099 and you are not incorporated or part of a partnership, then you are considered self-employed.

self-employed, business owner, e-mythBut I’m going to take a stand here and say, I don’t care what the IRS calls you.  If you think of yourself as self-employed you are undermining your success!

As I teach in my Business Management for the Creative Mind class, here is my definition of a person who is self-employed:

An employee with lousy pay, terrible benefits, and a maniac for a boss!

Instead, I recommend you think of yourself as a business owner.  It doesn’t matter if the IRS thinks of you that way.  It doesn’t matter if you’ve set up an LLC, S-Corp or whatever.  It doesn’t even matter if you’ve registered a dba!

I want you, in your mind, to think of yourself as the owner of your business.

There are several advantages to thinking of yourself this way:

  • Stop thinking of yourself as the product – you’re the business owner, the product is the product.

When you think of yourself as self-employed, then you are the product!  Your services, skills, and expertise becomes the product (even if you’re selling pies – they’re YOUR pies).

As a result, every job bid, every new concept, every marketing attempt becomes a measure and representation of your personal value.  And your self-esteem and self-worth is now inextricably linked to every failure and success in your business.

As a result, you may find yourself unwilling to take risks, ask for the job, charge what you’re worth – because if the answer is “No” that means you’re not worth it!

If you’re the business owner, and the product is the product, you will be free to test ideas, try things, experiment and discover what will work for your business.  Because every failure is just something that didn’t work.  It’s not a measure of your value.

  • You create a business that can be expanded beyond your own capacity to run by yourself

When you’re self-employed, you do the work yourself; its your employment.  When you’re a business owner, you can choose to hire other people to do the work – when you’re ready to.  Most self-employed people are limited in the growth of their income by what they themselves have the ability, time and energy to accomplish.

Business Owners know that they can hire people with skills they don’t have (either as independent contractors or employees) and exponentially expand the hours in the day by increasing the number of people working for them.

  • You hold yourself in higher esteem

It’s fascinating to me, but I see it every day in my business coaching practice.  You will stand up straighter and hold your chin up higher when you say, “I’m a business owner.”  Try it out!  Tell me if I’m wrong!

Now go back and say, “I’m self-employed.”  See?  Feel the slouch?

  • You can begin to build business systems

When you think of yourself as self-employed, you’re basically an employee.  You show up, you do the work.  Period.  You likely don’t think about questions like:

  • Is this the best way to approach this?
  •  Is there a faster, more efficient, effective way to do this?
  •  How can I design this activity so someone else can do this job as well, or better?

As Michael Gerber says in The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It (an absolute MUST READ), you must work on your business, not just in your business.

That concept has no meaning for a self-employed person. It only makes sense if you think as the business owner when it comes to your business.

Understanding this can absolutely set you free – expand your time, improve your efficiency and effectiveness, make your results duplicatable and therefore easier to sell, and so MUCH easier to delegate!

  • You build big picture goals and long term plans, strategies and tactics (as opposed to living gig-to-gig)

entrepreneur, self-employed, business, success
Hint: Take the right…

When you’re self-employed, you’re just looking for employment.  What’s the next job, the next gig, the next paycheck.  When you’re a business owner, you think about where your business will be in 1 year/3 years/5 years.  You begin to make plans for how to take your business to those goals.  What are the marketing methods, strategies and tactics?  Where do you need to expand your capabilities?

When you’re self-employed, you might think about ways to expand your own skill set, but as a business owner, you can expand beyond your skill set because you can bring in other people to do the things you don’t want to do, are not trained to do (and don’t want to learn) or aren’t the best use of your time – as the business owner…

Resolve Today – You Are a Business Owner

It’s amazing, this simple change in mindset will make a profound difference in how you think about and do everything in your business.

Are you willing to accept this challenge?  Please tell me in the comments how it affects you!

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21 Replies to “Self-Employed vs. Business Owner – Which Mindset Will Empower You Most? by @artistsedge”

  1. Francis Sabutey

    So far so good. The best article I have read on the topic. It teaches that being self-employed is a mindset and transitioning to a business owner means consciously changing that mindset with a business owner mindset. Once there is an internal adjustment and mindset change, the person will begin to make external changes and adjustment that will revolutionized and transform the business to become an automated, money making machine that runs independent of the owner. That starts with changing our self-image. Thanks a million for sharing.

    1. Debra Russell

      Exactly! And it requires being willing to let go a bit. (thought – if it runs without me, what will I do with myself?!?)

      I think people also get overwhelmed with the idea of running a business – I know how to …X…., but I don’t know how to run a business! That’s where bringing in a great coach to help you set up those systems, manage the discomfort of change, and proceed with both caution and courage, comes in.

  2. Gary Gruber

    Thanks! I believe that regardless how you think of yourself, whether self-employed or as a business owner the bottom line is the bottom line. And, if you have more than enough income to all the things you want to do, why does it matter what you call yourself? I don’t care what the IRS calls me either although I wish they wouldn’t take 30% of earnings as federal tax and then there’s state income tax, etc, etc. You can create some tax-sheltered income to withdraw later as needed and there are other financial tools and resources to help the self-employed business owner such as not owning the airplane, the boat or the ranch.
    Just saying,,,,..

    1. Debra Russell

      Actually = if you run your business like a business rather than a self=employed person, you can significantly reduce your taxes. But that’s not why I recommend it. I’ve seen this simple shift make a world of difference in clients’ businesses and lives.
      Thanks for your comments here and on Twitter!

  3. Jennifer Bourn

    I love that you’re bringing this up! A business owner mindset is so much more powerful than just being self-employed! Too many people don’t give themselves enough credit!

    1. Debra Russell

      Too right, Jennifer! And when you don’t, you do damage to your business and your self-esteem!

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  5. Family Travels on a Budget

    WOW! Great post. I call myself a business owner, but I think of myself as self-employed. Time to be business owner in both realms — and stop letting the criticism and questions cause me to doubt my decision. That same criticism can improve my business. Thanks for the pep talk!

    1. Debra Russell[ Post Author ]

      You bet! And I also have several articles on my website about how to manage that criticism and doubt (both internal and external!)

  6. Mindy Crary

    Great reminder…in fact, after being a business owner for 16 years, this is worth repeating regularly, because it is so easy to fall into that self-employed trap as you grow and change!

    1. Debra Russell[ Post Author ]

      Every December, I step out of the doing of my business to assess how my business is doing. And then I set goals for the coming year. It’s critical for the health of your business and your own sanity to get the big picture and hold yourself as the owner of that.

  7. Amy Kinnaird

    That mindset piece of running the business is critical to feeling and being successful. Otherwise the business just runs you. Women (including me) often find it hard to turn things over to someone else; there is something about feeling like we can do it better/faster/easier/whatever ourselves. Take control by letting go!

    Thanks for you nicely this was stated.

    1. Debra Russell[ Post Author ]

      Exactly Amy! One of the most important questions a business owner can ask herself is, “Is this the best use of my time?” Even if you can do it better/faster/easier, it’s not necessarily best for your business that you are doing it!

  8. Lisa Wroble

    Thank you, Debra! I’ve been stalled in growing my business and knew I needed a shift in thinking. This simple yet sound advice did the trick. How empowering!

    With gratitude,

    1. Debra Russell[ Post Author ]

      I’m thrilled to hear that, Lisa! Let me know if I can help you in any way.

  9. Corina Ramos

    Hello Debra,

    You’re so right…we have to hold ourselves in a high regard when it comes to identifying ourselves. Like we have to talk the talk and walk the walk.

    My blog is my business so I definitely consider myself a business owner.

    Great advice Debra. Enjoy the rest of your week!

    1. Debra Russell[ Post Author ]

      Excellent Corina! When your business is a blog, it’s even more important to know your numbers. It’s the best way to gauge how you’re doing!

  10. Sydni Craig-Hart

    Great post Debra! I see this mindset you mention all the time, especially with women entrepreneurs.

    It is an establish fact that if you respect your business and treat it like a business (instead of an expensive, time consuming hobby), you will be happier, more successful and do better work.

    I always tell my clients, if you aren’t willing to invest in yourself and your work (even if that investment is putting effort into a mindset shift), you can’t expect anyone else to invest in you!

    Thanks for sharing your thoughts on this topic!

    1. Debra Russell[ Post Author ]

      Glad you enjoyed it Sydni! I see it in both men and women, particularly in the Arts. Mindset is so important. I say, “All problems/obstacles are internal obstacles. Therefore all solutions must begin as internal solutions.”

  11. Sarah Arrow

    Debra, this is sound advice for any business owner. I could feel the slouch come as I said “I’m self employed”. I love how practical this advice is for business owners who are new to the business, as well as biz veterans.
    My mantra for the next week will be “I am not the product…”, it will be hard for me to overcome this as the only thing that truly makes our businesses different is ourselves.

    1. Debra Russell[ Post Author ]

      That’s great Sarah! Can I recommend that your mantra be stated in positive terms (the brain doesn’t understand negative commands and will hear instead – “I am the product”!

      Instead, what if your mantra is “I am a proud business owner.”

      Or – I make my business special and I am more than my business…

      Let me know how that works for you!

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