I hired a landscaping contractor to do my yard recently. As is usually the case, the person I talked to before the work started, Bob, didn’t do the work himself. On the agreed-upon date, he sent a team of his crew to do the job. Bob owns the business. He pockets the difference between what I paid him and what he paid his crew.
A father-and-son pair led the crew. When I spoke to the son, he told me he and his dad used to have their own landscaping business. Now they just work for Bob. That got me thinking. Why work for someone else when you can have your own business? I read somewhere every millennial should have a side business. Didn’t the book The Millionaire Next Door say these unglamorous businesses like landscaping are fertile grounds for producing millionaires?
The son told me they are actually better off working for Bob. When they had their own business, they had to go out and bid on jobs. As we homeowners are told, always get at least three bids, that means on average two out of three times they don’t get the job. All the time spent on coordinating the schedules, traveling to and from prospects and preparing the estimates end up wasted.
Now whenever Bob sends them out, there is an actual job. They get onto it right away. They always get paid. If Bob doesn’t have a job for them, they just do something else. They are always productive. They can also sign up with another “Bob” and get more jobs. In a way these Bob’s become their commissioned sales force.
In the previous post The Biggest Rock In Financial Success, I mentioned Apple CEO Tim Cook. Tim Cook wasn’t a founder of Apple. According to Wikipedia, he joined Apple when he was 38 as a senior vice president, a well paid employee, but still an employee. Before that, he worked at IBM for 12 years and other companies for a few more years, again as an employee. Tim Cook didn’t open his own business. He worked for other people’s businesses. He made his fortune from being a good employee.
I too made most of my money as an employee. It’s actually a great arrangement. Whether the business is successful, I still get paid. I retain the knowledge and experience, which makes me more valuable. It’s hard for me to find someone having a problem worth tens of thousands of dollars but when the company’s products affect millions of people, it’s easy for me to make them better off by a fraction of a penny each. The employer provides the employees a playground, problems large enough worth solving, and opportunities to apply their skills at scale.
It’s not bad working for someone else. It’s not a grind, a rat race, or slavery. As the father-and-son who worked on my landscaping project showed, you can be financially better off working for someone else than having your own business. Don’t believe it when someone says having your own business is the holy grail.
Say No To Management Fees
If an advisor is charging you a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice: Find Advice-Only.