Most businesses fail… but most jobs succeed

I posted early on in No Job? No Way! the difference between owning your own business and owning your own job:

    When you own a business, the income comes in every day regardless of whether or not you go to work
    When you own a job, you can’t be fired or have your hours cut, but you have to come in to work if you want to get paid.

So restaurant owners who no longer come in to cook, bloggers who have monetized old blog posts, and owners of self-serve car washes own their own businesses. Hairdressers, plumbers, and artists own their own job.

A gedankenexperiment

So imagine, for a moment, that you want to play God, and it is your job to design a life form that will run around and survive on its own.

As any Intelligent Design proponent will tell you, this is a significant challenge. You have to make a respiratory system, and a circulatory system, and a muscular system, and a sensory system. And all of those have to work together just right or the whole thing fails.

A business is like that. Your sales force has to be good, but not too good — if it’s 10x better than your manufacturing department, then you’ll go under from unfilled orders and angry disappointed customers. But if manufacturing is 10x better than your sales force, you’ll go under from inventory costs that are too high. Your accounting has to be good enough to track down customers that don’t pay, and to manage your cash flow so you don’t run out when the bills come due. And if something unexpected comes up, you need to adapt before you die. And a business has to do all of this while you’re on a beach in Tahiti.

Jobs are way easier

Owning your own job is more like creating a puppet or a robot or a computer program. It can do a lot of the same stuff as an animal, but it can’t do it without you. You’re there pulling the strings. So when sales are going too fast, you shift your effort to manufacturing. If accounting is falling behind, you put in extra time there. And if something unexpected comes up, you have to come up with a response.

Obviously puppeteering and robotics are skills in their own right, and picking them up is non-trivial. But it’s way easier than creating life.

95% of businesses fail in the first 5 years

Of course 95% of businesses fail in their first 5 years. You’re going to fail the first several times you attempt to create your organism, because your systems won’t be quite properly balanced or adaptable. And the only way to know that is to try it, send it out into the world, and see what happens. Then try again.

BUT…

Although I don’t have any hard statistics on this, I would bet good money that more than 5% of own-your-own jobs succeed. I would bet that more than 50% of jobs succeed. I would guess that a significant majority succeed for as long as their owners want them to.

Trying to start a business is a process and a risk. But starting your own job is a much easier project.