No Job? No Way!

As I explained in my previous post, I was inspired on my current mission by a strange notion that began to penetrate my consciousness when I was about 18:

You don’t have to have a job

This is the strangest and most difficult concept I’ll probably ever post on this website, so I’d like to take some time to examine the alternatives available to you.

Let’s start at the most basic, just so we’re all coming from the same place.  What is the purpose of a job?

Are we all agreed that you keep going to your job in order to make money? That is, you put up with an idiot boss, or noxious smells and noisy machinery, or whatever other trial you have… primarily for the purposes of bringing home a paycheck?  (If, in point of fact, you find your job happy and fulfilling, without a care in the world, by all means feel free to stop reading this and go back to browsing online comics or whatever.)

So an alternative to a job would be anything else that gets you money.  The following discussion – other ways to make money – is based on Robert Kiyosaki’s Cashflow Quadrant

Employee (E-Quadrant): Making money with your time

Odds are pretty good that you fall into this category (and at the very least, that you’re familiar with the concept) — people in this quadrant monetize their skills by finding an employer who will pay for them, usually at an hourly rate plus benefits.  Because employees are paid for their time, their income is limited by the amount of time they can work.  I expect you understand this quadrant well enough, so I won’t say much except to remember that this is only one of four possible monetization methods.

Pros Cons
  • Little planning necessary
  • Paycheck is steady
  • Paycheck is guaranteed until you get downsized
  • Benefits usually come with job
  • Paycheck is all-or-nothing
  • If you want more money, you have to work more hours
  • You have little control over the size of your paycheck

Self-employed (S-Quadrant): Making money with your time and effort

A smaller but significant number of people fall into this quadrant: most financial advisors, hairdressers, and small business owners.  People in this quadrant monetize their skills by finding many people who will pay for them, again usually at an hourly rate.  The higher hourly rate they receive is balanced by the higher hourly expenses they have to pay, among which the most significant are taxes.  Unlike employees, they are not at the mercy of one person for their pay — if one person gets pissed off and swears never to pay them again, they still have their other clients.  They also have a different pay structure: they have the potential for lower pay in months when business is bad, but have the potential for higher pay in months when business is good.  Self-employeds are also paid for their time, and their income is therefore also limited by the amount of time they can work.

Pros Cons
  • Monetary rewards when business goes well
  • There’s room for the paycheck to be reduced in bad business climates without going away entirely.
  • You can’t be fired
  • Greater control over schedule, projects, etc.
  • Can often be set up and making money quickly
  • Can be a good transition into owning a business
  • Paycheck is reduced when business does not go well
  • You have to do all the strategic planning for the business
  • If you want more money, you have to work more time
  • You have to pay for your own benefits.

Business Owner (B-Quadrant): making money with your effort and ideas

Few enough people are in this quadrant that most of us don’t even think of it as a possible monetization method.  Most people when they think of “business owners” imagine Bill Gates or Donald Trump, and think that a business has to be a publicly-offered, fortune 500 company to count.  But you probably have many business owners in your town: the owners of a mom-and-pop bakery who can no longer come to the bakery every day, and have to leave most of the work to their employees; or that guy down the road who does “…something with the internet, I’m not exactly sure…”

The crucial part of being in the B-quadrant instead of the S-quadrant is not the size of your company or the number of employees or the market capitalization.  The only thing required to be a business owner is that your business works without you being present.  When you’re self-employed, you can take all the vacations you want…. but you only get paid when you, personally, are in the office working.  A business owner gets paid vacations, because the business keeps working when they aren’t there.

One way to do this, obviously, is to have employees doing work for you while you’re gone. The mom-and-pop bakery continues to run even when Pop passes on or when Mom’s arthritis keeps her in bed all day.  Another way is to set up an automated business that doesn’t need anybody running it.  Self-service laundromats or car washes are old-fashioned examples, but the modern method is to set up a website that provides some service — offering good information, or selling products to people who need them, or helping customers connect to service providers and vice-versa — and make sure that the website can do that without help.  In this way the business continues working even while the owner is on a Caribbean beach.

Because business owners aren’t being paid by the hour, they can increase their income without increasing the numbers of hours they work: for example, Mom & Pop could open another bakery across town, and — after the huge initial investment of getting that bakery set up — their income would effectively be doubled while they still stay home most days.  In this case, their income is not limited by the number of hours they can work (which is remarkably few anymore) but by the number of bakeries they can open — which is significantly higher.

Pros Cons
  • Paid vacations!
  • Income can be increased without increasing work hours
  • A single investment of time can often result in a permanent increase in income
  • Potential for very high income
  • Monetary rewards when business goes well
  • There’s room for the paycheck to be reduced in bad business climates without going away entirely.
  • You can’t be fired
  • Greater control over schedule, projects, etc.
  • Income is not immediate — payoff may be years down the road
  • Paycheck is reduced when business does not go well
  • You have to do all the strategic planning for the business
  • You have to pay for your own benefits.
  • Takes a lot of planning, training, and work

Investor (I-Quadrant): making money with your money

This monetization method is less accessible to many of us because we haven’t got any money to speak of – and so making money off of it is rather difficult. But if you have some small sum it’s worth looking at.

Most of us, when we think of investing, think of the stock market. (I once had a conversation with an accomplished and wealthy real estate investor that went awry for 45 minutes or so because he thought of stocks and bonds when I asked about “investing”.) And stocks and bonds are indeed a way to make money off of money. But any set-up that allows you to make money just for having money to spare qualifies as investing:

  • Real estate investors use their money to pay the upfront costs associated with obtaining land, and receive payment on that land by renting it to those who can’t afford to buy (houses, apartments, office buildings, malls, etc).
  • Venture capitalists use their money to help aspiring entrepreneurs start a business for which they would otherwise not have the money, and receive payments in the form of a paid-back loan or a share of the profits.
  • My favorite investment is a story (anyone know where I read this?) of a kid who had a few hundred dollars and wanted to buy a new set of golf clubs.  His dad insisted that he could not use the money to buy golf clubs, but instead must buy an asset that would pay for the golf clubs.  The kid was angry and sulked for a few days…. And then bought a vending machine and put it up in waiting room of his doctor’s office where he’d once wished he could buy a Snicker’s bar.  Before long he had his new golf clubs and an income-producing asset.  He said to his father, “I understand now what you were trying to do.  You wanted me to have my golf clubs and my money.”

That concept, to have your toys and your money too, is the core of investing.  You use your money to buy something that makes money… whether it’s a share of Coca-cola, a house with tenants, or a vending machine.

Pros Cons
  • Paid vacations!
  • Income can be increased without increasing work hours
  • A single investment of time can often result in a permanent increase in income
  • Potential for very high income
  • Monetary rewards when business goes well
  • There’s room for the paycheck to be reduced in bad business climates without going away entirely.
  • You can’t be fired
  • Greater control over schedule, projects, etc.
  • High upfront capital requirements
  • Takes a lot of planning, training, and work
  • Income is often not immediate — payoff may be years down the road
  • Paycheck is reduced when business does not go well
  • You have to do all the strategic planning for the business
  • You have to pay for your own benefits.

This isn’t meant to imply that you mustn’t have a job (Although Steve Pavlina would tell you differently, see 10 Reasons You Should Never Get A Job); I’m a geek, so I know plenty of people who are well-suited to employment: they don’t have the broad base of social, analytical, intuitive, and creative skills necessary for running a business or managing real estate, but they do have the capability of handling complex and difficult calculations that most people can’t.  They make excellent money doing something they enjoy, and they are relatively free agents because their skills are so rare and valuable.

But you do have other choices.  There are ways to get money besides having a job.  So think about your monetization plan.  Is a job what you want?

Resources for Further Reading
Most Businesses Fail… But Most Jobs Succeed
Define: Entrepreneur

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