I have been contemplating the business of some of our Startup Club members and I thought it was high time that we drew a line in the sand and defined who is self employed and who is a business owner; and obviously figure out the difference between the two.
A self employed person is exactly that; they are employed by themselves. Typically they earn the same as an employee, but often work more hours. They probably work more hours because in addition to their job they are also the administrator, bookkeeper, receptionist, marketer and salesperson. The self employed usually charge by the hour similar to employees.
Self employed charge more than the employed are paid, but they have overheads to manage. Self employed people usually don't make losses because their overheads are usually fairly low. The self employed seldom have staff, either because they don't need them or they are such perfectionists that no one else can do it as good as they can. When the self employed retire, they don't sell their business, they simply tell their customers they are no longer working.
A business owner; owns a business and like owning shares in the market they are subject to the highs and lows of any business. Business owners can either lose all their money on a venture, or they can realise massive growth quickly. Business owners don't necessarily have to work in the business, they may have worked in the business initially but the business owner has build a system that allows the business to survive without the business owner. This is the key differentiator, to be considered as owning a business, you must be able to walk away from it or sell it to someone else. If the business cannot survive without you, then you are self employed (or egotisical).
I hope this clarifies things a little for you. I am not here to tell you which one is better than the other. Like all things in life, there are pros and cons to each. It's up to you to figure out which hat you want to wear based on your personality and your goals.
Have a good long weekend gang,
Chris Hooper
(Innovate or Die)