I once read a document which featured interesting statistics like the following:
“About three quarters of all U.S. business firms have no payroll. Most are self-employed persons operating unincorporated businesses, and may or may not be the owner’s principal source of income… Since 1997, however, non employers have grown faster than employer firms.” – U.S. Census Bureau’s website
Those numbers relate to the USA. But (at the risk of stating the obvious), I’m based in Africa, shuttling mainly between Nigeria’s Lagos and Benin Republic’s Cotonou, as a Location Independent Multipreneur.
For most of the past decade, I’ve worked – as a service provider – with many small and medium business owners.
I do not have statistics matching those of the USA, for my country. But I do have the benefit of years of exposure to these businesses, to make some informed observations.
Example: Just like their North American counterparts, many firms out here do not have payrolls, and the self-employed also mostly operate unincorporated ventures. Indeed, some do not even have registered business names.
But that’s not the point I wish to make.
Why Spend Money On Things You Don’t Need?
I’m more concerned about the reasoning behind the decision making by some of the self-employed, regarding hiring of employees, and spending on overheads.
For instance, I’ve provided services to independent consultants (including experts-who-speak) who maintain rented offices (and staff), that rarely get visited by prospects or clients.
And they do this year in, year out, while paying all kinds of bills – in addition to salaries – monthly.
My enquiries reveal they hold this (grossly mistaken) view that if they fail to do so, potential clients will assume they’re not doing well.
In other words, they believe they need to show they are making profits, by hiring employees, and renting offices, even when they do not need them.
Did I hear you say “Huh?”. Well, you’re not alone. What warped logic 
What irks me most is the fact that some of these business owners do not (and/or are not able to) provide adequate salaries or benefits for the employees they recruit.
Some Do It To Belong. Others, To Make A Statement.
They want to keep up with the Joneses. So, they ignore readily available “family labour” (e.g. a spouse as personal assistant), and a room in their home that could be converted to an office.
The question I ask is this: If I can work without commuting to an office outside my home, does it make good business sense, to rent office space and engage employees I have to pay?
Advocates of this approach argue that impressions matter, and that that justifies doing the above. But who are they trying to impress exactly?
There are also those who adopt the above mentioned wasteful approach, so they can prove they are better off than some rival or contemporary. And they act it by readily pointing out that s/he does not have any employees (or office)…or that s/he does not have as many as they do.
In some developing cultures, there is widespread belief that anyone who works from home only does so because s/he is not making enough money.
And it cuts across: Even the elite are just as prone.
They fail to realize the decision about renting an office would depend on the kind of business – and also how much money you have. Service providers generally find it quite easy to operate home offices.
But in these societies, people blindly place great importance on owning a formal office or business premises. There is a lot of prestige that comes with being able to invite a client to meet you in your OFFICE..:-)
I’ve personally lost count of the number of times prospects afflicted with this mentality balked at speaking further with me, as soon I told them I worked from home.
“So, where is your office?” they typically ask. And I always respond: “Actually I work from home.”
Then I watch with mild amusement as their eyes glaze over, and they suddenly adopt a condescending tone in subsequent exchanges. Some even make tactless comments like “Oh well, not to worry. Once business picks up, you’ll have your own office and probably employ a secretary to help you.”
And I would wonder to myself who it was that told them I wanted an office, and employee(s) to WORRY about???
But experience has taught me to ignore them.
Here’s one reason why:What do you call a guy who – after recommending that you rent an office and hire staff – turns around to ask for massive discounts for your paid services claiming he’s on a shoe string budget?
I’d say UNSERIOUS, and not worth my time …especially in an economy where you have to generate your own electricity, and other basic necessities, to do your work.
I learnt a lot about minimizing overheads as a independent consultant, from reading Herman Holtz’s writing. He revealed that even in working for large corporations, many of the executives showed respect for his need to keep his overheads low as a solo operator, by agreeing to meet with him in his home office.
My achievements in THIS SAME society have proven that serious prospects will make no issue of a service provider choosing to work from home. Many readily agree to meet me at home (or a mutually convenient location), once they become convinced I have the competence to solve their problem(s).
As Experts, We Should Be Thought Leaders!
It’s ironic that experts who should be savvy business persons, allow faulty reasoning by larger society, to influence them into taking actions that negatively impact their business’ bottom line.
Should it not be the other way round? Are we not supposed to guide society on what should be done, based on our expertise?
Why not educate members of society that their assumptions and expectations are wrong? You can do this by doing what is right for YOUR business, and letting them see how it pays off for you.
How do you explain a business owner choosing to throw away profits, in order to impress people who do not own stakes in his business? Senility?
So many questions. Too few answers that make sense.
I’m The Only Full Time Employee In my Business. And I Intend To Keep It That Way.
There is one thing that’s crystal clear however. And it’s the FACT that there are still those who know enough, to live their lives on their own terms. I am proud to belong to that group.
We never let others dictate how we think, live or work. If you want to be authentic as an expert-who-gets-invited-to-speak, you will want to toe the same line.
Since 2005 – when I launched my first website – www.spontaneousdevelopment.com – I made it clear on the ABOUT page that I intended to be the ONLY full time employee of my business.
You see,
I did not decide to become an entrepreneur to look big, by employing thousands in order to feel successful (the way Bill Gates does in Microsoft for instance). I’ve never been comfortable with the idea.
I came out here to pursue self-fulfillment by adding value to the lives of others, through my work. Terry Dean – a highly successful and reputable entrepreneur/marketing consultant shares a similar view – as he’s stated in past writings.
We who think this way however accept that there will be others who feel building more Microsoft-like companies is the way for them.
And that’s alright.
Each person should do what works for him/her. We should not do things because others say we should, when we know better.
That applies to the issue of having employees in your company. Not everyone is cut out to run a business that involves managing others. There are personality types that determine these things.
It’s actually unwise – mean in fact – to take on employees, when you are not able (or willing) to provide them decent working conditions and/or remuneration.
Out here, not much is (currently) made of it. Even mistreated employees rationalize that they have no choice…or choose to leave it to God…:-((
However, in developed countries like the USA, trying to make an impression in that manner, would get you into big, fat trouble!
NB: The original version of this article was first published online on Tue 9/11/2012 12:30 AM via spontaneousdevelopment.com (my 9 year old domain which is now defunct).