@Aislinn:
Whoa, really like your ideas and your advice. Especially the part:
“If you’re going to do that, though, you need to understand one thing - no matter what the courses tell you, it DOESN’T happen overnight. You’re going to have a lot to learn, and you’re going to make plenty of mistakes, before the cash starts rolling in.”

A lot of people seem to miss this, and as you say, they’re all hyped up by everything they read about “Making loads of $$$ in no time at all using (insert random method)”.

Building a sustainable business takes time, effort and most of all, persistence.

Great comment and thanks for taking your time to write it!

Some people genuinely like what they still believe to be the security of working for an employer, and it’s certainly much less scary than working for yourself.

Unless you have a realistic chance of ending up running the company, though, the trade-off is that you’re never likely to make any REAL money.

Merely being self-employed more often than not ends up as drudgery, with long hours and customers or clients every bit as awkward as the most demanding boss.

The beauty of the Internet is that it gives you the perfect platform for “create once, sell forever” products such as software, music, books, etc, and even lets you (eventually!) build your business to a point where it becomes self-sustaining and provides both the money and the free time to spend the way you want to.

If you’re going to do that, though, you need to understand one thing - no matter what the courses tell you, it DOESN’T happen overnight. You’re going to have a lot to learn, and you’re going to make plenty of mistakes, before the cash starts rolling in.

My advice? Try it in your spare time first. Build your savings up as much as possible (don’t worry about the effect on your social life - you won’t have time to go out, anyway!).

That gives you a chance to see if your idea is profitable - AND if you’re the kind of person who can work all day at a computer, on your own, and still stay sane.

If in either case the answer’s “No”, you can walk away with your head held high (you’ve given it a go - that’s more than most folks ever do!) and no financial damage.

If it’s “Yes”, though, you’re on a winner. Go for it!

After re-reading my little post (in a more sober state) I’ve realized that I didn’t really explain a few things in depth.

You’re absolutely dead on about the idea of absolute value. Setting up your own company isn’t a 100% surefire and foolproof way of creating more value in absolute terms, and it surely doesn’t guarantee that you would be able to make more money than being an employee.

Another thing that I didn’t really go into detail about is the difference of being self-employed and a business owner. Being self-employed is pretty much like being an employee - in the majority of the cases your input is highly correlated to your output - the amount of money you make is highly correlated to the amount of hours you spend working.

To be honest, I’m pretty much still stuck at this stage. I’ve been running an IT-consultancy company for a few years and during the most of this time I’ve pretty much only worked in a way in which my time was highly correlated to the money I would make. The more hours of consulting I did, the more money I made.

It is just recently that I started to look into hiring other freelancers to do the majority of the work for my clients. I’m still experimenting with this and I’ll probably give outsourcing to India, Russia and similar countries a go to free up even more of my time.

What I’m aiming for is to transform myself from being self-employed to being a business owner where the income I make comes from scalable products and/or services.

As you’ve said, there might be opportunities for employees to conduct their work in a scalable, no-input-to-output-relation, model where they’re rewarded for their work in a greater extent.

I do however believe that this isn’t a very common case. I believe that the majority of the employees in this world are stuck in the endless rat race with 40ish hour work weeks, the money they make being highly correlated to the amount of hours they work and the money that they do make only representing a fraction of the actual value they created.

I’m not saying that employees are dumb, stupid or whatever for sticking to this common model. We humans are all different; some people enjoy the security and routine that comes with a job and some people are willing to take risks and make sacrifices in the pursuit for a higher return on investment for their work.

I do believe that if you’re smart, ambitious and do want to make a dent in the universe, that you should go about trying to create a product or service of your own. You might fail, you might succeed - and if you do, you’ll probably be able to work less hours than most people and make more money than most people.

Regarding the book, I haven’t read it yet. Definitely going to check that one out. Thanks for the recommendation and your comment!

For one, as an employee you are indeed only compensated for a fraction of the value you create. Whether or not the absolute amount of that fraction is larger than what you would get when getting 100% of the fruit of your labor, but being on your own, varies.

However the more important concept here, which I agree is very important to understand, is that you need to disconnect your input from your output. In other words you create a scalable model, where time spent working is not a factor in the value you create.

Nassim Nicholas Taleb’s The Black Swan talks about this at length and I would recommend a read if you haven’t read it already.

My point in all this is simply that your two concepts are not necessarily related - employees can work in scalable models where their value creation and compensation are not related to their work input, and entrepreneurs can get caught in the trap of tying their output to their hours spent (something I fell into myself at first).