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The Illusion of Job Security

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I think entrepreneurship…whether that’s starting up a brick and mortar business, investing in real estate, or creating an on-line business is really fun. I’m not kidding. If you ever talk to me in real life I think you will sense my enthusiasm for this stuff. It’s exciting and new all the time. It uses parts of your brain that are different from being a doctor or lawyer or even an MBA. Business school teaches you how to be a manager, not to be a business owner. The great side benefit of this hobby for me is that it makes money–usually in the form of passive income. That extra income makes my life easier. It takes pressure off of of my bread and butter business as a doctor and helps me enjoy my life more. I don’t ever think about retirement because I am accumulating passive income. In a few years, I could theoretically retire with on-going passive income for the rest of my life that can be inherited by my children. I’ll tell you all about this in other parts of this blog.

I passionately feel that if more people switched their way of thinking, they would be happier. I’m one of those annoying friends who brings up the same topic whenever you see him… an evangelist of sorts. But that’s what people do when they believe in something so deeply. Whenever I bring this up with my overworked friends, they roll their eyes at me and say, “I’m not like you J. I’m a doctor, not a businessman.” Or, “I don’t even have time to see my kids much less find other ways of making money”. Or, “I don’t want to do anything risky.” Doctors are a little bit more fortunate than other high wage earners in that the industry of sick people will not go away anytime soon. It is hard to get laid off as a doctor working in a practice or hospital unless you do something really bad. However, you certainly are prone to decreases in your pay at the whims of the government. Being a physician is not what it used to be like in the 80s and 90 in terms of making money and I guarantee you it will be even worse 20 years from now. Reimbursement is going in one direction only and it’s not up. If you’re not a doctor, it’s even worse. Most other industries grow and contract with the economy and it doesn’t matter whether you are good at what you do or not.

For the most part, there is NO SUCH THING AS JOB SECURITY WHEN YOU ARE WORKING FOR SOMEONE ELSE. Sorry about the obnoxious capital letters but that is a fact. My brother was a very well respected banker at JP Morgan in New York during the financial crisis and he got laid off.  He later got a job with the government of a wealthy middle eastern country managing their wealth fund. That was before the Arab spring. He’s still there, but I would hardly call that secure. I stress this lack of security because it is one of the main reasons that people shy away from entrepreneurship.  Because, doing things on your own rather than having a “steady” job it is thought to be risky. After all… there is no regular paycheck. And of course, if you do receive a regular paycheck, you must have job security, right?

The problem is that somewhere up the pecking order, someone likely DOES own your business and that person knows very well that the paychecks his or her employees receive are nothing but perceived security. They are part of what we, as business owners, refer to as “overhead”. If the business owner starts to struggle, the owner starts with trying to cut over-head. That means laying people off who thought they had stable jobs. Therefore, the job of the employed individual is actually LESS secure than the person who owns the business. The business owner is safer than the employees, but he or she isn’t necessarily that safe either. Let’s take my situation for example. I am primarily a cosmetic surgeon and I do not take insurance. For all practical matters, my business is a high end retail business rather than a medical practice. I reap the benefits of a good month and absorb the bad ones. If things stayed bad for a prolonged period of time, I would have to reduce my overhead. If things still didn’t get better, I might even have to close down my business. As a business owner I am not immune to the ebbs and flows of the economy.   However,I can always take solace in the fact that MY FATE IS IN MY HANDS rather than those of an employer that could fire me just to cut the fat or because he doesn’t like me.  Being a business owner is better than being an employee but the best situation is when you have multiple streams of income and best if those streams of income are passive. Passive income is income that comes into your bank account while you are sleeping, eating, playing with your kids, whatever. It does not require you to DO something in order to make money. An example of this kind of income is owning real estate that is taken care of by a property manager. There are other types of passive income as well that we will get into in other parts of this blog.

So why not start your own business or practice? You will very likely make a lot more money (I make easily 2-3 times what my academic colleagues make from my practice). And why not try to create multiple streams of income through other businesses and/or real estate ventures? If the answer is that you don’t know how, you are in luck. I intend to help you. I’ve already discussed why this is, in fact, not more risky than having a job–especially since you don’t have to quit the one you have. And if you think you are not good at business, I would like to remind you that you are a high paid professional that is paid well for something that you are able to do. There are a lot of people significantly less intelligent than you who had a lot less disposable income than you to start who are killing it out there simply because they decided to do it. What do you have to lose?