With any opportunity, there are always certain risks involved.
For instance, the opportunity to make significant profits as an independent contractor are offset by the inherent risks involved. Should the business fail, the obligations of business ownership and operating costs can prove a financial hardship.
This scenario alone would give credence to the statistics that suggest most startups ultimately fail within the first few years of their existence.
Comparatively, an employee will have little to no real financial risks associated with their job. As they are not responsible or financially liable if they fail to fulfill their duties, they will at worst be terminated from their position. This offsetting of risk can prove advantageous to some individuals.
It should be noted that while an employee position has less risk involved, they also do not have the same opportunity to attain higher profitability when compared with an independent contractor.
This is because an employee trades their time for their profits. Time being a finite resource, means that an employee will be involuntarily “hard-capped” against a certain number of profits being made each year. Whether by salary, or by hourly pay, there will be a maximum amount conferred to the employed individual.
Contrarily, an independent contractor makes money by increasing their productivity, networking, marketability, and the overall commissions received from customers. This is to say that an independent contractor has the advantage of being able to create more wealth through their own enterprising efforts. Moreover, since they are their own “boss,” their only limitation is their personal capacity to provide excellent products or services to interested customers.
This can spell huge opportunity for driven contractors who thrive as independent workers.
- An employee typically has more job security than an independent contractor.
- An independent contractor who proves successful can reap significant monetary rewards.
- Both employees and independent contractors have certain advantages that should be carefully reflected upon.