You Are Self Employed

It may come as a surprise to many that we are all self employed. Very few people realize this until after retirement, when they scramble to get their act together and learn new tricks in old age, or after a job loss. For many, the outcome is catastrophic financially – the retiree and his gratuity soon part ways. Unless you are a partner or a major shareholder in the company, you are service provider, rendering services to the company you are working for, whether your name shows up on the payroll, or your own company name. Your contract with the company has an end date. If you are not self employed, you may be stranded. Your future is in your hands, whether you take the responsibility or not.

You are in charge of your life – your time, finances, career, relationships, you name it. You are the CEO of your life, whether you are an employee, employer, businessman, clergyman are whatever your vocation our calling, that is why minding your business is your primary responsibility.

Everyone is a business man or woman. Everyone is doing business, whether you own a business or working for a business or charity. Businesses can be broadly divided into two – manufacturing and services. Employees are into the service business, they provide services to their employer, trading their time and skills in exchange for money. They get paid based on productivity and value added.

Because of increasing costs and regulatory burdens imposed by ever intrusive state regulators on small businesses, many business owners are again looking at ways they can reduce costs and lift some of the extra overhead requirements keeping up with ever increasing regulations. Shelter manufacturing in Mexico, the current incarnation of the old maquiladora program, is starting to look better and better.

Mexico shelter companies working with a Mexican owned company south of the border who performs some of the labor-intensive tasks of manufacturing or service businesses. These can be as diverse as computer data entry or as complex as complete manufacturing processes to turn raw materials into finished goods.

Typically, though the “twin plant” concept is employed where the capital intensive manufacturing operations remain in-place in the US, while the more labor intensive operations are moved the a lower cost facility in Mexico. For example in a film capacitor manufacturing operation based in Southern California, the automated capacitor winding machines and lead attach machines were left kept in their original facility, while the slower, more labor intensive, wrapping, epoxy filling, marking, and testing operations, requiring minimal capital equipment but rather extensive labor was moved to Mexico. This resulted in a reduction of over 50% of the labor content of the finished goods while retaining the same or better quality level.

When equipment, tooling, materials, or work-in-process are shipped to Mexico to a shelter operation, ownership of the goods does not change hands from the American company to the Mexican so concerns about your materials or tools disappearing are unfounded. In order for the Mexican company to import those items permanently, they would have to pay import duties on them. By Mexican law, those items must be in Mexico only temporarily.

The other main concern many American businessmen have is the difficulties often reputed in crossing goods back and forth across the US/Mexican border. When you deal with a reputable Mexican shelter provider, this is another non-issue. It is the Mexican business’ responsibility to provide cross border transportation and paperwork. The US company need only supply accurate bills of lading for all the goods being shipped.

In the above-mentioned capacitor manufacturing operation, the only thing the US manufacturer had to do with the import/export and NAFTA requirements, was to unload the truck when it arrived every Friday, and reload it with the next week’s work, along with a list of items being transferred to Mexico.

As for the costs, the Mexican shelter operation picked up all expenses for the pick-up and delivery, import and export fees, and all aspects of the Mexican manufacturing operation and charged the US company a single, per-man-hour fee that was about 2/3rds of the wages alone of the US workers. This doesn’t even take into account the benefits, insurance, supervision, utilities, and other overhead expenses it takes to employ a factory worker north of the border. Overall, the job got done for less than half of what it took to do the same job in the US.

Just about any labor-intensive part of modern business is suitable for a shelter operation in Mexico. Of course, manufacturing processes from sophisticated chip-making operations, to assembly operations, to packaging, marking, second operations, and a host of others can all be accomplished in Mexico for about half of what it takes to get those jobs done in the US. Also things, like data entry, sorting and other service related functions not directly associated with manufacturing lend themselves well to being performed in Mexico.

Mexico does not have nearly the labor problems common in the US. The workforce is reliable, trainable, and generally very stable. Since jobs are relatively scarce, they’re cherished so conflicts and high turnover, a near cliché in the US low skill level jobs, is far more rare south of the border.

A good way to illustrate this is to imagine an Accounting/Auditing firm with many experienced and certified information systems auditors, which seconds some of their staff to work for another company, auditing their books for a certain period. The auditors are not employees of the company they are auditing, but they work for that company. They resume work in the morning and close in the evening. They have a certain task they are to complete to the satisfaction of the company paying the bills.

It may look like I am trying to play with words, but the issue is that of mindset which ultimately determines the outcome. If you are self employed, you are working for your own company (though it may not yet registered with the Corporate Affairs Commission), rendering services which is paid for monthly as salary. If it is your name that is on the payroll that you acquire from Nominak or any other Payroll consulting company that you might be affliated with, then it is Yourname Nigeria Limited. That means you are in charge of the quality of service you are rendering. To command better fees/salary etc, you want to add more value to the services you are rendering, exceeding customer expectations – the customer being your employer. You get paid more through salary increases, including promotion. Because you are in charge, you do not wait for the company to push you before you step up your game. You seek to improve your skills on your own by seeking out and attending courses relevant to your current job function to improve your performance on the job. Since you are self employed, you don’t mind spending your own money to attend some of the courses either home or abroad, to give you the competitive edge (if such training opportunities do not exist in the company). Remember you have other companies in competition, sorry fellow employees. You are in effect working for yourself, not the company hence it does not matter if your new skills or value added are recognized and rewarded by the current company. You have an idea where you are going, and if it means changing jobs to get there, you have the skills needed at that level.

Since you are self employed, you get to choose the jobs you do or the companies you work for. If the job you are currently doing does not fit into your plan or is not what you really want to do, you can discuss with the company to move you to another job function and workplace, for example, for the New Jersey workplace, and if all fails, go work for another company. You take control of your career and professional development, not necessarily having to wait for the HR Department – remember you are self employed. Your skill set is not tied to the company you work for, but what you want to do with your life now and in the future. You do not wait for the company to promote you – you promote yourself by acquiring the skill set of the position you want to be, and start performing at that level. Soon it will be obvious to all that you are a candidate for that position.

As self employed person, you do not wait for the company to manage your finances. You don’t wait for your salary before you give your wife her housekeeping allowance. If the company delays in paying salaries, you have a Plan B, as your life is not tied to the company. You don’t wait on the company for gratuity and pension, you plan your cash flow down to your old age, by investing in portfolios that will generate both fixed income, returns and growth. What the company offers, if any, becomes a bonus.

Also as self employed, you do not wait for the company to tell you when to retire. You can choose to keep work as long as you want, doing what you love and loving what you do. If you love the company you are working for, you can stick with them till the mandatory retirement age, and then offer your skills to same company or another company as a consultant, if that is what you love doing. What that means is that you have registered your own company somewhere down the line and learnt how to run a business and not wait until you get notice of retirement. You can also choose to retire young and go do something else with your life if you so desire.

As self employed, you are in the driver’s seat of your life. You do not want someone else or circumstances driving you. No one knows where you really want to go more than you do. No one cares for you more than you do. In a business down turn, the company down sizes and no matter how much the company loves you, you may be let go. If you are financially illiterate, your gratuity may soon become history too. That is when it dawns on you that you are really on your own – truly self employed.