Declining Economy vs. Self-Employment
By The Tim on Feb 7, 2008 in Commentary
Someone going by the name “Sniglet” brought up a great point yesterday in the comments on Seattle Bubble when I announced Thatch Mound:
Not to be too negative, but I don’t know how great a time this is for relying on web advertising for revenue. If we are about to embark on a significant recession (which many people who frequent Seattle Bubble believe), then advertising ALWAYS takes a massive hit. Even if Seattle Bubble maintains a large readership (or even grows it), the over-all money spent on advertising is likely to decrease substantially.
This is something I have definitely pondered as I make this transition from a “stable” job to a self-employed online business. If the economy begins to significantly retract (and there is a good chance that it will), isn’t this just about the worst time to start something like this? Well, maybe. But I considered that question before quitting the job, and (obviously) for a number of reasons I came to the conclusion that it was a good idea to go forward anyway.
First off, sure, self-employment is risky in a recession, but so is a “normal” job. During the last downturn, my previous employer laid off hundreds of people, and things were going so poorly that many of those who kept their jobs were concerned about the company going bankrupt. Although my job function was electrical engineering, my employer was a manufacturer, and historically manufacturers are some of the hardest-hit businesses in a downturn. Granted, one would hope that they learned their lesson in 2001, but there’s no guarantee.
Also, the whole concept of Thatch Mound is to generate multiple revenue sources, such that the loss or decline of any one source will not be a crippling blow to the company. Once things get fully up and running, advertising be just a part of the overall income. Additionally, the plan is not to rely on any one site, either. If revenues from Seattle Bubble decline, hopefully the other projects will continue to perform.
However, the main reason I decided to go ahead with it in spite of the threat of recession is that a recession is outside the realm of things that are under my control. There are things that I do have some amount of control of (or at least influence over): how much I have saved up, what my monthly expenses are, how much debt I have, etc. I have been spending years getting these things in order so that I could have this opportunity. To back out now because of a threat that I have no control over, and which does not necessarily spell certain doom would be overly cautious.
I’m not saying that it makes sense to throw prudence out the window, but you don’t achieve your dreams by avoiding every possible risk. I’ve worked hard to get to where I am, and if a recession is in the cards, I’ll just have to work all that much harder to get to where I want to be.
Right on. I don’t have much else to add. You’ve already said what should be said here.
Adam | Feb 10, 2008 | Reply
great line, “you odn’t achieve your dreams by avoiding every possible risk.” I think I’ll have to quote you on that :)
rebukey | Feb 11, 2008 | Reply
Go for it!
PastorBlastor | Feb 11, 2008 | Reply
Not a bad attitude, but I have to say my first thought when the conservative engineer gets into the “web services” is game is that it’s a sure sign the web 2.0 bubble has popped.
It’s a nice theory that multiple revenue sources will protect you (and it certainly works to have a diverse stock/bond portfolio), but I’ve never seen it work for an individual small business person. More likely none of your businesses will do well enough to make serious money because you won’t be able to devote enough time to any of them.
Just my 0.02c (or less)
jcricket | Feb 12, 2008 | Reply
Interesting comment jcricket. I appreciate the humor in your remark about the “web 2.0 bubble,” although I should point out that nothing I’m doing is really “web 2.0,” and personally I hate that term.
I’d say the projects I’m working on are about half writing and half “services.” I’ve always enjoyed writing and dreamed of being able to write full-time. The timing of entering the market at this particular time has everything to do with my personal preparations, and very little to do with the overall online environment.
I guess time will tell whether the multiple revenue sources plan will work out. The fun part for you is that you get to watch it unfold without having to take on the risk :^)
The Tim | Feb 12, 2008 | Reply
I will say that you have courage that is inspiring! A famous person once said that, “If there is a recession I will simply refuse to participate in it.” Which can certainly be true. We have the capacity within ourselves in this semi-free market economy to refuse to participate in an economic downturn. For instance, whenever there is a significant stock market downturn there are always many accounts of those with insight and fortitude that recognize that there were also opportunities present as well and refused to be swept away by the wave of pessimism that is always pervasive in those economic events. Those were the ones that really cleaned-up. That is the real trick, right? To keep one’s head and be able to see the opportunities that others have overlooked on the stampede to the door. Your multi-faceted project sounds intriguing and it will be very interesting to watch it develop. Beware of the naysayers that want to talk it down, but also keep yourself detached enough emotionally to be able to catch that the right “wave,” which also means being able to let the wave go by that will peter-out.
Zee Marketspice Meister…
Zee Marketspice Meister | Feb 13, 2008 | Reply
Yes – I get to continue to snark at you, much as you have delighted in snarking at people like Seattle Eric and the travails of other RE “investors” over the last couple of years
All from the security of my high-paying stable downtown office job.
jcricket | Feb 13, 2008 | Reply