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Employment VS Entrepreneurship in the UK

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I have noticed there is an increasingly large disconnect between the power of capital and labour in our current financial system. I am going to use my own experiences in software development to give my opinion on this topic.

As a software developer I know my skills can be monetized directly within certain markets by developing applications that serve a certain purpose. Yet looking at job adverts most developers are only earning in the 30-50k range in this country.

I was recently considering moving to Japan to work as a developer there but I was surprised to discover most of the development jobs require foreign applicants to speak very good Japanese regardless of the applicant's skill as a developer. And the jobs that don't require Japanese are fiercely competitive. If software development is such a useful skill by itself then why all these language requirements? Usually, these companies have staff with good English speaking skills to make up for that issue. Perhaps the issue is software development is no more special than any other field with an ever increasing amount of labor competing for the same jobs.

If you consider that a good application or a reasonably simple game in certain niches can earn anywhere from 500k to millions of pounds, there seems to be a large disconnect between the value a good developer provides and the monetary compensation.

I can only conclude that in our capitalist system simply having skills such as engineering skills (in this case software) does not by itself reward a person. You have to be a capitalist to be truly rewarded, create your own product or service and join the market directly. This disconnect between capitalist and labour income is increasing every year at an exponential rate.

The app I am developing currently could potentially serve thousands of customers, charging them a monthly fee anywhere from 30 to 100 pounds per month. I would, therefore, be leveraging the power of technology to provide my skills to the world for a small monthly payment. Whereas if I were to opt for a full-time job I am then charging 2-3k per month to a single company who are taking a huge risk on whether I have the skills to develop the app they want.

If their risk pays off then six months of my work to develop a complete application for them could potentially provide them with 100,000s in revenue per year for many years to come.

I think many people like myself who became interested in software development did so because they saw the potential added value that software can bring to various industries. Most of these people unwittingly went into the workplace assuming they would get a good reward for their expertise. 

Yet like most careers, most people in development see themselves working a never ending series of jobs well into their fifties and beyond. Some of them get into contracting and manage to earn large incomes such as over 100,000 pounds per year for which they give away half in taxes. They feel successful but in reality, these people are usually working even harder than before to keep up with the expectations companies expect from such highly paid contracts.

The problem with employment is there is no long term financial reward for the work you do. You have to work just as hard or harder every month of every year for similar or slightly higher earning potential. You most likely wouldn't even have time to plan an exit strategy once you settle into the full-time grind of a job.

Whereas going self-employed with your own product to the market usually most of the work is done in the first 6-12 months of development and once you have a product that can compete directly in a market it's just a case of getting enough sales to provide a basic living income then from there you gain the leverage to be able to employ part-time sales staff and free up your own time to potentially develop more products.

This ability to free-up one's time by capitalizing indefinitely on past work done is not available to employees in a company. I see a lot of news articles talking about how software development jobs are one of the top fields to go into these days. What these news articles don't say is that even though development is one of the best-paid fields in modern times, the companies are leveraging most of the added value provided by the skills utilized. In reality, the salary for these jobs is similar to other high-skilled professions and not much related to the earning potential these skills have in the marketplace for software based products and services.

This problem seems to be even bigger in the UK since there is very little entrepreneurial spirit amongst young people in this country. Our working culture seems to be obsessed with corporations and status, most likely as a reflection of British culture and social norms here going back hundreds of years. There seems to be a stigma associated with going self-employed here compared to other countries such as the US where entrepreneurial spirit is celebrated more openly.

If you consider inflation then software development salaries have gone down in the last 10 years.

I only just found this after writing my post but actually this video sums it up, this guy is a genius- 

 

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2 hours ago, developer said:

 

As a software developer I know my skills can be monetized directly within certain markets by developing applications that serve a certain purpose. Yet looking at job adverts most developers are only earning in the 30-50k range in this country.

 

This country has pulled the wool over the eyes of everyone.  i am surprised developers earn so little really for the amount of effort required. But like you say earning more than 50k is 50% tax anyway so what is the point. 

if 1,000,000 people suddenly pick a niche skill to learn it no longer becomes niche, i suspect the corporations are pushing through learning at schools and uni`s for their own benefit. 

If everyone has a degree it has no value any more. 

Myself i am looking for a low stress to decent pay ratio job and the ability to have another income stream from other sources while working.  Not easy to find though. 

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2 hours ago, longgone said:

This country has pulled the wool over the eyes of everyone.  i am surprised developers earn so little really for the amount of effort required. But like you say earning more than 50k is 50% tax anyway so what is the point. 

if 1,000,000 people suddenly pick a niche skill to learn it no longer becomes niche, i suspect the corporations are pushing through learning at schools and uni`s for their own benefit. 

If everyone has a degree it has no value any more. 

Myself i am looking for a low stress to decent pay ratio job and the ability to have another income stream from other sources while working.  Not easy to find though. 

I've been fairly lucky in that I have managed to build up a business (writing and self publishing books through Amazon) which is largely passive income with minimal stress. 

However I did reorganise my life quite a lot as I realised one had to think outside the box in modern Britain. The old certainties of a 9-5 job and a semi-detached house no longer apply. I realised I had to subvert the system in order to make it work for me instead of the other way around. Eg, we are encouraged to work harder and earn more. But all this does is just line the government's pockets with tax money. If you learn to live within the taxable allowance you don't have to pay any income tax, all you pay is NI. 

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3 minutes ago, Austin Allegro said:

I've been fairly lucky in that I have managed to build up a business (writing and self publishing books through Amazon) which is largely passive income with minimal stress. 

However I did reorganise my life quite a lot as I realised one had to think outside the box in modern Britain. The old certainties of a 9-5 job and a semi-detached house no longer apply. I realised I had to subvert the system in order to make it work for me instead of the other way around. Eg, we are encouraged to work harder and earn more. But all this does is just line the government's pockets with tax money. If you learn to live within the taxable allowance you don't have to pay any income tax, all you pay is NI. 

i have no issues in paying income tax , but there is no way i am going to work my backside off to earn 35k-40k a year. and have some middle manager breathing down my neck all day.  i can`t change the tax system but what i can do is find a much easier job that does not have much stress involved so win the other way.   i have always sold stuff on ebay as a income stream even when i was working but was oblivious of where to invest my savings . no good earning when they are rotting away in banks. now even more so with low rates. 

having a large deposit has made me lazy though :lol:. i used to be quite proud of having 100`s of k saved up at 33 now i am 40 this year i don`t even think about it anymore. 

i just want a simple quiet unstressed life now.  of course you still have dreams about making it big and never having to worry again, but i just cant see that happening. 

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3 hours ago, longgone said:

i have no issues in paying income tax , but there is no way i am going to work my backside off to earn 35k-40k a year. and have some middle manager breathing down my neck all day.  i can`t change the tax system but what i can do is find a much easier job that does not have much stress involved so win the other way.   i have always sold stuff on ebay as a income stream even when i was working but was oblivious of where to invest my savings . no good earning when they are rotting away in banks. now even more so with low rates. 

having a large deposit has made me lazy though :lol:. i used to be quite proud of having 100`s of k saved up at 33 now i am 40 this year i don`t even think about it anymore. 

i just want a simple quiet unstressed life now.  of course you still have dreams about making it big and never having to worry again, but i just cant see that happening. 

One thing that is important to consider (as I sure you do given the nature of this site) is housing. I decided that instead of continuing to save for a deposit on a tiny flat in London, it made more sense to change my job so that I could work anywhere, and use that deposit instead to buy a small cottage in the country outright. I now don't need to earn much money because my house is paid for. If I had remained in London I would never have saved enough even for a tiny flat, I would be working and commuting in a stressful job to line a landlord's pockets, paying income tax on my earnings and tax AGAIN on those earnings when I put them in a savings account. Even if I had achieved my 'goal' all I would have had would be an eye watering mortgage on a tiny flat in a slum. Madness!

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Quote

You have to be a capitalist to be truly rewarded, create your own product or service and join the market directly. This disconnect between capitalist and labour income is increasing every year at an exponential rate.

It's very difficult, in some cases nearly impossible, to successfully launch your own business. The established entities will snuff you out, and very difficult to get hold of customers - in a different context the quote is "the biggest enemy of a startup is indifference". 30k-50k may seem like a small proportion of what a developer is earning for a company, but it's a lot more than nothing.

 

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3 hours ago, Austin Allegro said:

One thing that is important to consider (as I sure you do given the nature of this site) is housing. I decided that instead of continuing to save for a deposit on a tiny flat in London, it made more sense to change my job so that I could work anywhere, and use that deposit instead to buy a small cottage in the country outright. I now don't need to earn much money because my house is paid for. If I had remained in London I would never have saved enough even for a tiny flat, I would be working and commuting in a stressful job to line a landlord's pockets, paying income tax on my earnings and tax AGAIN on those earnings when I put them in a savings account. Even if I had achieved my 'goal' all I would have had would be an eye watering mortgage on a tiny flat in a slum. Madness!

i am outside london but only just , i could not move out further . i was born in zone 2 and lived there for 30 years . 

being a single bloke i am not so concerned about living in a flat .  least i can hope on the train for a night out . 

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8 hours ago, longgone said:

i just want a simple quiet unstressed life now.  of course you still have dreams about making it big and never having to worry again, but i just cant see that happening. 

2

Go teach English in China or Japan, it's one of the easiest jobs out there. With your savings to fall back on you could just spend all your salary every month and live comfortably even on 25k a year. Very rewarding job, it doesn't feel like hard work compared to IT. I'm still considering doing it for a couple of years in Japan before I start applying for IT jobs there since it will allow me to improve my Japanese skill and meet the requirements for those IT jobs.

I know that sounds hypocritical after posting this thread. But the truth is even though I'm developing my own app I still have a career path/backup plan- something everyone should have. There's no reason you can't do both your own business and a job at least until you are self sufficient.

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14 hours ago, longgone said:

i am outside london but only just , i could not move out further . i was born in zone 2 and lived there for 30 years . 

being a single bloke i am not so concerned about living in a flat .  least i can hope on the train for a night out . 

I guess it depend what you want in life. I like gardening, swimming in the sea, sailing, walking/cycling in the countryside, and I couldn't do that very close to London. 

There's a reasonable amount of nightlife in the local market town, and London is about 1.5 hours by train if necessary, so I'm happy with that. 

The only thing there's a shortage of is attractive women - but they present problems of their own, as you will see in the Deluded Old Scrapper Birds thread!

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Sleepless in Bangkok so thought I'd add my own thoughts.

I left the corporate world in 2005 and was recently shocked to see that a similar type of development job in London pays the same. Lucky escape.

I do think the UK lacks in entreprenurial spirit but maybe things are changing. I remember meeting an ex gf's parents (very middle class) and the dad was clearly not impressed with my self employment status. Very old skool though.

I have considered going back into employment from time to time, but aside from losing my location independence, I never want to trade my time for cash ever again. 

You are better off building something that can continue to provide income. 

As I say, there is no income like passive income.

 

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11 hours ago, Austin Allegro said:

 

The only thing there's a shortage of is attractive women 

 surely the upturn is alcohol to compensate . 

stay fueled and they look attractive all the time :lol:

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On 7/26/2017 at 9:22 PM, developer said:

Go teach English in China or Japan, it's one of the easiest jobs out there. With your savings to fall back on you could just spend all your salary every month and live comfortably even on 25k a year. Very rewarding job, it doesn't feel like hard work compared to IT. I'm still considering doing it for a couple of years in Japan before I start applying for IT jobs there since it will allow me to improve my Japanese skill and meet the requirements for those IT jobs.

I know that sounds hypocritical after posting this thread. But the truth is even though I'm developing my own app I still have a career path/backup plan- something everyone should have. There's no reason you can't do both your own business and a job at least until you are self sufficient.

sadly i could not leave family here. it would be nice to start a fresh somewhere else though.

The self sufficient thing is most attractive to me but working alone could get boring, a job is nice if it is sociable not so much if you work with W@nkers. as i said a nice stress free role with decent people commutable location and decent pay is attractive right now to me.   business along side it would be the cherry on top.

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I'm considering going into a career in sales in something like enterprise software. I have been doing some research this week and it's better paid than IT on average.

The main advantage with sales is you can earn a significantly higher salary like 100-200k+ if you are good at the job. Whereas as a developer in a team you could be doing most of the work then have some MBA graduate as team manager taking all the credit for your effort.

Being in a sales job is also very similar to running a business so you can essentially be an entrepreneur as a salesman and be capitalizing on the capital investment of a large company by having the opportunity to sell their products or services. It's the natural choice in an environment where capital is now much more powerful than labor.

There are other benefits to sales too such as improving your network of useful contacts. A successful sales track record also gives much faster career progression than what is available in software development.

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1 hour ago, developer said:

 

The main advantage with sales is you can earn a significantly higher salary like 100-200k+ if you are good at the job.

i like the sound of that :lol:

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On 26/07/2017 at 6:59 AM, developer said:

As a software developer I know my skills can be monetized directly within certain markets by developing applications that serve a certain purpose. Yet looking at job adverts most developers are only earning in the 30-50k range in this country.

I was on £30k as a developer in 1996, I felt hard done done by at the time but looking back it was a veritable golden age: I could afford a massive house for 2.5 - 3 times salary, run a couple of cars and have a skiing holiday every year without being especially financially stressed. Same position today would get you a room in a shared house, a moped and a netflix subscription.

But whatever ... you have to remember that people who can program outnumber people who can invent ways to make money from software by probably several thousand to one, trust me if I could do the latter I'd not still be writing code.

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2 hours ago, goldbug9999 said:

I was on £30k as a developer in 1996, I felt hard done done by at the time but looking back it was a veritable golden age: I could afford a massive house for 2.5 - 3 times salary, run a couple of cars and have a skiing holiday every year without being especially financially stressed. Same position today would get you a room in a shared house, a moped and a netflix subscription.

But whatever ... you have to remember that people who can program outnumber people who can invent ways to make money from software by probably several thousand to one, trust me if I could do the latter I'd not still be writing code.

You can, read my last post. In fact not only is a sales career more profitable than any other in my opinion but it's very useful experience for pushing yourself into self-employment and launching your own business because you get the sales experience but you will also get a good enough salary to put some capital behind your own business too.

If a person became good enough in their sales career, at the right company it can even be more lucrative than running a small business.

Consider that you can get a commission of 8% for every B2B sale you make on products and services that cost anywhere from 10,000's to 100,0000's or more.

You have the full weight of thousands of employees, a large successful brand name, and hopefully a very useful product or service behind your role as a sales person. With a commission in the high single digits, you can potentially earn more than the average shareholder or even some high-level managers at the same company. There is a direct monetary bonus to hard work that you don't have to wait for more than a few months or the end of the fiscal year to receive.

I would also argue that it's probably easier to earn money a lot faster as a salesman in the right company than doing a startup without any capital. So it's a great first job before launching a business. The sales experience itself would make it worth doing before launching a business.

Basically, all I can say at this point is anyone who has the right personality and a passion for business, sales and success should be in sales.

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22 hours ago, goldbug9999 said:

I was on £30k as a developer in 1996, I felt hard done done by at the time but looking back it was a veritable golden age: I could afford a massive house for 2.5 - 3 times salary, run a couple of cars and have a skiing holiday every year without being especially financially stressed. Same position today would get you a room in a shared house, a moped and a netflix subscription.

But whatever ... you have to remember that people who can program outnumber people who can invent ways to make money from software by probably several thousand to one, trust me if I could do the latter I'd not still be writing code.

my first real job was doing technical support in a bank in the city was 22 earning 28k in 1999 . i assumed it was a poor wage.  

how wrong was i compared to now. 

still the 2nd job got me 40k plus every year from 2000-2006 . 

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On 28/07/2017 at 8:34 PM, goldbug9999 said:

But whatever ... you have to remember that people who can program outnumber people who can invent ways to make money from software by probably several thousand to one, trust me if I could do the latter I'd not still be writing code.

Yet the people who program (and not just turning the handle on the code) are the more essential. Without the sales people you'd probably sell a lot less, without the programmers you'd have nothing to sell at all. And it's not the sales people who are inventing ways to make money from software anyway (although to be fair I don't think you said that they were).

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It is not what you earn it is what you spend that matters......very rich people earn little and spend less. Agree that if you have the skills to sell there will always be work.....what good is money otherwise, it is only made to spend......plenty out there ready and willing to work,  to be parted from it, all they need is someone to sell it to them.;)

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Just now, winkie said:

It is not what you earn it is what you spend that matters......very rich people earn little and spend less. Agree that if you have the skills to sell there will always be work.....what good is money otherwise, it is only made to spend......plenty out there ready and willing to work,  to be parted from it, all they need is someone to sell it to them.;)

True about what you spend of course, although with the astronomical cost of living the appeal for more is quite a reasonable one for most people. You just need to avoid the "always needing more" trap, because if you're in that you'll never have enough and quite honestly probably wouldn't be any happier whether you had enough to get by without much worry or were a billionaire getting glum because his superyacht isn't big enough.

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2 minutes ago, Riedquat said:

True about what you spend of course, although with the astronomical cost of living the appeal for more is quite a reasonable one for most people. You just need to avoid the "always needing more" trap, because if you're in that you'll never have enough and quite honestly probably wouldn't be any happier whether you had enough to get by without much worry or were a billionaire getting glum because his superyacht isn't big enough.

Helps when you have the will power to know when enough is enough.....goes for many things in life, that extra one or two may well make you feel worse not better...... sometimes the things wanted are completely out of the realms of possibility of ever getting like the yacht or the nice house or the exotic six month holiday.....so some compensate by treating themselves with stuff they can buy and in so doing may spend more than they have got, that won't make them any richer, but it may make someone else richer.;)

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Very true, especially for it applying to a great many things in life (which is why I take a dim view of people who say we need faster this or that too). Or maybe I just set my sights too high - I'm not terribly motivated by any amount of money that could vaguely realistically come since I can't really think of much to do with it that would make me happier (which isn't the same as saying there's nothing that I don't have that I wouldn't like), but with untold trillions to effectively be able to change anything I wanted to how I wanted...

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Never been motivated by money, been motivated to succeed, motivated by doing something purposeful that's fair......seen too many miserable wealthy people who however much they spend will never make them happy.;)

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