A guest post by Elaine Pofeldt, author of The Million-Dollar, One-Person Business.

Running your own business is an exciting journey that comes with unmatched freedom and independence—but it’s got its challenges, too. The big one is economic insecurity. If you are self- employed, chances are you will, at some point, have to figure out a strategy for coping with some of the downsides: uneven income, non-paying clients, high healthcare costs and the lack of any real social safety net for the self-employed. When your work dries up, there’s nothing to protect you in the way that unemployment safeguards W-2 workers.

There’s no easy answer these challenges, but after 10 years in business, I’ve concluded that the simplest way to protect ourselves as self-employed people is by earning more than we believe we need to.

Many people start out in business thinking that if, say, they earned $100,000 in their last job, they’ll be fine if they earn the same amount in a solo business. I once thought the same way. But the reality is that if you want to hold onto the same lifestyle, you need to earn about 40-50% more than you did on salary to cover the cost of benefits.

That’s one reason I wrote my upcoming book, The Million-Dollar, One-Person Business, which Random House is publishing January 2. As part of a two-freelancer couple until last year, when my husband went in-house with a favorite client, I know how difficult it can be to build a financial wall around yourself, so you don’t get into a crisis when a child has an unexpected dental bill or a big client suddenly hits a bump and cancels your contract. I wondered if there was some way for free agents like myself to protect ourselves.

Then one day, I came across Census statistics on nonemployer businesses. These are firms that employ no one except the owners. I noticed that some were bringing in more than $1 million in revenue. I was intrigued. What did these people do for a living that allowed them to earn so much more than the typical one-person business?

Although $1 million in revenue is different from $1 million in income, by my calculations, those with $1 million in revenue were likely to be bringing in a mid-six figure income after taxes and expenses. That was more than enough for most Americans to do things that have become hard to achieve in today’s economy: own a home, obtain good healthcare coverage, save for retirement, fund their children’s college education and perhaps toss in a nice vacation every year.

The Census Bureau didn’t provide much information on what the businesses did, except their industrial codes, so after I reported on the growth of these businesses in a blog that went viral in 2013, I asked readers who were breaking $1 million in nonemployer businesses to reach out to me. And they did. Over the past few years, I found out they were doing all kinds of interesting things: investing in residential real estate and renting it out, selling organic honey online, sharing information about nutrition and fitness in eBooks, running high-end professional services firms, selling stylish housewares on Amazon, you name it.

More than 30 of these businesses shared their strategies for growing their revenue and profits in The Million-Dollar, One-Person Business. After interviewing their founders, I found that they all had one thing in common: They had scaled their thinking beyond that of an employee.

While many people who start one-person businesses create what is essentially a job substitute for themselves, repeatedly trading their labor for income, these million-dollar entrepreneurs have figured out a way to extend their efforts beyond what one person can do. Often it’s by using contractors and automation. Some have also thought of interesting ways to multiply the revenues they derive from a single product, whether by selling an educational booklet, an online course or a webcast to their many followers.

These strategies and many others allow them to generate high revenues without the responsibilities of maintaining and meeting payroll every month—an ongoing challenge for many small employer businesses. Many, as a result, are able to spend time on what they really enjoy: travel, family life, seeing friends, sports, volunteering, whatever they are truly passionate about.

Not everyone needs to bring in $1 million in revenue, but I believe that to achieve true financial security, the self-employed need a financial cushion—a big one. By deploying even a few of the strategies of the entrepreneurs who generously shared their stories, I’m hoping readers will be able to enjoy the freedom of entrepreneurship for as long as they want by creating more sustainable businesses.

AUTHOR BIO

Elaine Pofeldt is an independent journalist who specializes in small business, entrepreneurship and careers. Her work has appeared in FORTUNE, Money, CNBC, Inc., Forbes, Crain’s New York Business and many other business publications and she is a contributor to the Economist Intelligence Unit. She is the author of The Million-Dollar, One-Person Business, a look at how entrepreneurs are hitting seven-figure revenue in businesses where they are the only employees, tapping automation and other technology to scale their efforts (Random House, 2018).

As a senior editor at FORTUNE Small Business, where she worked for eight years, Elaine was twice nominated for the National Magazine Award for her features and ran the magazine’s annual business plan completion. During her time at FSB, she ran the magazine’s website, fsb.com, for four years, building its traffic from two to five million page views a month.