The latest employment figures suggest that more people are in work than at any point in the last 40 years. But it would be a mistake to assume that this reflects a settled and stable situation for employees. Trading conditions are difficult for organisations of all sizes, while the public sector is under intense financial pressure. Closures and redundancies are announced every week.
Under these conditions, one option for employees is to keep their heads down, work harder and hope for the best. However, when current research shows only a third of people are motivated in their current role, it may be that making the leap and embracing self-employment could provide the motivation to succeed and to achieve a different kind of security.
The paradox of self-employment
If you go self-employed you have no boss. You cannot be fired or made redundant.
But self-employment is not a one-size-fits-all solution. Depending on your circumstances and priorities you may choose to work the gig economy where your income is limited to what is being offered during the hours that you can work. Or you may be attracted to the quick money available in freelancing, although rates are being driven down by global work-by-the-hour websites. You may be fortunate and ease your way into self-employment by starting a business in your free time (a ‘side-hustle’). Or at the other end of the spectrum, you may feel ready to make the substantial commitment of buying a franchise.
The opportunities are endless, but before you invest your time, energy and possibly your life savings into self-employment, it pays to reflect long and hard on what you will be tying yourself into and why.
A new kind of security
The most serious downside of self-employment is that you lose income security. Your workload may fluctuate enormously from one month to the next, you may be paid late and clients can leave you without warning. However, once you have built up a number of clients, you can be reasonably sure that they won’t all move-on at once (in contrast to being made redundant from a full-time job). Equally, with a little discipline you can put a proportion of your income aside each month into a business savings account, so you have money to draw on during the lean months.
If you have a family or other dependents, you need to consider what would happen if you became ill. Long-term sickness insurance is not cheap, but could give some of the security that you need. Or you and your partner may decide they are earning enough to cover the essentials, so you can effectively self-insure.
Perhaps the greatest advantage – and responsibility – of self-employment is that you are 100% responsible for bringing in new business, with potentially no limit to your income, in contrast to earnings from employment. In your new role, your income security and growth potential will depend on continually investing your creativity, energy and resources into well-researched, professional marketing and sales.
Your best predictor of success
There are many factors that determine the success of a new business, but perhaps the most important is your passion. The energy, enthusiasm and resilience that are essential in your first years of self-employment don’t come from outside; they are fundamentally rooted in a belief in what you are doing.
If you are considering doing work that is just a way of paying the bills; if you have no real feelings for the people who would be your clients; then you are going to find it harder to persist in the face of setbacks and disappointment.
On the other hand, if you start your self-employment in alignment with your core values then you will gain a huge advantage, starting every day knowing that you have the chance to make a difference – however large or small. What’s more, others will recognise this genuine passion, and will be far more inclined to respect, recommend and hire you.
The path to self-employment
At Work Horizons we do not encourage people to just walk away from the security of their job. Do your research and make a plan. Talk to a financial advisor. Discuss the implications with your family. And be patient – your dream of self-employment may have to wait until you can made adequate provisions or until your circumstances change.
We suggest you start by considering the personal implications of self-employment. Take a look at our short video on the subject.