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Is self-employment for me?

Self-employment is an appealing option for many, making up 15% of the labour market in 2018, but it’s not right for everyone!

If you are considering going solo, be it by consultancy, freelancing, or starting your own business, there are many things that need to be considered before breaking out on your own.

So, what is self-employment?

Self-Employment is quite simply when a person works for themselves rather than an employer. This could be anything from managing and running a business or selling services or goods as a freelance trader. Rather than relying on a wage packet or salary from a company, a self-employed person makes their income from the profits of their own business.

Why do people become self-employed?

There are many potential benefits to being self-employed. One of these is flexibility in your schedule. While being self-employed usually entails working longer days or on-average longer work weeks, one of the perks is that you make your own schedule.

This creates a particular paradox that you have to appreciate and embrace – that time not working is time not paid. Provided you are putting in the effort, you can set a schedule that suits you. Another core reason may be the location – working from home is rarely applicable while working for someone else.

If you aren’t one for office politics, company hierarchy and a lengthy daily commute, then it makes a lot of sense to be self-employed. It also makes sense if you have schedule-breaking problems like a school run or young children to care for!

Freedom

Another reason is more creative freedom. By being your own boss, you’re in charge of the decision making and will have the freedom to explore creative solutions to problems and the satisfaction of working on projects of your own choosing. Many people can’t imagine having to run things past a manager or boss.

The work you do is yours and yours alone – and the criticism you receive is from your customers. If you feel you are an independent decision-maker, then self-employed is likely the way for you.

Job satisfaction is another reason people go it alone. Your hard work can be extremely satisfying, especially with increased autonomy.  Provided you love what you do and are able to translate your passion to your work – and then on to your clients – your integrity and enthusiasm will carry your business through.

As you are in control, you’ll encounter a lot of variety in the range of projects you take on, and gain specific experience in areas you may not have to otherwise, such as administrative work and bookkeeping.

The downsides

However, there definitely are drawbacks, especially when starting out!

As mentioned previously, your long hours could be great for your schedule, but may be irregular. It also means you may struggle to switch off between your work and home life, particularly if working from home.

You’ll be a lot more responsible, being in charge of your own national insurance, pension, and doing your own self-assessment tax return. You also will not have the usual employee benefits, things like a holiday or sick pay, or dental plans. You’ll be starting from nothing – building a client base or buying into an established one – and this can be a slow and frustrating process.

Your finances will also be unpredictable, particularly early in the business’s inception. You may go a long time without making a profit and will have to cover your own overheads.

So what do you need to succeed?

This mostly depends on the strength of your product or the services you provide. But being a small business owner also necessitates that you have certain qualities, such as being innovative and creative.

Imagination is key and you will need to have this and genuine initiative in order to thrive. Not only this but you will require the determination and discipline to see projects through, usually against adverse circumstances.

You will also require a good knowledge of the market you are entering and the product you are supplying.  You will have to be goal-oriented and focused, while able to take full responsibility for your decisions and the ability to set realistic and achievable objectives.

Setting up your own business takes hard work and tenacity but for enterprising individuals, the effort is well worth it.

Food for thought

A great blog from the Everyday Loans team! More people each year are going into self-employment, and small businesses are cropping up at an increasing rate. If you think you want to try it, there’s never been a better time.

If we can assist you with a loan to suit your needs, be sure to visit our website’s main page for a fast, handy quote tool.

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Tim Woodley
Financial Content Editor at Everyday Loans
Tim Woodley has been a financial copywriter for over 8 years, using his experience and skill to draw out and discuss interesting financial subjects and learning points that help make life better. https://www.linkedin.com/in/tim-woodley-725267133/