Is Self-Employment Right for You?

Many people dream of being their own boss someday. For some, self-employment is the quickest way to turn that dream into reality. But not everyone is cut out for self-employment.

Why Self-Employment?

The following questions will help provide some direction:

• Why are you exploring entrepreneurial alternatives at this time?
• If you could land your ideal job OR start your ideal business, which would you choose today? Why?

When compared to traditional employees, entrepreneurs are not necessarily happier, less bored or worried, or even more satisfied with their daily tasks. No one is there to give you assignments, provide a constant flow of work, or pay a monthly salary. Unless you can identify and hold on to what motivates you most, you will not be likely to succeed.

Personal Qualifications

Another way to determine whether self-employment is for you is to consider your own qualifications and preferences. While many people think they can turn a particular skill, hobby, or talent into a successful business, the reality is that small-business ownership requires particular business and other skills that are often overlooked. If there is ever a time to be honest with yourself, this is it. It is better to take the time you need now for proper self-assessment in respect to this, before you start making substantial commitments in time and finanaces.

The following questions can help you conduct an honest self-assessment:

• What are your qualifications for owning a business?
• Do you have sales and marketing experience?
• Do you have operational, administrative, and general management experience?
• How experienced are you with basic business financial management practices?
• What education, training, or experience do you have to indicate that you will be capable of producing desired results?
• If you do not plan to lead specific parts of the business, who will manage them, and how much will you need to pay them?

Costs of Being Self-Employed

While some entrepreneurs earn a higher net income than traditional employees performing the same type of work, the cost of running a business often reduces your income considerably. It is wise to first determine your personal financial needs. What are your living expenses? How will you cover housing and pension costs etc? Next, determine start-up and ongoing expenses. What will you be required to pay in additional taxes?

It is critical to remember that in addition to providing services or products, you will also need to devote time and money to the tasks necessary to operate the business, including:

• Marketing and selling.
• Tracking earnings and expenses.
• Paying local business rates, corporation tax, national insurance, and income taxes.
• Communicating and contracting with customers and vendors.
• Handling employee-related matters, such as payroll and benefits.
• Complying with Health and Safety regulations, employment law, and guidelines and regulations associated with the industry.

Since learning from your mistakes is both expensive and time consuming, it’s recommended to take business courses or seminars before starting a business. Small-business development centres, national and local authority enterprise schemes, and other private companies provide help for those starting a business. 

Other Things to Consider

On the positive side, being self-employed may allow you the freedom to make your own decisions. But there are negatives, too. Self-employment can involve stress, unpredictable income, and risk. Think of the pros and cons this way: If you’re self-employed, you can decide when and if to take annual leave – but no one will pay you if you do.

If you’re thinking about working for yourself, it’s a good idea to talk to other people who have (or have had) a business similar to the one you’re trying to start. You’ll want to do a lot of research.

If these exercises have helped you realize that self-employment is NOT for you, that’s actually a positive outcome. Think of all the time, frustration, and money you’ve saved by not starting a business destined to fail! On the other hand, if they have clarified your reaffirmed to start a business, then nothing should hold you back from becoming your own boss.