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Is self-employment right for you?

By Prospects

Monday 7 January 2019 Careers and Jobs

Creating a successful business takes tenacity and hard work, but the benefits of self-employment make the effort worthwhile for many enterprising individuals

Advantages of self-employment

There are many potential benefits of being self-employed, such as:

  • Independence - Having the freedom to set your own hours and fit your work around other commitments often leads to an improved quality of life.
  • Job satisfaction - Reaping the rewards of your hard work can be very satisfying, while you also have the autonomy to do the things you love most.
  • Location - Working from home, if applicable, means that you don't have to worry about office politics, company hierarchies or an expensive and stressful daily commute.
  • Salary - Your earning potential is much higher when self-employed - everything is in your hands and, financially, the sky's the limit.

Disadvantages of self-employment

Despite the advantages, there are some inevitable risks involved in self-employmentThese include:

  • Lack of employee benefits - You won't get sick pay, holiday pay or any other employee benefit.
  • Long hours - Your working day may be much longer and more irregular than someone who isn't self-employed. Business commitments may mean that you spend less time with your friends and family, or struggle to switch off from work life.
  • Responsibility - You're in charge of your pension, National Insurance and completing your self-assessment tax return - what's more, you'll pay tax even if your business makes a loss. Nobody is there to manage you or motivate you during the difficult times. The fact that success or failure is down to you can increase your stress levels.
  • Unpredictable finances - Your income can be irregular, especially in the early days. You could go several months without earning a profit, and you'll always have to pay running costs such as rent, insurance and internet access.

Skills to succeed in business

Success as a small business owner largely relies on the strength of your product or service. However, you must also possess the following qualities to thrive:

  • Creativity - You must be innovative, imaginative and have the initiative to push your business forward with new ideas. You'll also need drive, determination and enthusiasm to make them reality.
  • Knowledge - Having a strong understanding of your market and customer is vital, while the willingness to listen and adapt to their ever-changing needs is also key.
  • Leadership - Owning and developing independent projects should come naturally to you, as should managing a team.
  • Organisation - You must be focused and goal-orientated, able to set clear and realistic objectives. Working well under pressure and having strong time management skills are also important.
  • Self-belief - You'll need the confidence to take risks and responsibility for your decisions, as well as the appetite to network with individuals and other organisations.

Six signs that you're ready to start a business

Here are several boxes that you'll probably need to tick before committing to self-employment:

  • You have the willpower, determination and self-discipline to enjoy making your own decisions, and are comfortable with the prospect of hiring and managing employees.
  • You possess experience of working in a similar organisation at managerial or supervisory level, and have a deep understanding of the market that you're entering.
  • Your family and friends are supportive, genuinely believing that you've got the ability and energy to be successful on your own terms.
  • You're prepared to temporarily lower your living standards and spend a sizeable chunk of your savings, even if you've secured significant investment.
  • You've developed skills in leadership, perhaps through attending seminars on small business ownership.
  • You've worked out key financials such as your cashflow and profit margin.

If you feel that you're ready to make your move, discover how to start your own business.