What's your readiness score for self-employment?
Oh, to work for yourself!
No more bosses, no more rat race, no more commuting—it sounds wonderful.
I have many clients who work for themselves. They are either self-employed, or run a small business.
Are they happier working for themselves?
Definitely.
Is everything peaches and cream?
Definitely not.
Working for yourself can be fantastic. But, while it means more freedom, it also means more responsibility.
In this article, I’m going to go over what it really means to be self-employed. My goal is to give you enough insight to help you decide if you are ready to be your own boss.
What does it mean to be self-employed?
When I say self-employed, I mean one of two things:
You work for yourself, out of your home. Your business is not incorporated.
You run a business (either out of your home or you have a storefront) and you are incorporated.
My self-employed clients primarily fit into the first category. Most don’t have any staff, typically work from home, and are usually selling their intellectual expertise to solve specific kinds of challenges. They are a business of one—themselves. I also call them self-employed professionals.
What are some of the advantages of being self-employed?
There are definite advantages to working for yourself. Here are a few of the ones my clients often mention to me.
You get to do work that truly interests and inspires you
You create your own work schedule and routine that meet your requirements
You can operate in a virtual, home-based office, which eliminates the need to pay rent for office space.
You set your own pricing based on your abilities
You can generally operate with very low costs and therefore very high profit margins
You can choose which clients to work with (and which not to)
You don’t have to commute to work every day
What are some of the disadvantages of being self-employed?
There are, of course, some possible disadvantages to being self-employed. It’s important to know about these before you start working for yourself, so that you are properly prepared.
You’re always on the hunt for your next project. For those who are natural networkers, this might not be a huge challenge. For those who are more introverted, you have to learn how to network and dig up leads.
When you first start, you need some financial reserves (typically at least 3-6 months) to address the potential for “feast or famine”
You aren’t part of a long-term team, and that can be somewhat socially isolating. So you need to find mechanisms to address this (such as joining a support group consisting of other self-employed professionals)
You typically work from home and that can mean lots of distractions: family, pets, phones, visitors—not to mention the temptation of things like the snack cupboard and video games. You have to be disciplined.
You have to be responsible for all aspects of running a business: accounting, marketing, sales, running a website, etc. That means a big learning curve, especially in the beginning.
Should I become self-employed?
Self-employment is not for everyone, so I’ve put together the following checklist to help you determine how ready you are.
For the following items, count how many you answer “yes” to.
Are you are frustrated with the “rat race”?
Do you get excited at the idea of working for yourself?
Can you work for long stretches of time on your own, alone? (You don’t have the need for the continuous social interactions of a traditional workplace)
Are you able to manage your own time effectively and be productive?
Do you have a specific skill/product/idea that is needed/wanted in the marketplace?
Do you have sufficient space and resources in your home to run a home office, or sufficient funds to set up a commercial office?
Are you willing to take on the responsibility for all aspects of running a business: accounting, sales, marketing, customer service, IT?
If you don’t know enough about accounting, sales, marketing, customer service, IT, etc., are you committed to learning about them?
Are you disciplined enough to address and resist the distractions that come with working from home?
Do you have enough financial reserves to get you through the initial start up phase? (That means enough to set up an office and see you through the first months as you build your client base. The number of months it takes to build up enough clients to pay the bills depends on your skill level at marketing/sales and the type of business you have.)
Do you have extensive work experience (10+ years), which has given you strong skills in the area in which you want to be self-employed?
If you answered “yes” to 7 or more items on this this, you are probably ready to take the first steps to becoming self-employed. If you scored less than 7, it doesn’t mean being your own boss isn’t part of your future; it might just mean that you are not quite ready yet.
Thinking about becoming self-employed?
If you are thinking about going the self-employment route, I recommend two main things to start.
Start learning, especially about the points mentioned in #7 above (sales, marketing, accounting, customer service, IT). Read books, attend relevant workshops/webinars etc.
Join a self-employment support group, such as my Free Agent Collective. There is no better way to learn how to start and run a business than from people who’ve been there and share the same types of vision that you do.