Self-employment: Is self-employment right for you?

What are the pros and cons of being
self-employed?

Being self-employed can have its advantages. These include:

• the opportunity to choose your own hours;
• independence and freedom to try out new ideas;
• increased job satisfaction.

The risks depend on how you set up the business. For example, if you set up a limited business and sell shares to friends or family, you are less personally liable for any costs if the business doesn't succeed. However, this means that you have the responsibility of making sure that your friends and family's investments aren't lost too.

The disadvantages of being self-employed as a sole trader or through freelance or consultancy work include:

• pressure from setting up the business and ensuring it succeeds to legal responsibilities such as paying your taxes and National Insurance;
• a lack of free time. You may find yourself working every day as you are not only responsible for selling your product or service you are also in charge of all administration tasks too;
• money worries. You may have to go a few months without having any earnings as you build up your business. This could even result in needing to take on a part-time job to keep up with your living expenses;
• a lack of holidays, sick pay and company benefits. You won't be covered if you take time off work for any reason as you are solely responsible for earning your living and you will need to pay all of your contributions to a private pension.

Read about money and tax essentials.

Which sectors attract the most self-employed graduates?

The most common sectors include media and journalism, art and design, IT, sports and fitness and banking and finance.

Graduates from disciplines such as the performing arts, media production and art and design should prepare for periods of self-employment, if not for the entirety of their careers at least for some time before securing an in-house position.

A recent survey that asked graduates what they were doing six months after graduation found that more than three quarters of graduates working as musicians were self-employed/freelance. It also revealed that more than half of those working as artists and more than a third working as textile designers were self-employed.

The Destinations of Leavers from Higher Education survey also found that all graduates working as garden designers, upholsterers and electricians were self-employed as well as more than half of acupuncturists, osteopaths and homeopaths. (What Do Graduates Do? HECSU/AGCAS, 2012).

When it comes to the arts, there is a high number of freelance workers but they are often competing with each other for fewer contracts and aren't aware of the 'hidden jobs market' which is taking over advertisements in being the most popular way of freelancers finding work.

Recent arts graduates may find this new way of entering the industry tricky as it relies on networking to tap into this 'hidden market'. Find out more at The Guardian - How to be an Arts Freelancer in 2013.

Have I got what it takes to set up a business?

There are a couple of approaches you can take when setting up a business. A business owner may not wish to change their structure and approach to business and may stick to using traditional knowledge and skills.

Entrepreneurs on the other hand will look to continue to grow a business, be responsive to opportunities, and take a creative and visionary approach. (Quality Assurance Agency, 2012)

The National Centre for Entrepreneurship in Education (NCEE) advises that a range of skills are needed in order to be a successful business owner. These include:

• commitment to see things through from conception to completion;
• an ability to network;
• confidence to take ownership of projects/developments;
• initiative;
• good persuasion and negotiation skills;
• focused to set and achieve goals;
• strong decision making skills;
• an ability to work quickly under pressure;
• confidence to take risks when necessary;
• an ability to work independently.