Building a successful business takes hard work and tenacity, but there are many benefits of self-employment…

Skills to succeed in business

Success mainly relies on the strength of your product or service, plus your ability to persuade, negotiate and network. However, the following six qualities are also vital:

  • Creativity - You must be innovative and imaginative, showing the initiative to push your business forward with new ideas.
  • Determination - You'll require great drive, commitment and enthusiasm.
  • Knowledge - Possessing strong understanding of and passion for your market is vital, while the willingness to learn, listen and adapt to ever-changing customer needs is also a key asset.
  • Leadership - Owning and developing independent projects should come naturally to you; managing a team should too.
  • Organisation - You must be focused and goal-orientated, setting clear and realistic objectives. Working quickly under pressure is another required skill, while good time management is also important.
  • Self-belief - You'll need the confidence to take risks and responsibility for your decisions.

Advantages of self-employment

There are many potential benefits of being self-employed. These include:

  • Flexibility - Setting your own hours and fitting work around other commitments can lead to an improved quality of life.
  • Independence - You've the freedom to trial new ideas, focusing on what you enjoy doing most.
  • Location - Self-employment cuts out the inconvenience of office politics, company hierarchies and - sometimes - the expensive, stressful daily commute.
  • Salary - Your earning potential is much higher, while reaping the rewards of your hard work is very satisfying.

Disadvantages of self-employment

You should also consider the potential risks of self-employment, such as:

  • Benefits - You won't get sick pay, holiday pay or any other employee benefits. You may also feel isolated from colleagues and customers.
  • Finances - Income can be irregular and unpredictable, especially in the short term. You could go several months without earnings, and you must also pay for running costs such as rent, insurance and internet access.
  • Hours - Your working day may be longer than a typical employee's. Business commitments may mean that you spend less time with your family.
  • Pressure - Making decisions without advice or support may see you struggle to switch off from work life. Success or failure is down to you, which can increase stress levels.
  • Responsibility - You're in charge of your tax affairs, pension and National Insurance. You've nobody to manage you either, nor motivate you during difficult times.

Six signs that you're ready to start a business

  1. Your family and friends are supportive, believing you've the ability to become successful.
  2. You've gained experience of working in a similar organisation before at managerial or supervisory level, and you've perhaps even attended seminars on small business ownership.
  3. You've developed leadership skills, and have the willpower, determination and self-discipline to enjoy making your own decisions.
  4. You get along well with others, and are comfortable with the idea of hiring and managing employees.
  5. You're prepared to temporarily lower your living standards and spend a sizeable chunk of your savings.
  6. You've the ability and energy to meet your current commitments while handling a heavy workload.

What’s the difference between a small business owner and an entrepreneur?

Small business owners typically:

  • solve existing and obvious local problems;
  • make low-risk decisions that ensure short-term security;
  • manage their employees closely, meaning that the company can struggle to function without their input;
  • take a traditional approach, possessing core business skills;
  • have little or no intention of selling their business.

Entrepreneurs typically:

  • devise untested ideas;
  • make high-risk decisions that have a potentially huge impact on long-term growth;
  • delegate management to experts, meaning that the company can easily function without their input;
  • take a visionary approach and are responsive to business opportunities;
  • aim to generate buyer interest in their business.