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-employment. These 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.