Setting up your own business takes tenacity and hard work, but the benefits of self-employment make the effort worthwhile for many enterprising individuals
Self-employment accounted for 15% of the labour market in 2018 - up from 12% at the turn of the century. In this time, the number of self-employed workers aged 16-24 has increased by 74%.
While self-employment may be an appealing career path for some enterprising individuals, it won't be right for everyone. Before starting a business, you'll need to weigh up the benefits and drawbacks of working for yourself - here are just a few to get you started.
Advantages of self-employment
There are many potential benefits of being self-employed, such as:
- Creative freedom - By going self-employed you'll be in charge of the decision-making. You'll have the freedom to explore a number of creative solutions to problems that arise, and have the satisfaction of seeing your ideas through to completion.
- Independence - As well as creative freedom, you'll also be able to set your own hours and fit your work around other commitments, which 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, meaning you can take on more work at various times of the day. Financially, the sky's the limit.
- Variety - As you're in control of your workload, you'll have the opportunity to work on a range of projects with a number of clients and develop new skills. You'll also gain experience in the different areas of setting up a business, including overseeing the finances and administrative work.
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. The fact that success or failure is down to you can increase your stress levels.
- Social isolation - You'll miss out on the workplace environment, at least while you're establishing yourself as a business owner. Not only can this be lonely, but it's likely you'll also have to work harder to stay motivated.
- Starting from nothing - Establishing your business and building a client base can be a long, tiring and at times frustrating process. You'll need determination to succeed and perseverance, even if progress is slow.
- 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, as well as managing a team, should come naturally to you.
- 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.
If you think you're ready to take the plunge, discover how to start a business.
5 signs you're ready to start a business
There's no 'right time' to go self-employed. You'll develop skills and learn as you go along - but if you'd like some reassurance, you might be ready once you've:
- mastered a professional approach - When starting a business, you need the confidence and motivation to market yourself from day one. Many think that charging a reduced rate or offering to work for free is what's required to build a client base, but remember that the work you're doing will still add value to your client's business or project and you should be compensated for this.
- found a unique selling point (USP) - One of the biggest misconceptions about self-employment is that to be successful a business must be started by an entrepreneur with a big idea. Having the right skills, passion and business acumen are more important factors for finding success.
- developed excellent organisation skills - Taking control of every aspect of your business is no mean feat. By creating a long-term business plan, or a weekly to-do list, you'll have a clearer picture of where your business is heading.
- demonstrated resilience - Starting your own business doesn't happen overnight, and will require months - sometimes years - of hard work, and a thick skin. It's a slow process, and you may encounter rejection from clients along the way, which can be disheartening.
- gained the confidence to build a client base - Building up a network contacts is crucial for establishing a client base - as daunting as it may seem. You'll need the motivation, confidence and enthusiasm to be looking for potential opportunities at every turn when you're starting out.
Find out more
- Ready to get started? Learn more about writing a successful business plan.
- Browse job profiles to explore self-employment opportunities in your chosen career.