Self-employment is quickly becoming an area of interest for many people. It’s not surprising really when you hear that UK redundancies hit a record of 370,000 in the last quarter of 2020. As the unemployment rate rises to 4.9%, many people are looking at their options and wondering if now is the time to strike out on their own.
While being self-employed does come with a lot more control over your future, it is by no means a walk in the park. Here are the pros and cons of becoming self-employed.
- You can work when you want – you have the flexibility to decide your own working hours. Are you more productive very early in the morning? Then start early and finish early. As long as the work gets done, it doesn’t matter if you want to take Mondays off.
- You can work where you want – all you need is a phone, a laptop and a stable internet connection. This means you can define your own work environment, whether that’s at home, at a café or somewhere else in the world.
- You can choose the work that you want – you don’t have to work with frustrating clients, be around co-workers you aren’t comfortable with or work on mind-numbing and boring tasks. You are free to take on the work you are most passionate about and to decide who you want to work with.
- You could potentially make more money – your hourly rate is going to be much higher than what you would earn in a full-time job. If you’ve got a full schedule of work booked in, you could be making a lot more per month than you would be employed.
- You are always learning – running a business takes a lot of additional skills, so you will always be developing yourself. As well as business skills, you can also take more control over your own learning and development.
- You could benefit from tax advantages – many things become tax-deductible if it’s purchased for the sake of your business. These business expenses can even include a portion of your rent and house bills if you are working from home and any asset purchases such as cars.
- You have more control over your income – if you want to make more money, you can find more clients. Since you are responsible for your own income, this provides you with more of an incentive to work harder too.
- Hours can be long – you may enjoy your time off work less when you think this time could be spent earning. This may mean that you end up working far more hours than you did as an employee (especially to start off with).
- Being alone in your work environment – it can be lonely working entirely alone during the work hours for days and weeks at a stretch. Having no one to discuss work with or share victories or frustrations can be very difficult.
- You have to do everything – now you’re self-employed, you have to do all of the work, all of the marketing, all of the bookkeeping and so on. This not only takes up a lot of your time, but it can be quite stressful too. Especially since you can’t ask a colleague for help.
- There is no guarantee of work (or money) – unlike a 9-5 job, you don’t know what work you will be able to secure when and for how long. This often leads to a lumpy pipeline (i.e. not being able to win a job for months and then landing 3 at once).
- You could potentially make less money – being self-employed is difficult and requires a lot of self-motivation. If you don’t have the drive, then you’re going to earn less.
- You will have to work for free – running a business takes time, time to market yourself, quote for jobs, invoice clients, and managing multiple clients and your own schedule. This is time that you’re not getting paid for.
- You have no employment rights or a workplace pension – being self-employed means no sick pay, annual leave, workplace pension or company benefits (e.g. a company car, health insurance, gym membership etc). Essentially, any time not working is time not making money.
Self-employment isn’t all smooth sailing
Being self-employed may sound like heaven, but you alone are responsible for whether you fail or succeed. You get what you put in when you’re self-employed, and while this could result in more money and freedom, it takes a lot of self-discipline, motivation, and hard work to get there first.