The pros and cons of being self-employed
In the age of Instagram celebrities and digital nomads, being self-employed seems like the latest trend and the secret to living a lavish life of working only when you feel like it and always from some exotic locale.
But what many seem to forget is that self-employment has been around for a very long time. Small companies all begin somewhere - even sprouting as an idea of a freelancer. Being self-employed can also take many forms and is common in many different industries.
Social media has contributed a plethora of new buzzwords and titles to self-employment: ‘remote work’, ‘solopreneur’, ‘side hustle’...but essentially it all comes down to one main thing. Being self-employed means: running your business, your way.
We’ve all seen some of the main ‘pros’ of running a business. Waking up late and working at a laptop from some fashionable cafe or enviable vista. And for some, this is the reality.
But for most, the pros come down to the basics. The same can be said for cons, though many avoid thinking about the cons, especially when first setting out on the self-employed path.
An aspect of being self-employed might easily be both a pro and a con, somehow completely simultaneously. Let’s take a closer look.
The pros of being self-employed
A central part of the allure of starting a business is the prospect of being your own boss. Meaning you have no one to answer to, no one to report to. You call the shots and make the decisions that matter most for your business. We’ll break this down a bit more:
Easy to get started
This one of course has several caveats. If you have an idea that’s something you can begin yourself, without capital, extra training, equipment or office/shop space, then it’s relatively easy to get started. Of course, this changes depending on the industry and resources needed to launch.
Also depending on your business and location, registering with the authorities can be as simple as filling in an online form or if you’re freelancing, may not require anything initially but this can change as your business grows.
Setting your own schedule
This one is also one of the primary benefits that come to mind when you run your own business. For many not tied to an industry with strict working hours, this means that if you’re not a morning person - for example - you can enjoy a bit of a lie-in before getting to work and making the most of your night-owl ways.
But this benefit goes beyond that and also means that you can make time for holidays when you determine it’s possible to step away for a long weekend or extended holiday. It means that you can also choose to take certain jobs or tasks and turn down those that you don’t deem as valuable for your business.
Determining your own road map
This means that you decide the direction in which your business will grow. No matter the current size of your business, you likely have some ideas of how you’d like to see your business develop. And that’s exactly what you can do when you’re self-employed: take the steps necessary to move towards specific goals for development and growth.
When you work as an employee within a company, unless you’re part of the C-level, you’re likely not calling the shots in terms of future development. As a small business owner or freelancer, it’s entirely up to you.
Deciding who you work with
We’ve all had (or at least heard anecdotes about) that colleague. You know the one. Who can’t stop talking about their cat’s birthday party, or their weekend shenanigans. Or who has an incredibly loud sneeze (and somehow always has allergies). Or maybe even those colleagues who are always looking for a leg up, no matter who gets trampled along the way, or even those who just don’t carry their weight.
It must be clear by now - we’re talking about the colleagues you wish you didn’t have to work with. And when you’re self-employed? You don’t. If it’s more than just you, you have all the control over who gets hired, who gets fired, and who works on which projects.
Keeping all the profits
Finally, perhaps most importantly, any profits that are generated from your business are yours to keep. Of course, this is after costs of operation, payment for any employees etc., but you are the primary person profiting from your business.
The cons of being self-employed
From the above, it may seem like being self-employed would be an obvious choice. Who wouldn’t want to call all the shots and keep the profits? And yet as with anything, there are of course downsides to running things yourself.
No sick leave
A primary concern is that when everything is up to you, on those days when you’re just not feeling 100%, or if you come down with something that lasts a bit longer, it’s expected that your business will feel the effects of your absence or inability to work the same hours.
On the other side of keeping your profits, you’re the one responsible for generating your profits, so in the case that you’re not able to do so, there’s no sick leave that kicks in if you’re unable to work.
No paid time off
Along those same lines is holiday time. Although you can set your own schedule and certainly take all the holiday you choose, if it’s only you and there are no employees there to help run things while you’re away, your profits might see a hit.
A topic that has become more and more accepted to discuss involves the solitude that can come with running a business on your own. Many entrepreneurs, sole traders, freelancers, etc. have recently started to share their experiences with the remoteness that often comes with being self-employed.
Depending on the field, it’s possible that you may not interact with others on a daily basis if you’re working from a home office, for example. Your business can also take up extra time, causing you to put in hours on the weekends and resulting in you missing out on social time with friends and family.
When you’re self-employed, it’s incredibly important to set aside time to step away from the business on a regular basis and ensure that you’re connecting with others.
Finally, just as it’s up to you to bring the profits in, it also means that in the case that something goes wrong, that there are unexpected costs or fees, it’s also your responsibility. From tax to refunds, to potential penalties for not adhering to rules for your industry or VAT submission, it’s all on you.
Weighing the risks and rewards of being self-employed
The cons can seem intimidating. Yet the pros of being self-employed are certainly plentiful enough to persuade anyone who can handle the risks.
It’s arguable that it takes a certain kind of person to be self-employed, but with the right preparation and business, it really can be an option for anyone willing to take the leap.
Knowing your own strengths and weaknesses, as well as whether you have the motivation to pursue leads and handle challenges (chasing late payments, for example), is a great place to start. Combine this knowledge with a thorough business plan and you’re already on the right path.