Should I become Self Employed?

More people than ever before are starting their own small businesses. According to the latest official figures, more than 35,000 people became self-employed during the last year, making the total number now working for themselves just under 4 million.

The lack of good employed jobs, redundancies and perceived freedom of working for yourself are some of the reasons but for many, self-employment can be a frightening step to take, particularly when it comes to stability of income.

Those who are new to self-employment will come across unexpected obstacles and challenges and many small businesses fall by the wayside in the first year often due to a lack of planning and not taking a reality check.

A recently released analysis of business failures by Equifax seems to suggest a continuing downward trend in enterprises going under. With a 7.9% drop in failures for January-February 2011 compared to the same period in 2010, this provides some positive signs. However, the fact remains that almost 95% of new businesses fail within the first 5 years.

The desire to work for yourself can be strong; perhaps you have come up with a brilliant idea that you believe will make you wealthy. In many professions, self-employment or freelancing is increasingly normal as well as rewarding and profitable. Journalism, legal and financial professions, writing and the arts are all sectors where self-employment is commonplace.

The reality is that if you do choose to become self-employed or a small business owner, your life is unlikely to be filled with free time. The workload and pressure is overwhelming for some and knowing that the buck now stops with you can be too much. For those used to being employed in a corporation, where there is an infrastructure of departments to handle issues such as IT, human resource, accounts, marketing, legal, financial… the list goes on! Being self-employed means, you may be opting to be the Manager of all of these departments and more.

Brian Bush, Director of Norwich based business, Arcate Ltd. says, “the biggest benefit to any new business is strategic planning. It takes time to put together a business plan, but writing it is just the start. We work closely with our businesses reviewing their plans and development at least once a quarter. Things change and if the consequences are not thought through, failure is increasingly likely.” Brian advocates sticking to what you know, “if you have a skill, and your business relies on your skill then you should be doing exactly that. Consider leaving the accounts, HR, legal and other professional issues to the experts and get on with running your business and making money.”

James Ewles wrote this article on the 10th July 2011. The points raised in this article are the opinion of James Ewles only.

James is the Managing Director of Oracle Financial Services.

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