Employed person to self-employed person: “You’re so lucky, being your own boss. You can control your working hours and take holidays and days off whenever you want. If you need more money, you just work harder. No one tells you what to do and every hour you put into your business is time well spent building something for your future. Best of all, you can be clever with your taxes. What a great life!”
Response from self-employed person: “I think you are the lucky one. As long as you turn up to work on time, keep a smile on your face and do your job reasonably well, you’re guaranteed to be paid at the end of the month. You get paid when you go on holiday, you get paid when you are off sick, and if you work for a large employer, you even get money put into a pension plan for you. It is easier to get a mortgage and… I could go on and on!”
Good arguments on both sides. However, the truth is that in today’s economy, many ’employees’ live in fear – as do many who would call themselves their own bosses. For the employee, fear that the business they work for may start to face difficult times. Difficult times which would lead to cost-cutting. Cost-cutting could mean ruthlessly trimming the firm’s most valuable, but also the business’ most costly resource – staff. Staff cuts meaning redundancy. Redundancy meaning unemployment and the misery and uncertainty that goes hand in hand with that unhappy state of affairs.
The self-employed individual is the business, so the risks are much closer to home. There is no cushioning effect such as a redundancy package when the business starts to suffer and the individual rises and falls with the business like a ship on the waves of the sea.
So what does it take to be your own boss?
1. Guts: the safety net provided by being an employee is all but an illusion. Ultimately, an employee would lose their job if they failed to perform in the same way as a self-employed person would lose their business if they failed to perform. So if the risks are similar, why not do it for yourself? Those who take the plunge into self-employment tend to think that way and believe in their own ability to deliver.
2. Belief: Having a positive ‘yes I can’ attitude is crucial when running your own business. Statistics show that people who grow up with parents who are, for example, teachers, would find self-employment an uncomfortable concept, while those who grew up around self-employed people would be much more comfortable in running a business.
3. Self-discipline: You report to no one but yourself, so you can take time off whenever you feel like. Is this a good thing? No! The temptation to put things off till tomorrow can be too great for those with a lack of self-control. Here, a split personality helps. Splitting your hours into employer/employee could be the key to conquering any self-control issues.
4. Prudence: Know yourself, know how much you need coming in and understand your expenditure. Many self-employed people bury their heads in the sand and try to bumble along from day to day without really understanding how their cashflow works. Having a full understanding of your income and expenditure will give you confidence.
5. The ability to plan and execute: Your business plan would be the starting point, but it goes beyond that. You’ll need to plan every last detail and work your plan like your life depended on it. It is all very well having long-term plans, but you must be flexible enough to adjust these plans as market conditions change. Deal with your plan in bite-sized chunks. You succeed or fail one day at a time. If you make a success of every single day, it stands to reason that over a period of time your business will be a success. What a great life!