The allure of self-employment is powerful. Who doesn’t want to be their own boss, work when they want to, from wherever they want to, and have complete control of their income potential?
Unfortunately, it doesn’t really work that way. Becoming self-employed is a life-changing undertaking. I wouldn’t change my decision to become self-employed for anything in the world, but I didn’t decide to become a solopreneur without taking all possible factors into consideration.
Over the next several weeks we are going to dive deep into the world of self-employment, and talk about how to conquer some of the most pressing issues we face a self-employed individuals.
In my opinion, if you’re self-employed you’re an entrepreneur. Lots of people get in a pickle over calling self-employed individuals entrepreneurs, or solopreneurs, or small business owners.
I don’t think it matters.
What matters is that if you are solely responsible for generating your income through the development of a bona fide business, then I think you can call yourself any of the above. As such, I’ll be using the terms interchangeably.
Being self-employed has it fair share of advantages and disadvantages, so let’s talk about those now.
The Advantages of Self-Employment
Personal Fulfillment – If you start your own business for the right reasons, if you serve people that you were meant to serve, and if you truly enjoy what you do, there is no better feeling than making a living from it.
Professional Independence – Being able to call your own shots, establish your own business philosophy, and make your business what you want to be is not just empowering, it’s fun.
Unlimited Income Potential – Elusive as the concept may sound, most of America’s wealthiest individuals were small business owners at one time. That said, extraordinary wealth as a solopreneur is not the norm or average outcome by any measure. Many entrepreneurs make a satisfactory living, and are very happy, despite not being bazillionaires. Going into business for the right reasons to begin with, will greatly impact how you feel about the income you make in the end.
Tax Advantages – Believe it or not, owning a business can make you eligible to make use of tax privileges not available to employees such as deductions for costs, insurance, and an increased cap on tax free retirement savings.
The Disadvantages of Self-Employment
It’s All You – When you first become self-employed EVERYTHING is your responsibility. You can read The E-Myth Revisited by Michael Gerber, but you can count on having a hard time implementing his advice at first. In all likelihood you won’t have the financial resources and training systems in place to build a system for your business from the get-go. It takes time to do that. Juggling everything in your business can get overwhelming and intense. Having the right support in place to get through this start-up phase is essential to your success.
You Live With Uncertainty – Despite what most people think, just because you have a job, doesn’t mean you have financial security. As the last several years have demonstrated, your job can vanish like a vapor. The real difference between being an employee and being self-employed is that your level of psychological security is higher when you’re employed because you expect a paycheck.
This does not exist as a solopreneur. The reality that your income source could cease at any time is palpable when you’re self-employed. Thankfully, if you market your business properly, fill your pipeline with customers, develop multiple income streams, and deliver an amazing product/service so that you build a bona fide business this issue becomes less palpable.
Administrative Matters Are Your Matters – Filing taxes, keeping clean records, invoicing customers, drafting contracts, securing healthcare, obtaining insurance, applying for licenses and complying with regulations are all your problem. Thankfully, it’s not as bad as it sounds, and as you grow your business you can outsource many of these responsibilities. But until that day comes – this is all you too.
You Are The Fall Guy – When you first pursue self-employment, you will make mistakes. It’s part of the learning process. Developing a strong positive attitude and learning to “fail forward” is essential to getting your business of the ground.
You Don’t Really Call The Shots – This is the paradox of self-employment. You are in total control of your time, attention, and effort, but if you’re going to be successful your time attention and effort need to be on building your business. This means you’ll work more than you ever have. You’ll have multiple bosses instead of just one (your clients are your bosses). You’ll be able to work when you want to, but it better be quick and great quality if you want to be paid well for what you do. Managing your time, establishing balance, and exercising self-discipline are all part of the package for the solopreneur.
These pros and cons are just the “biggies.” There are many more of them too, and that is why it’s so important to know what you are getting into when you jump into self-employment.
Knowing The Good, The Bad, And The Ugly Are You Still Right For Self-Employment?
It’s often said that just because someone can be an entrepreneur, doesn’t mean they should. Personally, I think every individual should perfect their entrepreneurial skill set because you never know when you might be forced to use them. But if given the choice, you should only consider becoming self-employed if you have the right skill set and you’ve got the right reasons.
Of course, having the right products, services, and target market are essential to becoming successfully self-employed as well, but having the right set of intrinsic abilities to see your entrepreneurial pursuits through goes a long way.
Here are some key skills you will have to learn or outsource to become successfully self-employed:
- Financial Management – You have got to have a handle on your money matters.
- Marketing & Selling – If you don’t do these things you’ll be out of business before you start. Marketing is the lifeblood of your business.
- Leadership & Time Management – You are in charge of yourself and everything else; no one will tell you what to do.
- Confidence – This is hugely important and HUGELY overlooked.
- Trusted Intuition – You will have to make decisions regularly, and oftentimes without full knowledge.
- Positive Thinker – If you have a negative bent, rejection, setbacks, and unforeseen obstacles will throw you off course and you can’t afford that.
- Persistence & Ambition – There is no such thing as overnight success. There is no magic bean. Accept it and get to work.
- Unrelenting Passion – You’ve got to want to do what you’re doing more than anything else, otherwise go do the other things.
Still Not Sure? Take This Test!
Okay, so keeping in step with my philosophy of making work fun and always giving you actionable advice, I created this little online quiz to help you determine whether or not you are truly cut out for entrepreneurship.
This isn’t a scientific test based on years of research. If you’re looking for something like that try a Myers-Brigg exam. This is simply a guide that will indicate whether or not you have entrepreneurial traits working in your favor. It’s fun. So try it!
Then be sure to come back here and share your results in the comments below. And if you’re already self-employed, tell us some of the things you struggle with the most, or wish you would have known beforehand so we can learn from one another.
Click here to take the quiz now.