I recently wrote some notes on 'Becoming Self Employed in the UK' for a research student. They are repeated here:
Firstly,
let us understand the situation from a statistical point of view. In in 2012
there were over 4 million people self-employed. This is set against a figure of
about 25 million who are employed. The self-employed figure is rising. Why?
Well in the years of recession from 2008 onwards, it seems that people may have
chosen self-employment as a way of keeping some income coming in, amongst other
things.
Secondly,
let’s look at the different categories of self-employed:
·
There
are a lot of people in some industry sectors who are ‘self-employed’, but to all
other intents & purposes they are just like an employee. These people are
often ex-employees of large companies who have been ‘outsourced’ to the
‘contracting’ world. This is particularly prevalent in the IT & oil industries
to name a couple where large businesses want to keep down their ‘headcount’ as
it makes their financial reporting look good, but in actual fact they still
need those other specialist IT people. They recruit these through specialist
recruiting companies who act as an ‘umbrella’ organisation shielding the client
company from the full liabilities of employing people. I worked in this way for
some time and it’s good for both parties most of the time. In summary, though I would not call these
people ‘self-employed’ in the true sense of the word as they have not
necessarily taken that leap of faith in themselves and in the marketplace and
created a business which will succeed or fail upon their innovation, marketing
and business acumen.
·
Then
there are the people who have made a lifestyle choice and become self-employed
because they want the freedom of working hours, the location where they work
and the opportunity to take time off whenever they wish. These people are often
in a good financial position, with or without being self-employed. So for the
moment, let’s put this group to one side.
·
Likewise,
there are other groups who are self-employed without taking the leap of faith
as it were. The building industry used to be full of people in this category.
Actually, it largely still is. Big building companies like Barratts don’t want
to directly employ people, as this leaves them with a heavy liability when
there are a few houses to build or when the economy takes a downturn. If they
have self-employed people they can shed these quickly as a project comes to a
close. It is often the case that a young person will get their training in
bricklaying, carpentry and electrical installations etc and then simply become
self-employed, that’s how the industry works. In this sector one finds that a
father who is in the building industry has a son who is also in the building
industry and so the way of working is repeated from generation to generation.
·
Self-employment
has also been the choice of many women who want to get back to work after
having had children. Often there isn’t an easy way for them to take on a
regular job because of school holidays, sickness etc so they develop a
self-employed business. This is a growing area, but it really depends what the
previous experiences of that person and whether their business sector suits the
world of self-employment. Sometimes this works, sometimes it doesn’t. To work in this way often takes a lot of determination
or and extremely good connections in business.
Now
moving on, let’s look at all of the other people who might become
self-employed. These range from the young entrepreneur to someone who is making
a conscious career change and are moving from employment to the riskier world
of self-employment. The person may have had an idea or sees a market
opportunity. They then take the risk, leap of faith and become self-employed to
develop their business. It is in relation to this group that I would address
your question.
You
mention the word motivation. Indeed, this group needs to be highly motivated
and determined to carry on. It’s not like having an ordinary job where if you
don’t really feel like contributing very much you can go slow for a day or two.
If you’re developing an idea or a market opportunity you have to keep working
at it. But there are much more practical things you have to think of. When I
first came self-employed, I thought it was all going to be very easy, but it
wasn’t.
Here
are a few lessons I learnt:
o
Make
sure you understand your market. Test your ideas about the market you’re
proposing to go into with anybody. You can find before you start. Don’t choose
something just because you like it.
o
Make
sure you have a business plan, including different scenarios of worst-case and
best case. Always plan for the worst and hope for the best. Get people to check
out your plan. There are simple tools you can use like doing a SWOT & RISK
analysis.
o
Financial
stability, from the worst-case plan work out how you’re going to live. If
you’re an entrepreneur, you have to take risks and take a positive view but
don’t put you and your family into a financially difficult position.
o
If
it’s an idea or product you are developing, how far down the line have you got
improving its viability and marketability? It might be better to more fully
develop your product plan before you take the leap into self-employment , so
that you tease out all of the bugs or worse points before you stand alone
financially.
o
Keep
your costs down, – you’re not a major international corporation. Find ways of doing things that don’t cost you
money, or at least minimise running costs. A classic case of overheads closing
a business is somebody who has an idea to open a shop and take on a lease. The
lease costing say £15,000 a year doesn’t seem a lot of money, but remember you
have got to make sure that that cost comes out of the product’s profit you sell
through your shop before you take a salary. Look for grants and financial
support in the early years of your product development. Working from home is
one of the best ways of keeping your costs down. Get free help wherever you
can.
o
Don’t
reinvent the wheel, - somebody’s thought of how to deal with things before, in
most cases, so read up. One of the best web sites about business planning is
called businessballs.com. Look at sites like the Citizens Advice Bureau for
help in starting a self-employed business. Do your research!
o
Contacts,
– do you have the contacts to help you sell your services or products. Many
businesses succeed because they already have a great contact within a much
larger organisation, and so it easy to launch a service or product. For
instance, when I was self-employed, I had a great contact in the BBC and I introduced
my services, and very soon I had a contract. Simple! Mmm, but if you don’t have
contacts in the right places life can be tough.
o
Support,
– being self-employed, opens up a whole range of things which take you away
from doing the actual job you started out to do. Dealing with the taxman,
keeping your accounts books, understanding legislation. There is loads of
stuff. You are effectively in the same position as the managing director of
Marks & Spencer’s but without lots of people working for you, who are
professionals in these areas. Find ways of getting support without it being a
burden to you or being a high cost. Above all, though, keep your record-keeping
up-to-date and tidy.
Look
for site like these:
