There are plenty of advertisements on TV, radio and the internet for becoming self-employed and all seem to highlight the same ideas
- More money
- Less & more flexible hours
- Do the projects that you want to do
- Be your own boss
Is this really for you? From the lines above I bet almost everyone is saying yes but there will be a few of you who are slightly more sceptical.
Like the majority of you I said "yes" too, however I found that there were a number of pitfalls and I eventually had to concede defeat and admit I failed.
My aim for this article is not to discourage you from trying self-employment but rather to try and highlight self employment from the other perspective and show the difficulties that can be faced rather than just stating the potential benefits. Hopefully this will help you to avoid the same mistakes I made and really make sure that you are ready for self-employment before jumping in with both feet.
One of the big selling points of self-employment is being able to do the projects that you enjoy and move away from doing the projects that you don't enjoy. I was a web developer and I enjoyed the web site and database development but I'm not a good with public speaker and writing user manuals bores me to tears, therefore, when I turned self-employed I wanted to drop off the public speaking and user manuals and focus on the website and database development.
This didn't quite work as I expected because I ended up having to do a lot of public speaking in the form of phone calls and business meetings in order to try and sell my services and get work in. I also had to write up proposals and weekly progress reports about the tasks I had done for my clients.
Looking back on it now it would appear that I didn't drop off any of the work I disliked at all but instead it was all there, all the time, just with a different face on it. I bet that many of the tasks you would like to put drop off will still need done even if you change to being self-employed.
In addition to not losing the work you disliked I found that a considerable amount was added on like proposals, invoicing, payroll, accountancy, tax returns to name but a few. This all needs on in excess of the hours you normally work and generally isn't something you can bill for. You may spend half a considerable amount of time doing a decent proposal for a job but if in the end you don't get the job you have to re-cover your losses from elsewhere.
Everyone who is trying out to be self-employed says the same thing... they want to get away from working the 9am to 5pm and have more flexible hours so they can take the morning off, finish at lunchtime on a Friday or even have more 4 day weekends. I was looking forward to the same thing but 2 years down the line I'm still waiting to see any of these.
With the additional work you needing done (as mentioned above) I found I had to do the normal 9am - 5pm on the billable work and then spend evenings or weekends doing the non-billable work. Finishing time slowly drifted from 5pm to 7pm to 9pm until it eventually got to the stage where the only time I wasn't working was when I was sleeping.
I have tried taking the odd long weekend off but for me this is when my clients choose to call you which resulted in the most amount of phone call I have ever received in a single day and it was supposed to be my day off. As a result I had my mobile to my ear for a large portion of the day and quite a few quid racked up at the nearest internet cafe.
I realise it must be tempting to give out your mobile phone number so your clients can reach you easily but I recommend against it, or at least get a separate mobile number for your work calls. Giving out my mobile number only resulted in being called anytime a client feels like it including 10pm on a Friday night or 8am on a Sunday morning. Sometimes this would even be about home IT problems which have absolutely nothing to do with the projects I was doing for them. I would recommend only giving a business number out and then you can switch it to the answering machine at 5pm on Fridays and allow yourself a break and time to relax until Monday morning.
One of the things we take for granted is the paid holiday that we receive in our employment. Being self-employed means you no longer get the benefit of paid holidays or sick days and you need to bring in enough money not only to pay for the holidays and sick days but to cover the income you will lose out on during these periods. Since my step into self-employment I don't recall having a properly holiday and the longest I can recall is 5 days and that is including the weekend.
The will be additional expenditure required regardless what type of business you try to start up but some types will obviously require more that others. For me I had the following additional expenditures:-
- Business Insurance (Public Liability & Professional Indemnity)
- Reseller Hosting
- Travelling Expenses
- Computers & Software
- Running Capital
The first 3 amounts to about £200 a month for me and travelling expense varies wildly from month to month and it all has to come out of your pocket (at least initially until you've got a project to invoice). Previously your employer would have had to take care of all that and you would just submit your expense claim at the end of the month and got all your business expense back.
Running Capital is another problem I faced. Usually I had enough coming in to cover the bills and expenses but if a client wanted a new PC installed I would have to get them to purchase the PC directly as my funds could not strech to have that kind of expense put on it. This poses 2 problems:-
- This does not give the impression of a successful company
- As the client is purchasing direct you cannot add any mark up on these items.
One of the other aspects to consider is the personality of the individual going into self-employment. If you get a difficult client that comes back with your invoice and says "I'm not paying that" then are you able to follow through and chase it up and get the relevant collection agencies involved if required or would you just write it off?
If you are the latter then you may well find a lot of people will try and take advantage of your nature and push down your rate or demand you cut your invoice total even though there is nothing wrong with the value you quoted. You will have to ensure you are able to commit and not back down otherwise your clients could have you working for peanuts and throwing in extra things all over the place that weren't part of the original project specification and expect it for free.
One of the best examples I've come across is when I was doing a few home PC repairs when I was previously employed. My friends would ask me to come round after work and fix problems with their computers and in return I would buy me a pint when we went to the pub. This continued after I became self employed with exactly the same in terms of payment (1 pint) even though I could be there 5 minutes or 5 hours... they had just come to expect it that way even though every job I now did had to contribute to my income that month.
At some point I spoke to them about this arrangement and told them I would have to start charging now since this is where my income comes from and from that day forth they've never asked me to fix their computer again.
This may seem like I've lost a potential client but they were the ones reaping the benefits while I got nothing in return and they were clearly not interested in paying for the services they were receiving.
This is partly associated with the person (see section above) again. About 2 hours after I got my business phone line installed I got a phone call from a business directory trying to get me to purchase their services and they succeeded but as it turns out the service didn't do my business any good. Unfortunately I was one of the individuals who could be talked into something fairly easily and more than one company managed to get their talons into my because of that.
What I've taken away from those experiences is a process I now follow with each conversation of that nature.
Firstly, if I have the time, I listen to what is being offered and then I take the contact details and tell them I will contact them back at a time convenient with me. This allows me to research the product or services without the pressure of someone trying to hard sell it to me.
Secondly I ask the following questions:-
- Do I need the service?
- Can I afford the service?
- Do they want me to make a decision right now?
If the answer to either of the first 2 are no then I don't bother calling back and if they call me back then I firmly stick to my answer, regardless how they try and spin their product.
If they are offering a special discount to try and entice you but they insist you make a decision right now then again that's when I say no and stick to it. If they are trying to get you to commit to something which is only available if you accept right now then it's most likely something that not going to be useful.
At the end of the day their job is to make money out of your company and they don't care if you need it or not. Your job is to make money for your company so you will have to learn how to deal with these call very quickly otherwise you will have companies talking you into buying their products even though you don't have any use for them.
I think one of the most important things to bear in mind is to manage to keep a home life too but this can be hard to do, especially if you are working from home. The long hours and stress can put a lot of strain on your home life and create problems between you and the rest of your family so you will need to create boundaries to help keep everything balanced.
Although you have to work hard to become self-employed, especially when you are trying to establish yourself, you should make sure that you don't put the work over the family.
Although this seems to portray a negative image of self-employment this is simply highlight some of the problems I encountered as I tried my hand at self-employment. Everyone will have different experiences, successes and failures and I strongly believe if you have the drive to start your own business then you will succeed and certainly no-one should stop you from trying!
If you do intend to try self-employment I would like to wish you the very best of luck and I hope you succeed in whatever venture you decide to try. I also hope that this article helps you think about what may be involved and helps you avoid some of the problem I've faced.
If you found something useful today, please consider a small donation.
Got something to add? Send me email.
More Articles by Chris Shennan © 2012-08-03 Chris Shennan
If you ask "Should we be in space?" you ask a nonsense question. We are in space. We will be in space. (Frank Herbert)