8 things to think about if you’re considering self-employment
Is self employment for you? Perhaps you’ve lost your job or you’re facing redundancy and think self-employment is the answer. Or maybe you just woke up on a grey, cold Monday morning and thought “why don’t I give it all up and work for myself?”
If you are considering self-employment, you’re not alone. Around 300,000 people are likely to take the plunge and turn self-employed in the UK this year, according to the Federation of Small Businesses.
Sadly, figures also show that three out of five of those businesses are likely to fail within the first three years. So how can you be sure that self-employment is for you and that if you take the plunge, you will be one of the people whose business succeeds?
Obviously there are the usual considerations that appear on any self-employment checklist – factors such as writing a business plan, choosing an accountant, deciding whether you should be a limited company or a sole trader etc.
But I’m talking about some of the more fundamental psychological considerations that make the difference between success and failure. When I made my own transition to self-employment three years ago I was lucky enough to benefit from a unique research project carried out by a psychologist called Cathy Brown in conjunction with Birkbeck College, University London. Cathy looked at those who had already successfully made the transition to self-employment and identified that there are 8 key factors that are important to focus on in order to make that transition easier and more successful:
- Is there enough of a push to move you from your current situation? People who move successfully into self employment have a degree of restlessness with their current situation. In other words, you’re likely to be frustrated with how things are right now, enough to motivate you to want to change and set up your business.
- Do you have a passion, not only for the work you do but for turning it into a business? If you’re passionate about what you do you’ll find it easier to ride the waves of change and keep going when starting out. You’ll also find that others will be attracted to your passion and will be more likely to help you make your business a success.
- Do you have a clear vision for what you want to achieve both commercially and personally? In answering this question you need to think through the commercial aspects of your business proposition i.e. what the business is going to offer, to which customer groups and to which geographical markets. But you also need to think about what success look like for you as an individual. Is it about earning a certain amount of revenue, having independence and autonomy, working certain hours or days of the week, all of the above or something completely different?
- How well do you know yourself and how to manage your energy levels and emotions? You need to know yourself well enough to know what you can do to stay motivated and energised. For example, do you like working on your own or do you prefer to have lots of people around. If you’re an extraverted gregarious type you may find days of working alone at home sap your energy and motivation so you may need to develop strategies (such as meeting a friend for lunch) to keep your energy and motivation high so that you are set up for success.
- Do you believe in yourself? Are you confident in your own abilities? To move successfully into self-employment you need to believe in yourself, your capability and your ability to make things happen. In essence, you need to know you can make it a success whatever happens.
- How much personal drive do you have to keep going even when things get tough? Research shows that people who move successfully into self-employment are focused on continually improving what they do and learning how things could be better; resilient when the going gets tough and personally driven to keep going at all times
- What about your financial buoyancy? Do you have plans in place to guarantee some form of a positive cash flow or income stream during your transition? This could be achieved through a range of means e.g. savings, redundancy payment, financial support from a partner, part-time job etc. A general rule of thumb is that people feel that they need a financial lump sum that covered six months of living expenses.
- How good is your support network? To make a success of self-employment you need a well-established network of contacts that can provide different types of support at different times. People typically need three types of support – (1) Practical support such as child-care, help with household chores etc (2) Technical support in areas outside of your expertise such as IT, finance or some other discipline that is an absolute necessity but a complete mystery to you and (3) Emotional support from people close to you who can help you through the tough times.