Advantages of self employment and mistakes to avoid

Advantages of self employment and mistakes to avoid

September 1, 2022 Off By TLK

There are several advantages of self employment when compared to salaried employment and entrepreneurship. People pursue self employment ideas for various reasons.

First, let’s differentiate self employment and entrepreneurship. In self employment, you are the business while in entrepreneurship you own the business.

The best professional comparison is that of writing. When you spend your days as a writer, employ people to help you accomplish some tasks when need arises, and create some income streams around writing, then that is self employment.

However, when you own a company where you have writers doing their job for profit of the company, then you are an entrepreneur. For instance, when you own a magazine or media company.

The thin line is separated by the fact that you have to be always present in self employment for it to work, while in entrepreneurship the company can operate without your presence. Sometimes people may not even know you own the business.

Main advantages of self employment

  1. The main advantage of self employment is having the freedom to set your own goals and schedules.
  2. Also you get the opportunity to utilize all the skills you have. Ever heard of underemployment or job dissatisfaction?
  3. Another advantage is that you get to keep all the profits.
  4. This may not sound like it, but yes, the flexibility for alternatives is high in case your area of specialization is not bringing in business. In entrepreneurship, you can’t wake up one morning and decide to shut your FMCG company and start a printing business.
  5. When you become a well known name in the industry, there is no requirement for fidelity to a brand. You are basically a freelancer and ready to work with anyone as long as they need your services or goods.

Some people get into self employment when they are unable to get into mainstream employment. Others just quit their jobs. They start a small business while others prefer doing freelance professional work. In this pursuit, many people make mistakes.

Mistakes to avoid when getting into self employment

Despite the worthwhile advantages of self employment, these mistakes can make the venture a disaster.

1. Quitting your job before figuring out what you want to do

If you are in salaried employment, never quit to get into self employment before creating a clientele base.

Things don’t always work themselves out. Just like in entrepreneurship, self employed people have to create customer base. And since you are the business, you have to build it on your own. It is time consuming and tiring, and unrewarding many times.

Quitting unreasonably will just make you a statistic in the percentage of the unemployed.

You need to start planning. Put your finances in order. Start researching and experimenting with side gigs with the intention of making a regular income. Create connections if you are going freelance, and learn the game first.

It still remains true that 30 percent of businesses fail in the first two years, 50 percent in the first five and 66 percent in the first 10 years.

2. Wading into unfamiliar territories

It is unwise to suddenly decide you want to change your ‘career’ when getting into self-employment. If you do not understand anything about the business you are going into, not even the gods will help you.

Do not shift from the manufacturing industry into farming without prerequisite knowledge of the latter — you are not a magician. Do not wade into unfamiliar territories, and these occur in various forms.

3. Learning new skills in your first year of self employment

You are a very good writer or editor, but then in your first year you decide that you want to learn coding, or illustrating. Three things are bound to happen here:

  • You will waste a lot of time trying to learn the new skills
  • You will reduce your chances of promoting your brand and earning
  • You will be broke, mentally exhausted, and frustrated at the end

When you get into self employment make sure you already possess the most basic skills and knowledge. If there is a skill you need to learn, it should be how to brand yourself and market your services.

4. Relying on your savings for capital

Unless you have been fired from a job and do no have any alternative, never use your savings for capital.

Do not mix your savings with business capital unless you have saved specifically for it. The money might appear much, but remember you have expenses especially if you have a family.

Also you are starting a business that has just incubated and the chances of successful hatching are still unverified.

That is why it is prudent to start your side gig while still on your annoying job to cushion against any shocks that might come along the way.

5. Giving yourself too much freedom in the beginning

It is no secret that while self employment promises much freedom, the opposite is true. Running your own agency or freelancing means you have to put in more time for the business to be stable.

You have to be hands-on, since you are the business. Unlike a company where there are professionals to run it, you solely hold the vision and mission of your business. You have to always be present, and that is a big disadvantage of self employment.

If you cannot put in more time in the first year, then do not be surprised if your business collapses in the next one.

There are times when business will be low, other times when it will overwhelm you. Learn to plan, but keep the vacations out of your plans. Do not be surprised when you have to work 15 or 20-hour-days.

You are building what you ever wanted, right?

One of the advantages of self employment is that if you are successful, you can incorporate your venture into a small business.