There are two reasons people choose to become self-employed; lifestyle or business. People are complex and the reasons they make decisions can be ambiguous. But let’s pull apart these two approaches and see what they offer.
Lifestyle
The lifestyle option is perhaps surprising and yet it appeals to many self-employed people. Many people no longer want to work for someone else and so choose their own business.
There is something attractive being in charge of your own time, able to fit your business around your life. This might appeal to parents of young children who have a few hours a day of spare time. Also to people who have their own hobbies or pursuits and want to schedule their business around them.
Now, you would be right in thinking this is not necessarily a wise decision. Unless you have some other source of income or savings to live upon, this can be a long road with little financial reward. I know this because it is the road I have taken.
My Experience
After I became redundant, I attended talks about self-employment and found the business lifestyle attractive. It allowed me to find time to walk every day, which is something I value. I have a rhythm to each day that I enjoy and would never be able to maintain in employment.
However, even a brilliant business idea can take years to develop. Starting with my community development experience, it has taken me several years to identify viable offers. I’ve invested lots in time and financial investment in training and coaching to get to where I am.
However, there are advantages. It has pushed me into thinking very carefully about my market and the problems they have. If I had a sure-fire business solution from day one, perhaps I would not have taken it so far. Patience and persistence are the key to this and if you can make it financially, it is a viable approach.
The point is life should be enjoyable and the lifestyle approach potentially places life before work.
Business
But most people take up self-employment to make money. If they have a good idea and they can plan it and market it, it is possible to make a living.
There are alternatives and these are government schemes and zero hour contracts. The government wants to get people off benefits and so schemes that provide some financial support during the early months is one way they do this. These grants are not massive and soon run out, long before the average business is up and running. This is why so many self-employed businesses do not work out.
Zero hours contracts use self-employment to support the fiction that working as a taxi driver or deliverer of hot dinners is self-employment. Often these fictions pay less than or equal to the minimum wage and allow business owners an escape clause to the demand they take on responsibility for their employees.
But if you have an idea, the time and the insight to make it work, self-employment can lead to a successful business. Each self-employed person has their own unique tool box and has something to offer. They need to package it and build a reputation. They need to be able to show they have the unique insights required to make something of their business idea.
The reality is, someone with a good business idea may have an initial advantage over the person who chooses self-employment for lifestyle reasons but in a couple of years that advantage may disappear.
Investing in Lifestyle or Business
The power of self-employment comes not from having a good first idea so much as a person’s ability to market their idea, understand how their market responds to the opportunities out there. To be self-employed means you are uniquely placed to respond to market demand and it is this that develops opportunities that can develop into viable businesses.
It is important to consider how you invest money to build an asset base to support you and your business over the long haul. A good idea that brings in money is rare as it is; rarer still is the business person who knows how to invest their income so they and their business survive. The incentive to do this is lifestyle. You can fund your lifestyle if you work consistently towards it but this is difficult if you don’t know what you want!
So, whether you make the first decision for lifestyle or business reasons, the chances are you will soon need to develop strategies to keep going. I’ll make a start on those next time.