Last updated: June 25, 2021Find out the advantages and disadvantages of being self-employed!
Self-employment comes in many forms. Not only does it include freelancers, entrepreneurs, and contractors, but these days gig economy workers too. If you’re self-employed or considering registering as self-employed, you have no boss telling you what to do. Your destiny is in your hands! On this page you can learn some of the challenges that can happen while being self-employed and how it can be best to approach certain situations.
You can be a self-employed superstar in no time!
First up, who am I? My name’s Chris and I’m the owner of MoneyCortex.com. I’ve been self-employed since March 2007. Everything you’re about to read is based on my experiences and what I think you can learn from them. To give you an idea of my type of self-employment I view it as entrepreneurship with a bit of freelance mixed in. I’ve never been a contractor. My income predominantly comes from running a group of websites.
There are advantages and disadvantages of being self-employed and the lessons on this page might help you learn and adapt.
Lots of great stories online exist of people sharing their success. You often don’t see the other flip side of the coin! Fingers crossed this can be just as valuable to you.
The broad advantages and disadvantages of being self-employed
Common advantages of being self-employed:
- Greater flexibility in when you work
- No boss to tell you what to do
- Potential for higher earnings
- Greater ability to take advantage of opportunities
- No external work office to have to go to
- Greater ability to follow your passions
- The independence can be very satisfying
Common disadvantages of being self-employed:
- Higher vulnerability to income drops
- Higher stress levels if money gets tight
- Fewer work colleagues (some consider this an advantage!)
- Personal finance impacts such as greater difficulty to get a mortgage
- Extra paperwork to complete tax returns
- Saving for retirement can be trickier in comparison to employees with company pensions
The pros and cons listed above are not universal and we all lead different lives. But they’re some of the key ones to be aware of. By being aware of them you can maximise the benefits and minimise the downsides!
Now let’s look more in-depth at some experiences and lessons learned from being self-employed.
Self-employment is a journey, sometimes a bumpy journey!
Saying this sort of thing is a bit of a cliche that you will see repeated in other areas of life. But it’s the truth. “It’s not about the destination, it’s about the journey.” This applies a lot with being self-employed. Whatever stage you are at in your entrepreneurial journey hopefully you’re enjoying the never-ending journey.
I’ve not solely operated websites over the last 14 years. I was a stock market trader for 2 years. I also spent just over a full year developing smartphone apps. I’ve also made small investments in new companies and tried things like eco-friendly debentures. One thing I’ve come to appreciate over time is that the unexpected will happen. When and how you aren’t allowed to know! Whether it’s changes to laws, the behaviour of competitors, advances in tech, or even a pandemic! At some stag your journey will get bumpy. The good thing is bumps can work both ways, you can get bumped upwards but sadly you can also get some stinky bumps back to earth! Accept it and adapt.
Help can come in unexpected ways
After working part-time as a regular employee for a supermarket for the first couple of years of my self-employment – an unexpected event happened. I had an email from a company. They were a company I had been promoting through affiliate links on one of my websites. They offered to increase the commission I received and help me optimise my website. It made a huge difference and it allowed me to leave my part-time job in the supermarket and become self-employed full-time! I didn’t know affiliate programs sometimes worked like that. I also didn’t expect that sort of thing to happen. It was completely out of the blue. As a result of that one email I went on to earn around $55,000 in commission from them.
Lesson 1: other people’s help, especially at the start, is vital. Other people’s expertise can go a long way at helping you! Don’t be shy, be proactive to reduce the reliance on luck.
You must adapt at the right time
A few years after I become self-employed things started to really change in the online landscape. Social media was still very new when I started. In 2007 it wasn’t normal for a business to have a Facebook page, Twitter account and Pinterest account. In fact, Pinterest only launched in 2010, I’d been self-employed for 3 years by that point! I felt I was too slow to tak advantage of those platforms when people started to use them for commercial gain.
Things were really changing with search engine optimisation at that time too. Once again my adoption of the new way of doing things wasn’t quick enough. Keeping up with changes in your industry and taking advantage of the opportunities is critical in order to survive and thrive. But don’t jump from fad to fad, be confident changes that are occurring are permanent.
Lesson 2: You have to adapt. You would think it’s obvious. But sometimes you can’t see the wood for the trees when working on something every day. Stay in the loop and try your hardest to be a quick adopter of new trends no matter what industry you operate in. In extreme circumstances, if you want to be self-sustaining in the long-term you may be forced to heavily adapt what you do.
Don’t get ahead of yourself
In the early 2010’s I owned a couple of premium one-word domain names. They were worth low four-figure sums. The plan was always to sell them and I very much looked forward to banking the profits because I’d got them at good prices.
After sitting on the domains for a couple of years the domain name market really started to soften with valuations going noticeably down. When I came to sell the domains the broker chucked some big numbers at me and I looked forward to him sealing a deal. Even if he only achieved half of what he said I thought I’d be delighted. It was a disaster and after months of negotiations with big multi-national corporations he only managed to sell them for about 10% of what he originally told me wanted to achieve. That was my first experience of such a disappointing situation. It’s like sitting on a massive profit in a stockholding and then watching the stock price sink. Never celebrate until the cash is in the bank!
Lesson 3: Try to keep level-headed and focussed as much as you can. Until the cash is locked in the bank you can’t be sure of anything.
Look after your health!
It’s impossible to say how important this as. If you’re self employed and get sick it can be disastrous. I’ve had one experience of this, it impacted me for a full year. 23 visits to the hospital in just over a year and I was discharged. Unfortunately the issue was with one of my eyes, which is quite important when you stare at a computer screen all day for your job!
Not only can the impact be huge in terms of lost income but it can also have other knock-on effects such as a loss of confidence in your work. Health issues can happen very suddenly and that can potentially leave you feeling vulnerable.
Lesson 4: Even if you are healthy now you need to make an effort to maintain your health. If you sit hunched over a PC screen all day it’s really bad for your health. Make sure you take action to counter-act the negative effects of your day-to-day work. And always maintain savings to cover any lost income from health issues.
Try not to run out of money!
This has only happened to me once. I decided to move into app development and cool down on my websites a little bit. I enjoyed it a lot to start with. However, I ran out of money during the development process! It was my own fault for underestimating just how challenging some aspects of the project would be.
Whatever entrepreneurial projects you take on in your self-employment always have your finances well-covered. A good strategy can be to presume the costs will come in more than you expect, and the income will take longer to come in than you expect.
Lesson 5: external forces will always have an impact on your work. Have a contingency plan in case you run out of money for reasons that aren’t under your control. Try not to see leave yourself too vulnerable. Always look ahead to what’s going to be happening in your life and prepare accordingly.
Your personal life will affect your self-employment
Life can spring surprises on you. You never know when you’re going to meet new partners, suffer tragic losses or develop health issues (as mentioned earlier). With regular employment you have things like sick pay and get time off for bereavement. And if you can still make in into work you will normally get paid the same even if you aren’t fully performing at your best. Not with self-employment! Your personal life will affect your self-employment and it’s just something you have to accept.
Lesson 6: whether it’s relationships, babies, family deaths or even pets dieing – your personal life will affect your self-employment. Sometimes it will severely affect it. The only other choice is to have no friends or relationships. And that’s not really an option! Have the support of family, and savings to help you get through tough times.
Enjoy the extra flexibility self-employment can bring
Not everyone is so lucky. In many jobs people have rigid hours they have to do and tasks they must perform. Don’t take the extra flexibility for granted because one day you might not be so lucky.
Lesson 7: take moments to remind yourself of how lucky you are. Sitting outside on a warm summers afternoon anytime you want can be a real treat others can’t enjoy.
Lots of little bits of advice
Here are some other bits of advice, they are arguably just as important as the ones above:
- Give yourself time. Most things will take longer than you expect!
- It’s not easy. Some bloggers love to write articles about how setting up websites and making lots of money from them is as simple as following a few steps. It’s not. Whatever your venture it’s highly likely it will not be easy at the start, you’ll have to learn a lot.
- Forgive yourself when you mess up. We all do it. Don’t forgive yourself if you keep making the same mistakes though! Kick your butt into gear in that case.
- Take criticism on the chin. It’s inevitable. Learn when you can from it. If it’s stupid critiscm then laugh about it!
- Be proud of yourself. Some people don’t even have the guts to try!
- Do things your own way. Learning is important but ultimately it is taking action and finding your own way that’s needed.
Your turn to act
How much the stories listed above will help partly depends on where you are at in your journey of being an entrepreneur. Some of them may be the sort of thing you need to experience for them to fully sink in and help you going forward. Others you can, and should, make a conscious effort with.
Life has ups and downs for all of us. Trying to go it alone compared to having a nice solid 9-5 job can create even more ups and downs. Always remind yourself that work is not the most important thing in life. Your relationships and your health are the most important. Remind yourself of that and it will stand you in good stead when it comes to the ultimate daily aim, happiness.
Are you willing to climb the mountain of happiness?