- The economy is shifting away from long-term employment with one company
- The “gig economy” and being self-employed is becoming the new normal
- Yet, starting a business requires more than your passion and a great idea
- Do you know the pros and cons of self-employment?
- If not, seek help. It’s the only way to take this leap safely.
I knew a man that started a restaurant.
He loved cooking, he was great at it, and he had a personality that fit a small town restaurant owner. So, he rented space for his American style bistro. He created a beautiful menu, a nice interior, and a big sign outside. His grand opening brought in many, me included. The food was excellent, the menu was diverse, and the atmosphere was charming. It was a smash hit.
Four months later, he shuttered his restaurant.
From what I heard, while he was a great chef, he was terrible with finances. He didn’t negotiate his rent well, he borrowed too much with too little collateral, and he didn’t know how to hire the right people.
On the other hand, in that same town, there’s this Chinese restaurant where the food is mediocre at best, the signage is terrible, and it’s very dimly lit.
They’ve been open for 30 years.
Why is the low-quality Chinese restaurant so successful at keeping their doors open, when the restaurant with the better food failed so miserably?
It all comes down to the skills and business knowledge possessed by the owner.
The Graveyard of Dreams
Every town has that one building that has seen a dozen different restaurants in as many years. Each of these failed businesses is a testament to the difficulty of starting a business and keeping it going. Why do so many try and so few succeed?
Is it even possible to work for yourself in today’s economy?
Yes! And many people succeed at it. While there are specific risks any new business owner faces, self-employment is still a valid option, especially in the world of freelance and consulting.
The Self-Employed Economy Is the New Reality
The sad truth today, however, is that the time of lifelong jobs with benefits and retirement are behind us. With so many jobs eliminated due to outsourcing, process re-engineering and computers, people are becoming more replaceable. The employee’s ability to choose and control the path of their lives is disappearing, and even in a full-employment economy, thousands are losing their jobs every month. (Note that people can find work, it’s just not a great job or a job that pays well, or both!)
The good thing is, a lot of fired employees often start a business, and hire other displaced employees. Most of these businesses aren’t your typical brick and mortar store. They start out as a consultant, coach or a freelancer. Trading their knowledge for work.
Many entrepreneurs start out by becoming independent consultants. They take their insightful knowledge of what works and develop solutions that will enable other companies to do the same.
Similarly, coaches mentor business leaders who have gaps in that business skills. Something the restauranteur should have done.
Lastly, freelancers will take on the work for you.
Here’s the bottom line: A lot of companies have problems that are holding them back from higher profits.
If you, as a consultant, coach or freelancer can solve that problem, those companies will pay you top dollar. On top of that, this “advice-delivering” work can sometimes only take a few hours a week, which makes consulting a great way to build your business while still earning a salary.
Once your business is big enough, you say goodbye to your boss, and set off on your own.
Let’s take a closer look at freelancing. According to Forbes, over 57 million people do freelance work in the United States. Hiring freelancers with skills and knowledge for specific services or projects is the current trend in business. The freelancer economy has boomed with the help of new technologies which bring freelancers and buyers together (Check out sites like Fiverr and Upwork for examples).
Many companies engage freelancers for writing, marketing, accounting, computer programming, and many other roles. These companies don’t need a full-time employee, can’t afford that employee, or only have a specific project that once-finished, the business owners focus on completely different priorities. For many skilled workers, freelance work is the best option to continuing doing what they like to do.
With all this freelance and consulting work going around, many people are asking themselves if they should get in on the action.
The Good and the Bad of Self-Employment
Let’s say you’re driven, self-disciplined, an expert in your field, and are ready to take risks. But can you really be self-employed?
Ask yourself these questions:
- Does self-employment lifestyle work for me?
- What are the advantages and disadvantages that come with it for my field of expertise?
- As an employee of a company, I had certain benefits, can I live without those benefits until my business is growing well enough to pay for them?
- What other risks am I facing?
Having a corporate support system (like sales group, a legal team, HR specialists, etc.), and access to the experience of your coworkers is a huge advantage. Add in benefits, such as health insurance, paid time off, training assistance, and your company job can seem cozy. So, for many, this is the best lifestyle they will achieve. However, they also give up their ability to choose and control the direction of their careers. Can you do the same job for the next ten years? That is, if it doesn’t get eliminated by technology.
It is only a matter of time before jobs are lost to new applications of technology or outsourcing. Also, there are office politics, shrinking health benefits, and the increasing cost of living. If that wasn’t enough, you may be working for someone who can’t see the avalanche coming. And no amount of warning will get that person to listen to you.
When you add all this together, there are almost more disadvantages to working in a company job. Plus, many companies are seeing benefits of freelancers, opting to hire that type of worker primarily.
On the other hand, self-employment can be a real risk. When you work for yourself, the only support system you have is the one you build for yourself. Health benefits are something you must also find and maintain. You have to learn to market and sell yourself. You need to get more knowledge about book keeping and bill collection. You need to keep the government from auditing your business.
With these risks, however, comes the freedom of making your own decisions about what type of work you want to do. When you want to do it. How often. And, how much. Plus, due to recent news events, you also can make policies based on your moral code and include them in your contracts.
And one of the biggest benefits: as you get more clients, you’re giving yourself a raise – every time.
Are you up to the task?
The thought of becoming self-employed is daunting. Determining if you can work for yourself and be successful requires intense self-reflection and honesty about your strengths and weaknesses. The first question you should ask yourself is: “Am I a person that can do this? Can I talk to strangers and promote myself? Do I know how to manage my finances, so I won’t go broke? Can I deliver a great experience to my client?”
When you read stories in Inc, Fast Company and Bloomberg, they are almost always showcase successful businesses. And they should. Because their purpose is to give insight that you might leverage yourself.
Self-employment takes more than having a great idea and plucky determination to build it.
Recognizing that you don’t have all the necessary skills is the first step to getting up to the task. Those successful businesses being written about always get help. You should too. And that restaurant owner should have done so, as well.
Self-employment isn’t for everyone, but it is still the most accessible path to career success today and for the foreseeable future.
So, take a breath, stand up straight, and get to work on building a business that is yourself.
If you’re thinking about becoming a consultant, coach or a freelancer, take our quiz, or talk to us live where we’ll point you in the right direction.