02 October 2014

5 downsides of self-employment

There are many pros to self-employment, but there are also potential downsides. Do you know what the common issues are and how to avoid or reduce them?

It’s easy to get caught up in the idea of working for yourself and doing a job that you love. The media regularly promotes start-ups and entrepreneurs in a glowing light and while there are certainly many pros to self-employment, the reality is that there are cons too. 

It’s best to be aware of the potential issues of starting your own business, so that you can hopefully avoid them before they occur. If you’re thinking of starting a venture or just setting up business, think about how you’d overcome these issues.

1.     Money worries

This is probably the main issue for people starting on the self-employment route. How do you support yourself in the early days of your business, when you’re trying to gain customers and clients?

Many people start their business from home as a side-line business. This can help to give you some financial stability while you’re setting up your business and help to fund it. However, some don’t have this luxury or need funding from the outset. There are plenty of funding options to consider – from bank loans to grants and crowd funding.

No matter how carefully you estimate how much money you’ll need, there will be extras you haven’t accounted for. It helps if you have a buffer for these unexpected circumstances. This might involve asking for more funding than you think you need at the outset or setting aside extra savings that you can fall back on in an emergency.   

2.     Success coming slower than expected

While a minority of businesses are successful money spinners from the outset, for many, it can take years of hard graft before they are successful. Taking the time to write a business plan is a smart move, as it forces you to consider what you can realistically achieve. It also means you set and formalise your goals, so you’re more likely to be able to assess whether your business is on the right track.

Of course, success largely depends on your definition. After all, not everyone who chooses self-employment is aiming to be the next Richard Branson. Do you define success by the profit you make, the number of customers you gain, or more subjectively on whether you can lead the life that you want to? It’s really important that the definition of success for your business is personal to you and that you don’t get swayed by the perceptions or opinions of others. Social pressure and expectations are additional stresses you really don’t need.

3.     Isolation

While part of your self-employment dream may have included benefits like working from home, the reality is that working by yourself at home day after day can be rather isolating. So too can toiling away during your ‘free time’ if you’ve kept your day job and are working on a side-line business.  Both can leave you with less time (and often money), to socialise, which can make you feel lonely and as though you have no time to properly unwind.

To counteract isolation, you could try coworking, which is becoming more commonplace as the number of self-employed workers increases year on year. Even if it’s just for a few hours a day or a day a week to get you out of the house and in a different environment. Many coworking spaces (like ours), offer flexible hourly, daily and monthly rates to suit your budget and mood. You can also join small business or freelance networks, which can often be good sources of advice and support.  

4.     Problems with self-discipline

As many a home-worker will tell you, no matter how passionate you are about your business, it’s surprisingly easy to get distracted. While you may not intend to spend long on tasks like the washing up or checking Facebook, these little interruptions can all add up or take longer than you think. This can really hamper your productivity. It can also mean you end up ‘working’ longer hours than you want to. On the other hand, if you limit your distractions, you may find you have extra time to devote to your business or to simply relax.

If you find yourself easily distracted, try coworking or setting time limits for tasks or scheduling your day. There are a huge number of apps designed to improve your productivity, from scheduling your social media posts to reducing the junk email you have to sift through or saving your ideas and useful links for you to revisit to later. There is even an app that monitors how long you’re spending on the internet and what sites you’re viewing, if you need help working out where you’re wasting time. Alternatively, you may work better by assigning certain times of the day to be distraction free, by turning off all your email and social media notifications for example.

Try to keep the distinction between work and leisure time and don’t let the two bleed into one. Don’t underestimate the value of relaxation and sleep on your productivity and creativity.

5.     Stress

The start of a business is typically a stressful time. You need to focus on gaining and keeping customers, administrative tasks such as sorting your finances and marketing your business, as well as keeping up with any changes or trends within your market. If your business isn’t the success you thought it would be, it’s easy to succumb to anxiety and self-doubt. Is your product or knowledge good enough?  

Try to reduce your stress levels by addressing the root problem. If you’re unsure of your product or services, go back to your market research in your business plan and ask your customers their opinions. It’s not uncommon for businesses to have to change or tweak their services or products so that they are what their customers want. If you don’t have enough time to do everything, or are overwhelmed by a particular task, work out whether you can outsource or automate this.

Help yourself by making sure you take time to relax, exercise and sleep