Going self employed is a huge risk, and it certainly isn’t for everyone.  Whether you’re thinking of working from home, becoming a contractor that flits from office to office, or actually trying to build up a business, the risks are significant. Particularly financial risks, but also lifestyle risks (work taking over your life), and also to your career if you try to return to work in future and have to try to explain what you did when you worked for yourself.  Employers aren’t always understanding regarding that!

And it’s also important to note that self employment really isn’t for everyone.  Not every personality can deal with the insecurity and the constant ‘hustling’ (looking for work, basically) of working for yourself.  Many people, understandably, simply prefer a salary, knowing when they’re going to get paid, and how much.

Although of course, people do lose their jobs, because of mistakes they make in the office, or mistakes their bosses make which requires the business to downsize (or even goes out of business), the risk is generally lower (or at least appears lower) than self employment.

So, What Sort of Work?

First of all you need to seriously think about what sort of work you’re going to be doing.  You need to think whether you’re going to be a freelancer, contractor, or actual business owner.

Freelancing (from home) and contracting (on site) is basically being a flexible employee, but often at a higher hourly wage, without the politics, and with somewhat more flexibility.  Although the risk does come from being too scared to turn down work not to annoy a client, so you may end up working more than you did in your job!

And as a freelancer or contractor, you won’t have a company training you up, so any new skills you’ll need, you’ll need to learn them yourself, and you’ll need to prove you know those skills if you’re looking to get such work in future.  Easier said than done perhaps in a quickly changing industry like IT.

Or if you’re thinking of starting and building a business, that takes a very different mindset, including deciding on investment capital, business and marketing plans, and if and when you’re going to take on employees.  Most businesses fail, and most fail fairly quickly, so any experience or expertise you can get on your side to help your chances is great.

Is it Right for You?

Well, it isn’t right for most people.  And not only does it depend on your personality but also your circumstances.  If you’re married with children, then your decision affects more people than just you, so it’s understandable if you’re more risk averse in such a situation.

And also it could be a while until you earn income (if any), so a financial buffer is very much required.

What’s the Next Step?

If you do decide to go for it, as mentioned a financial buffer is very much required, a clear idea of what you’re doing and how you’re going to attract work, an understanding of how much money you need to make for it to be worthwhile, and an idea of when that money might manifest.  And in particular you’ll need the required expertise.

Now, this article has tended to focus on the risks rather than potential of being self employed, but by being clear on those risks and thinking very hard about what could go wrong, and how to solve it, your chances of success increase.