You’re considering self-employment. What are the risks you should be aware of?

Income instability is always the number one thing on the mind of everyone who is deciding to take the plunge, especially when one is an experienced professional with a relative good and stable income. I recently took the plunge and this was definitely a major point of concern. It took me many months of planning and calculations, before I decided that I should go ahead. Depending on what kind of venture you are going into, you should be prepared to have savings to tide you through at least 1.5 to 2 years of day to day expenses/bills. If you are married and/or have kids, you definitely need to discuss at lengths with your other half and make sure he/she is fine with the reduced spending.

Self-employment can offer freedom and flexibility, but it also comes with its fair share of risks. Financial Insecurity: One of the most significant risks is irregular income. You might not have a steady paycheck, and your earnings could fluctuate greatly, especially in the initial stages. Lack of Benefits: As a self-employed individual, you won't have access to benefits like health insurance, retirement plans, or paid time off unless you arrange for them yourself, which can be costly. Work-Life Balance: It can be challenging to maintain a healthy work-life balance when you're responsible for everything in your business. You might find yourself working long hours, including weekends and holidays, to keep up with demands.

Self-employment comes with the inherent risk of income instability, as earnings may fluctuate. However, this variability fosters adaptability, pushing individuals to diversify income streams, develop resilience, and seize new opportunities. Embracing the challenge of income fluctuations can lead to financial growth and a dynamic, fulfilling career.

Income instability, especially at the outset, is a insurmountable barrier for many wanting to go self-employed even if they have a sound business plan. However, in some circumstances there may be a way to lower the barrier. Some examples are; look for local government grants, check for start-up loans, ask for a payment holiday on your mortgage if you have one. Lending from friends and family maybe another possibility. During the getting started phase there may be spare time to take on casual work to meet essential commitments.

When you are starting off from scratch, you will have limited visibility about your income ahead. Everything from - process - products - skills - market & - client base are yet to reveal itself. But if you are confident enough, you will push through all challenges and come out successful. A solid 'plan of action', well structured processes, associating with the right people and flexibility gives you just that. Combined with a consistent input of effort and continuous improvement you are a rocket on fire.

While self-employment may lack traditional benefits, it opens doors to flexibility and autonomy. Self-employed individuals can tailor their benefits, such as retirement plans and insurance, to meet their unique needs. This autonomy allows for personalized, cost-effective solutions, creating a work structure that aligns more closely with individual preferences and priorities.

In addition to traditional benefits as described here, it's also important to consider benefits like IT and administrative support. When you go out on your own, you should ensure that you plan accordingly! Subscribe to services that automatically back up your data, for example, and make sure to budget for the administrative time you'll need to get your business running effectively and efficiently.

I highly recommend speaking with a regulated financial adviser who can help you with arranging the right level of insurance protection and pension contributions.

Successful self-employment can be more lucrative than working in the same position for a company - but, it likely is going to take more of your time and energy. You'll have no other departments who will "handle it" - it's literally all you, and your success or failure will depend upon the effort you put in and the choices you make. Before you leave.... Seek the advice of financial and insurance professionals that have experience with independent contractors in your niche. I would interview them and ask about benefits, company insurance needed, and the costs. A solid accountant with experience is invaluable. You do have to pay for everything, including twice the payroll tax. They'll be able to show you the way.

Most people who've gone the self-employment route are very familiar with these feelings. So don't be afraid to reach out and build a network. You will soon find that these relationships quickly become mutually beneficial on many levels. Being self-employed will enable you the flexibility to network as long as you make it a priority. It's really rewarding!

There are many business networking groups one can join in with. Some more formal than others but there's usually one that suits most people who want to mix with other likeminded people. These groups are not just for business although that is the main reason to join. You can also form great long lasting relationships that help with your mental wellbeing.

I would first ask if you could consider starting something part-time and getting a better idea if self-employment is a viable option for you. If your idea is successful and you can see it working well if you were to expand it and put more time into it then you can feel more confident making it your sole source of income.

TIME MANAGEMENT! Learning how to manage one's time is crucial when transitioning into self employment. Normally, our jobs have determined when and where our time is spent on a daily basis. Once we become self employed, it's our responsibility to manage our time efficiently and effectively. • Prioritizing tasks appropriately (urgency vs importance). • Balancing family and leisure time now that there are less restrictions on your daily schedule. • Making self care a daily priority. ...Are all areas to pay attention to while transitioning into self employment.