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Self-employment: Is self-employment right for you?
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Building a successful business takes hard work and tenacity, but there are many benefits of self-employment…
Skills to succeed in business
Success mainly relies on the strength of your product or service, plus your ability to persuade, negotiate and network. However, the following six qualities are also vital:
- Creativity - You must be innovative and imaginative, showing the initiative to push your business forward with new ideas.
- Determination - You'll require great drive, commitment and enthusiasm.
- Knowledge - Possessing strong understanding of and passion for your market is vital, while the willingness to learn, listen and adapt to ever-changing customer needs is also a key asset.
- Leadership - Owning and developing independent projects should come naturally to you; managing a team should too.
- Organization- You must be focused and goal-orientated, setting clear and realistic objectives. Working quickly under pressure is another required skill, while good time management is also important.
- Self-belief - You'll need the confidence to take risks and responsibility for your decisions.
Advantages of self-employment
There are many potential benefits of being self-employed. These include:
- Flexibility - Setting your own hours and fitting work around other commitments can lead to an improved quality of life.
- Independence - You've the freedom to trial new ideas, focusing on what you enjoy doing most.
- Location - Self-employment cuts out the inconvenience of office politics, company hierarchies and - sometimes - the expensive, stressful daily commute.
- Salary - Your earning potential is much higher, while reaping the rewards of your hard work is very satisfying.
Disadvantages of self-employment
You should also consider the potential risks of self-employment, such as:
- Benefits - You won't get sick pay, holiday pay or any other employee benefits. You may also feel isolated from colleagues and customers.
- Finances - Income can be irregular and unpredictable, especially in the short term. You could go several months without earnings, and you must also pay for running costs such as rent, insurance and internet access.
- Hours - Your working day may be longer than a typical employee's. Business commitments may mean that you spend less time with your family.
- Pressure - Making decisions without advice or support may see you struggle to switch off from work life. Success or failure is down to you, which can increase stress levels.
- Responsibility - You're in charge of your tax affairs, pension and National Insurance. You've nobody to manage you either, nor motivate you during difficult times.
Six signs that you're ready to start a business
- Your family and friends are supportive, believing you've the ability to become successful.
- You've gained experience of working in a similar organization before at managerial or supervisory level, and you've perhaps even attended seminars on small business ownership.
- You've developed leadership skills, and have the willpower, determination and self-discipline to enjoy making your own decisions.
- You get along well with others, and are comfortable with the idea of hiring and managing employees.
- You're prepared to temporarily lower your living standards and spend a sizeable chunk of your savings
- You've the ability and energy to meet your current commitments while handling a heavy workload.
What’s the difference between a small business owner and an entrepreneur?
Small business owners typically:
- solve existing and obvious local problems;
- make low-risk decisions that ensure short-term security;
- manage their employees closely, meaning that the company can struggle to function without their input;
- take a traditional approach, possessing core business skills;
- have little or no intention of selling their business.
Entrepreneurs typically:
- devise untested ideas;
- make high-risk decisions that have a potentially huge impact on long-term growth;
- delegate management to experts, meaning that the company can easily function without their input;
- take a visionary approach and are responsive to business opportunities;
- aim to generate buyer interest in their business.
What are the typical tasks and responsibilities of an entrepreneur?
Finance and Accounting
Most small businesses need start-up capital to get established and grow their products and services. Depending on the business, some owners can bootstrap and start with a smaller budget. Other ventures require a small business loan to fund expenses for retail space, office equipment and hiring employees. You’ll also need to set up and maintain business bank accounts, payment processing, accounts payable and accounts receivable, and taxes.
Legal
Small business owners must comply with federal and state business licensing laws. From forming a limited liability company to creating legal contracts, they must know basics of the law and have access to an attorney if legal problems with customers or employees arise. You might need to write, review and sign legal contracts and sales agreements. When legal issues occur, you’ll need to consult a lawyer.
Marketing and Sales
No matter how good your product or service is, you need marketing and sales to drive business. Marketing and sales strategies and implementations vary widely, depending on the business, and could include tactics such as print advertising, public relations, online marketing, networking, cold calling and commissioned salespeople.
Customer Service
In the beginning, many small business owners are responsible for providing all or most of the customer service duties. These include phone calls, email messages and follow-ups concerning product delivery and quality issues. As the business grows, it makes sense to automate and hire customer service people when possible to scale operations and growth.
Human Resources
As a small business grows, so do its hiring needs to accommodate more orders and faster growth. The owner needs to identify human resources needs, write job descriptions, screen and interview candidates, and train, manage and pay employees. For some businesses, it makes sense to hire a dedicated HR manager to handle screening, hiring, training and employee-related processes.