Taking the plunge: Key considerations before going self-employed

It’s a huge step that can be inundated with risks. However, becoming self-employed can be one of the most rewarding things you do, and it’s full of benefits.

Of course, it’s not for everyone. For some people, the risks and extra considerations are not worth the hassle compared to a standard, salaried position.

Bearing this in mind, if you are in two minds on the above, let’s take a look at some of the key factors you should consider.

The security of a regular income

This is probably the biggest consideration for many people. The security of a regular income is often taken for granted in a salaried position. When you are self-employed, you are responsible for generating your own income, which can be a daunting prospect.

There are several ways to mitigate this risk, such as building a safety net of savings and diversifying your income streams. However, it is important to be realistic that there will always be some element of risk when it comes to this option and when times are tough, you no longer have that regular deposit being made into your bank account on the last day of every month. For some people, this thought in itself is just too much.

The lack of ‘paid’ annual leave

When you are self-employed, there is no such thing as paid annual leave. This is something that you will need to take into account if you are thinking of taking a lengthy getaway. You will either need to make arrangements to have someone cover your work for you or take a hiatus from work entirely.

Can you afford this? Are you the type of person who can delegate during your absence? Again, this will vary from person to person.

You become the ‘head’ of all departments (think paperwork!)

When you take the leap, you are the CEO, the marketing team, the accounts department, and the HR department. This can be a lot of work, and it is important to be prepared for it. This includes being aware of the paperwork requirements, such as registering for self-assessment and fulfilling your obligations like VAT.

You may have enjoyed life on the payroll of an architectural firm up until now and revelled in the responsibility of producing client drawings. Well, now you’re not just going to be responsible for the drawings, but all of the above.

Of course, many people will decide to hire an accountant or other professionals to assist with this, but this comes with obvious added costs.

The possibility of overwork

When you are self-employed, there is no such thing as working nine to five. If you want to make money, you need to be working all the time initially. This can be a blessing and a curse. On the one hand, you have total control over your own destiny and how much you work. On the other hand, it can be very easy to overwork yourself, especially in the early days when you are trying to get your business off the ground.

Rylie Holt