The Dream vs. Reality: Understanding the Advantages and Disadvantages of Being Self-employed
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If you are considering self-employment, there are many ways to strike out on your own so you can experience what it is like to own your own business without taking a big risk. One popular option is to take on work as a freelancer as a side job or “gig.” Even someone who offers wedding photography on weekends would be considered self-employed, at least on a part-time basis. Starting small can help you explore self-employment before jumping headfirst into a larger endeavour.
At its simplest level, self-employment means you are working for yourself and creating your own paycheque instead of working for someone else in exchange for a wage or salary. Whether you are working as a self-employed photographer, web designer, bookkeeper, or even a health consultant, the same general considerations apply.
Do you have a firm understanding of what it means to be self-employed? In this article we will examine the realities of self-employment, looking at both the advantages and disadvantages involved. There is a flip side to each aspect of self-employment based on the following six dimensions: being your own boss, working from home, ditching the dress code, enjoying greater financial freedom, maintaining a work-life balance, and following your passion.
- Being Your Own Boss
Advantage: This is often the first advantage that comes to mind when someone is considering self-employment. After working for others over the course of a career, the idea of not having to report to a manager is often very appealing. Another benefit is the freedom to clearly define the work that you do—rather than being told what to do—including having control over the number of hours you work and the amount of time you have off.
Disadvantage: If you find it difficult making decisions or solving problems on your own, then you may struggle with being your own boss. Having someone else oversee the responsibilities of a business can bring a sense of security and structure to your day that may be lacking when you are self-employed. You will also have to answer to the needs and requirements of your clients and customers—which can sometimes be more challenging than reporting to a “boss.” For some people, the freedom to make decisions can become overwhelming when there are numerous choices available, especially if they lack the business experience to know which option is the right choice.
- Working From Home
Advantage: If you have ample space in your home and are providing a service that can be done remotely, then you can transform an area of your home into a productive work area. This provides relief from the time, stress, and expense of a long commute. Depending on the type of business you offer, you may have the option of working on your balcony in good weather or visiting a local coffee shop with your laptop whenever you wish. You can also choose to run your business from another location depending on the product or service that you offer. When you are self-employed the ideal location is yours to decide!
Disadvantage: Some people find it difficult to work from home due to all the distractions from their family or roommates, and are unable to create clear boundaries between their home life and work. Isolation can also become a challenge, particularly if socializing with fellow employees is something you’ve come to really enjoy. Other challenges may include finding new ways to develop business relationships, maintaining social ties, and staying connected with others in your industry.
- Ditching the Dress Code
Advantage: Depending on your business model, you can be as informal or as formal as you like when you’re working from home. Many self-employed people love the fact that they do not need to wear business attire on a regular basis. This can help you save money, and your customers may feel more comfortable when you dress casually. When you attend a virtual meeting or professional conference call, you can quickly change into a business-appropriate outfit—and you define what constitutes business attire for your specific business.
Disadvantage: The way we dress can affect the way in which we work. Showing up at your home office in workout attire or pyjamas may subconsciously cause you to become too casual in the way you approach projects, people, and your overall work ethic. This can lead to lower productivity and negatively impact the way others view the professionalism of your business.
- Enjoying Greater Financial Freedom
Advantage: Working for yourself means that your income can potentially grow to a level that is much higher than when it is limited as an employee. Self-employment means you will have greater control over your earnings depending on the amount of work you accept. You may find that your monthly living expenses are lower, because you’re not having to drive to work or buy lunches in restaurants. You will also have the ability to deduct some of your expenses from your business income, potentially leaving you with a greater after-tax income. (Please note, always seek the advice of a tax professional with your questions about any potential business deductions.)
Disadvantage: As a self-employed person you will not be receiving the paycheque you may be accustomed to on a regular basis, along with the perks of annual vacation pay, paid sick leave, and health or disability insurance. You will be entirely responsible for generating your own income and remitting any taxes due on your earnings. Until you are able to build your business to a sustainable level, the business may not generate enough in sales to cover your business expenses at times. You may need to cover any shortfall from your personal savings, retirement funds, or have to borrow money from a bank or family members.
- Maintaining a Work-life Balance
Advantage: Along with the freedom to decide where you work and what to wear at work comes the flexibility to make decisions about virtually every other aspect of your working life. As your own boss you can set your own work hours, arrange your workspace, accommodate any health needs, and balance your family needs, such as childcare arrangements. You won’t have to ask permission or take a vacation day to stay home if your child is sick. If you decide you want to work from 11 to 3 instead of 9 to 5, or want to call your customers while visiting your favourite coffee shop, that’s up to you! You can select the model of computer that you prefer, decorate your office in your own style, and attend conferences or classes of your own choosing.
Disadvantage: While you can certainly have a greater work-life balance as a self-employed person, you need to be highly aware that sometimes the needs and expectations of your customers will take precedence. Without your customers, you will have no business. This can limit your freedom when it comes to choosing the hours you work. For instance, you will need to keep various time zones in mind when making client calls, which can be early in the morning or run late into the evening. If you take time off for health, family, or vacation reasons, your business finances could be negatively impacted. You may need to make up for this time off by working longer days or on weekends. Entrepreneurs say that they have often missed out on business opportunities while away from their business, or their vacations have been interrupted when problems arose in their absence. Most business owners work much longer hours than the typical 40-hour workweek. The flexible lifestyle that you have dreamed about can quickly become disruptive when your workload spills over into your personal or leisure time.
- Following Your Passion
Advantage: Being self-employed means that you can design your business by considering your strengths and following your passion. When you are able to spend each day working on projects that you enjoy, it can feel less like work and can bring you a great deal more fulfillment. You can also avoid the type of work that you do not enjoy—at least for the most part.
Disadvantage: The biggest challenge in following your passion is that it does not always lead directly to income from paying customers. Some new business owners have a challenge generating enough revenue solely by doing what they enjoy. It can take considerable time and effort to fine-tune your business offerings to meet the market demand. In addition, you may not be able to delegate the tasks you least enjoy to others, especially during the start-up stages. If you dislike bookkeeping or struggle with writing your marketing approach, you may still need to take care of these essentials yourself in order to build a successful business.
Summing it up
Self-employment is a popular choice for many people, and may very well be the right career path for you. It can be a way to set up a home office so you can work from the comfort of home or get a unique business idea off the ground, whether as a side “gig” or a full-time endeavour.
While some people are attracted to the sense of freedom and other advantages self-employment brings, they may fail to examine the potential pitfalls. If you are considering the idea of becoming self-employed, then it is important to carefully weigh out both the advantages and disadvantages involved. This means taking the extra step of looking inward and giving this career option the extra thought it deserves.
And remember, if you need guidance with exploring your career options, consider reaching out to a career or business coach, a career services organization in your local community, or our online career assistance and skills training programs that can help you identify and work toward your employment or self-employment goals.
Make A Change Canada provides online supportive programs for individuals facing barriers to employment from all across Canada.
- Online Career Assistance for Persons with Disabilities:
If you self-identify as living with a disability, you could be eligible for services.
Visit anycareer.ca for more information.
- Online Skills Training:
Make A Change Canada offers business coaching, employment and job search assistance, and technology skills training.
- Technology Skills Training:
The online Certificate in Applied Web Development and Design Programs are suitable for those who wish to gain valuable IT skills for employment or self-employment. Visit studyanywhere.ca for more information.
- One-on-one Support:
When you join Make A Change Canada programs, you are assigned a business advisor or employment specialist for one-on-one assistance and ongoing support with achieving your career goals.
- Employment and Self-employment Assistance:
Make A Change Canada’s anycareer.ca website gives those who self-identify as living with a disability the opportunity to receive employment and self-employment assistance from the comfort and convenience of home. Register online to gain access to valuable resources and your own personal advisor.