Should You Be Self-Employed?
How to boost your chances of success.
Posted Jan 20, 2021
Even before the COVID economic shutdown, the shortage of decent-paying, ethical, reasonably secure jobs made many people eager to try being their own boss.
The bad news
Alas, succeeding in self-employment is even more difficult than the statistics imply. Not only do 45 percent of businesses fail in the first five years, but many others struggle despite the owner working long hours under the stress of knowing that if enough money doesn’t come in, yikes.
It’s understandable that most new businesses fail. Many people are procrastinators, which often is the kiss of death for the self-employed: The meter never stops running. Also, the self-employed person must be quite self-sufficient, able to do most of a business’s core tasks from sales to basic accounting. Having a partner would split the profits and double the potential for conflict. And hiring, even on a just-in-time basis, can hurt cash flow too much — Money is a business’s lifeblood — Run out and you’re dead.
The better news
Fortunately, as the commercials say, your experience may vary. The more honest yeses you can give to the following questions, the better your chances of being successfully self-employed.
Do you have a low-risk business concept that offers a good chance of yielding you at least a middle-class income? Readers of this blog know that I recommend low-cost, low-status businesses, such as a small chain of gift carts that you'd plant near mass transit stations. Such businesses cost little to run and the competition in low-status businesses tends to be less than in, say, technology businesses.
Has procrastination had little or no effect on your previous endeavors? Would your proposed business be motivating enough that you’d procrastinate little?
Are you broadly efficacious? That is, have you demonstrated the ability to solve a wide range of practical issues, for example, in basic marketing, IT, tax and legal matters, or do you quite often throw your hands up, swallow, and pay dearly for help?
Do you have or could get access to enough money, yes for start-up, but also for the months or longer it takes to build your customer base, as well as to pay your living expenses for that time?
Have you been successful at persuading people? You needn’t have been a salesperson, but all of us are more successful or less in convincing people, for example, to do an activity or change their behavior. The ability to persuade is important in self-employment because you’re always selling, for example, convincing a friend to let you share office space, a vendor to let you sell their product on consignment, and, of course, getting customers to buy your product or service.
Do you have a nose for buying inexpensively? If you’re selling a product, “wholesale” can mean as low as 10% of what you’d sell it for or as much as 50% or more. Successful business people tend to search beneath the obvious sources. For example, if you want to sell furniture for psychotherapy offices, rather than just googling “wholesale office furniture,” you might check out the pallets and truckloads on liquidation.com or the Government Services Administration site, which conducts auctions of a wide array of government property.
Can you picture yourself devoting considerable effort to marketing and sales, at least until the business is doing well enough?
Compared with the job you currently have or likely would have if you tried hard to find a good position, how likely would you be happier being self-employed?
So, as you honestly reflect on your answers to those questions, do you think you should be employed by someone else? Of course, that’s fine — Most people choose to be an employee.
But if you think you should take a shot at self-employment, doing what? And do you need to promise yourself that you’ll do X or Y to maximize your chances of success?
If you can be successfully self-employed, you have the potential to make more money doing what you want to do while having more control over your work life than as an employee. That's an attractive prospect indeed.
I read this aloud on YouTube.
The other articles in this series on making major decisions can be found here.