Risks of Self Employment

By the way it's not all bed of roses. Being self employed has its own nuances. I have noted my own views and views of others that I have collected so far.

  • Uncertainty. Sometimes I don't know what lies ahead for me. Many times I wouldn't know if I will have a project after the current one gets over. When I am on a client assignment I truly focus on my work which leaves me very little time to look around for new assignments. So there is a period of time between the projects when I am not earning any money. Fortunately these have been far and few in between. This in fact is a direct result of my focus on the current project which has enabled me to build a good relationship with the client who in turn extends my contract. Furthermore I have been able handle these rare occurrences by diligently saving for the rainy days. I explain this in more detail in the Financial Planning section.

  • Instability. This actually is what my wife thinks is a nuance of self employment. I don't. However I do respect her view and understand that there are many folks with a similar view. I believe that there is no such thing as "job stability". Your employer or boss can let you go anytime they want. Or they may create a hostile environment that leaves you with no other option than to leave. When you are self employed and work on multiple projects for various clients, it in fact enriches your portfolio of accomplishments. Whereas, if you are a full-time employee, the same situation will make you look like a job-hopper and go against you. Check out the Self Employment Resume section on how you can present your experience to your advantage.

  • Lack of Benefits. When you are employed full-time with a decent sized company you are privy to certain benefits such as Health Insurance, Disability, Vacations, 401K match etc. You lose them once you start working for yourself. You absolutely need to consider these while planning for self employment. I have included a tool in Plan=>Start section to help you make that comparison.

  • No Career Growth. You obviously don't get to be a C-level executive in a Fortune-500 company if you are a self-employed professional. Like I said before, this is a choice you have to make for yourself. You only know what your priorities are at a given point of your life. You can choose to be self-employed for lifelong or only for a period of time. Or you may choose to expand beyond self-employment and hire employees and grow into a bigger business. Bottom line is it's your call.

  • Getting Money-minded. Being paid by the hour has its negative side too. Initially I would feel really bad to take time off for vacation, sickness or just to run errands. I would start calculating how much money I would lose by taking that time off. It took me a quite a bit of self-discipline to change that mindset. I am not completely there yet; but I am trying to. Just keep in mind that your physical and mental health is more important than just making money. Here is a tip: Start allocating paid time off to you for every full month of work (like most of the companies do). I will share more tips in the Operate section.

 

Start Self Employment: Plan->Prepare->Launch