Self-employment is overrated!

Don’t get me wrong. Self-employment is awesome – I’ve been self-employed for nearly 30 years and I love it. But it’s been so oversold that it’s become a bright shiny object in and of itself. Take control of your life/time/money; monetize your passion; become wealthy beyond your dreams; retire early; determine your own destiny; blah, blah, blah.

Yes, all of these things are possible but being self-employed has little to do with it. You can have any or all of these things by working for someone else. You may not have them in your current job but there are certainly jobs where all of these things can be available to you. Self-employment might bring some or all of these benefits but they are the exception rather than the rule.

If you have any doubts, take a look at this infographic published on Mashable in March 2012 – The Pitfalls of Freelancing. Some quick facts arising:

  • 8 in 10 freelancers didn’t get enough work in 2009.
  • Of those, half went through stretches without any work at all and half had to dig into their savings to get by.
  • 12% relied on food stamps, 26% borrowed money from family and friends and 37% relied on credit cards to get by.
  • Less than 50% saw their incomes increase over the previous year.
  • Of those studied, 60% were happier being independent workers than being employees. That means 40% were not and would rather be working for someone else.
  • Based on the above stats, it would be safe to say that of the 60% remaining, few would be kidding themselves that they were enjoying financial freedom or would be in a position to determine their own destiny (yet).

NB – The stats are from www.mastersdegree.net. They are US based and relate to freelancing but  could probably equally apply to many other economies and self-employment models.

Self-employment is not some Utopian world that’s out there waiting for all and sundry to stake their claim. Anyone who enters self-employment thinking it’s going to be ‘better’ than employment is in for a shock because ‘wherever you go, there you are’.

If you struggle financially working for someone else, chances are you will struggle financially working for yourself. If you have problems relating to your current boss, chances are you will have problems relating to your new ‘bosses’,  your clients, bank manager, landlord, etc. If you feel unfulfilled working for someone else, chances are you will feel unfulfilled working for yourself. If you are getting into self-employment to escape bullying in the workplace, chances are you’ll be bullied by someone else, a landlord or a competitor. You can certainly deal with these issues but self-employment isn’t the remedy.

Highlighting the money side of things, I like this take on it from Carol Roth, Author of The Entrepreneur Equation*…

 

Self-employment will serve up whatever you bring to the table. If you want above average results, it takes above average effort, creativity and commitment.

You may well get to the point where it does deliver the life of your dreams but that’s not the default setting. The statistics say the default setting for self-employment is failure. That’s not because it’s particularly difficult or beyond most people’s capabilities. It’s because they underestimate effort and overestimate reward.

It’s the same as any other aspect of life, it’s what you make of it. Just don’t get sucked into all the hype about it. Manage your expectations and take a reality check before you take the plunge and things should work out just fine. And if you decide self-employment is not the thing for you, well and good. Play to your strengths and have a fulfilling life either way.

Have you found managing expectations a challenge in your self-employment journey? Comments are welcome below.

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About the Author Brett Jarman

I've been self-employed since I was 19​ (and that was quite some time ago) and have owned manufacturing, service and consulting businesses ever since. Every business goes through stages and each stage in each business needs a different strategy to flourish and prosper. I can teach you about the stages and the strategies to shortcut your success.

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3 comments
Corbin says May 2, 2012

Hi Brett,

Your article makes great points. 2009 is maybe not the best year for Mashable to reference. ALL freelancers got hammered badly in 2009, especially from Q2 onward. Would love to find some comparisons of 2009, 2010 and 2011, It would also be interesting to see if the 20% that did get enough work in 2009 took 80% of the available contracts. In my experience with dozens of large corporate clients, it’s still the 20% that get the most done and the way-above-average performers that go the farthest.

Regarding expectation management challenges, a few I’ve personally faced are:

1. “Shiny Object Syndrome.” Years later and against better judgment, I still find this one hard to manage. (I have the physical and digital shelf clutter to prove it. 🙂 )

2. Effectively managing a client funnel. Now, I coach business IT professionals on how to do this. But for me, it took a long time to learn and become good at it. When I first started out on my own, I thought clients would come out of the woodwork based on my past success rates. Not so. Getting, managing, and keeping a steady flow of clients is always a challenge, and one that is easy to be abstracted from when working for someone else.

3. Underestimating the number of proposals required and competition with other freelancers for the same projects. Making, closing, and executing on a proposal is a lot of hard work. It can be frustrating work too if none ever close.

4. Recognizing when and where to partner. Many worthwhile projects of size are highly competitive. The “big guys” have deep pockets, large sales staffs and can happily go several quarters into the red to close new deals. I had to lose out on a few of these deals early on to realize that going after bigger game required partnering with other freelancers and small companies to form a virtual company to spread risk and the work required to respond to large RFP’s.

5. Keeping work efforts always focused on the money first. Employees can afford to get caught up in “busy work.” In fact, many businesses encourage this with endless pointless meetings and full calendars. Entrepreneurs cannot afford a daily calendar full of discussion. Is it related to your current bottom line or future top line? Do that FIRST, outsource whatever busy work you can, then relegate the remainder to slower times.

6. Being unprepared for the “all-or-nothing” break from the employee world. I’m a big proponent of starting and building a business on the side before completely cutting the W-2 strings. But it took a few tries early on to get there.

One piece of advice I would also share with new freelancers or consultants is **don’t start your physical business until you have at least one client with check in hand, ready to start.** Business entities, fancy errors and omissions policies, business cards, 800 phone numbers and all the other trappings should never come before actual paying clients. Get the client, close the deal, then build your entity and office. If your client requires a certain entity type or specific coverages, then consider subcontracting with a partner who does have them.

Thanks again for a great “keeping it real” article. Entrepreneurs need a lot more of this, especially *before* starting the journey.

Best regards,
Corbin

Reply
    Brett Jarman says May 2, 2012

    Corbin

    Thanks for such an in depth response. That’s an article in itself.

    A comparison of the numbers with prior and subsequent years would be interesting. No doubt there were some freelancers in that period who weren’t freelancers by choice (i.e. via redundancy) but I think even in boom times the overall balance would be similar.

    The sad part is that many of the 8 in 10 that didn’t get enough work probably could have got more if they’d had more realistic expectations about what it takes. As you hint above, it takes more than a business card to attract customers.

    Your tips are excellent, particularly the one about getting paid work before the marketing collateral. No doubt you’ve had to coach clients through the stage where they think they have to wait for a logo before they can ‘start’ when all they really need is a phone.

    Appreciate your input.

    Brett

    Reply
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