The difficult leap to self-employment
Being your own boss requires more than just big ambition
Phyllis Korkki, New York Times
27 June 2010
Sitting in their cubicles, rolling their eyes over the latest bureaucratic slowdown or marvelling at the near-incompetence of higher-ups, some employees are thinking: If only I were my own boss, I wouldn’t have these problems.
No, they wouldn’t. They’d have a host of different problems. Still, some people make the leap to self-employment and find it was worth the risk.
How can a salaried employee with some savings tell whether the idea of becoming self-employed is a viable option and not just an escape fantasy? And how can a recently laid-off employee with some severance pay determine whether this is the right time to pursue her dream of being an entrepreneur?
First, you must be highly motivated to sell a specific product or service that your research has found to be marketable. And your business idea should be based on expertise that you already have, says Susan Urquhart-Brown, author of The Accidental Entrepreneur and a career coach. Learning how to run a business was hard enough without also learning a new skill from scratch, she said.
Some soon-to-be entrepreneurs came up with a solution to a business problem and found their company was unwilling to pursue it, said William Sahlman, a professor at Harvard Business School with a focus on entrepreneurship. “There’s a mismatch between what they’re passionate about and feel ought to be done and what the company is prepared to support,” Sahlman said.
Motivation, drive, passion – these words are often used in connection with entrepreneurs.
“They need to be passionate about what they do because that will carry them through the tough times,” Urquhart-Brown said.
As an entrepreneur, you also need to be an excellent multi-tasker, because you’re in charge of your own marketing, payroll, administrative work, taxes and health insurance. Oh, and don’t forget – you also have to deliver a product or service.
At first, the actual business might be secondary because you would need to devote most of your time to marketing, Urquhart-Brown said. If you cringe at the idea of selling yourself, vow to hire someone for that task once the company has customers.
Expect to devote long hours to your enterprise, said Jessica Pryce-Jones, author of Happiness at Work and chief executive of iOpener, a workplace consulting firm.
At one of her consulting clients, Pryce-Jones once talked to a high-level employee who was complaining bitterly about having to work 40 hours a week. “He thought that if he went freelance he would magically become happy,” she said. She asked him: “How many hours a week do you think you’d have to work if you were freelance?”
The man put the number at about 35. She told him he needed to double that number.
And those hours, though more flexible, can be unpredictable. People who preferred a fixed structure were probably better off as salaried employees, Pryce-Jones said, whereas entrepreneurs preferred a more fluid work environment. They actually thrived on the stress of uncertainty and the adrenaline rush it gave them, she said.
In addition to structure and predictability, a workplace offered a sense of community and belonging, which was hugely important to happiness, Pryce-Jones said. One of the biggest problems faced by the self-employed was loneliness, she said. So make sure to connect regularly with others, she advised.
Another advantage of having an employer is access to benefits like health insurance. If fewer businesses offered comprehensive benefits, it could tip the scale towards self-employment, said Sara Horowitz, executive director of the Freelancers Union.
A harder adjustment for the self-employed was dealing with the lack of a steady paycheque, Horowitz said, as work tended to be feast or famine. And even when freelancers do get work, there is a chance that they may not be paid.
Given the risks, it’s no surprise the failure rate for new businesses is high. But even in the face of failure, most entrepreneurs are not willing to give up. “Once they taste having more control over their lives,” Sahlman said, “they almost never go back.”