Making the leap into self employment is a big decision. Self employement can have a significant appeal, particularly if you have recently been made redundant or otherwise lost your job. But it is important to remember that, while becoming self employed is a great choice for some, it is not right for everyone.

Advantages of self employment

• You are your own boss. You make the decisions about the work you do and the way your business is run.
• You can set your own hours. This is particularly beneficial for those with children or other family commitments.
• You can make a living doing what you enjoy.
• You can keep all of the profits from your business – presuming you are not in a partnership.

Drawbacks of self employment

• It can be difficult to predict your income. With no guaranteed wage, cashflow and personal financial planning can be difficult.
• The workload is potentially heavier. Self employed people spend a significant amount of time doing paperwork.
• You are personally liable for any debts your business runs up. In the worst cases this can mean that you risk losing your home if your business does not work out as planned.
• You may not actually generate any cash for a long time. Most businesses take around two years to break even. You will need to have some financial reserves to tide you over when you become self employed.

It is also worth remembering that some people are simply better suited to self employment that others. If you find it difficult to get motivated then self employment is probably not for you. But if you are a good ’self-starter’ with excellent organisational skills, becoming self employed might well be the best decision you ever make.