If you’ve been sending lots of resumes and getting the runaround, you’re not alone. According to the U.S. Labor Department, unemployment is the highest level in 25 years.
Is it any wonder that many unemployed, underemployed and workers fearing the loss of their jobs are now considering going into business for themselves? After all, if you’re self-employed you’ll never be laid off, right? And entrepreneurs are truly the backbone of the American economy; they create 80 percent of all the jobs in America, without the benefit of bailouts or handouts.
But is self-employment right for you? The prospect of being your own boss may look appealing, but what are the real benefits — and risks — of going it alone?
While preparing to write her book “The Accidental Startup, Business Basics for the Chance Entrepreneur,” author, Fox Business, CNBC and CNN media personality and financial expert Dani Babb surveyed 200 entrepreneurs and discovered that just 10 percent were unemployed when they started their own business. Another 26 percent were working part time and wanted full-time work, and 63 percent were already employed.
Yet with unemployment figures continuing to increase, Babb predicts so will the ranks of “chance entrepreneurs,” those who find themselves suddenly out of work and unable to find another job. If you’re among those ranks, it would be wise to weigh all the risks and benefits of becoming self-employed.
In the first chapter of “The Accidental Startup,” Babb explores the benefits of working for yourself, including:
- A stable income
- No more fear of losing your job
- Additional income
- Freedom to make decisions
- Flexible hours
- The chance to do something you’re passionate about
- Pride of ownership
- Earning potential
You should also consider the risks and downsides of self-employment, including:
- Feeling of instability as your business struggles to grow
- Potential for failure
- Unforeseen costs
- Potential for long hours
- Lack of vacations
- Difficulty in building your business
- Blurring (or disappearance) of work/life boundaries
You also need to consider financial aspects of being an entrepreneur, Babb advises. You’ll need to insure your business and learn the tax basics of being self-employed, payroll taxes, corporate taxes, etc. You’ll likely have to pick up your own healthcare costs, and provide coverage to employees. You have to consider if self-employment really will make you better off financially than just getting another job, or if you will be content just breaking even.
Once you’ve decided if self-employment is the right move for you, you’ll need to develop a business plan, raise capital and manage finances, learn about your customer, know what to expect during the first year and develop a strategy for growth.
“You may become an entrepreneur by chance, but succeeding in your own business definitely relies not just on luck, but on planning, preparation, money and time,” Babb says.
“The Accidental Startup” examines the reasons and motivations that lead to entrepreneurship, and helps new business owners plot a step-by-step guide to starting and running a business.
- Courtesy of ARA