So you decided to strike out on your own. You are in good company. The disruption to most aspects of life caused by the pandemic has dramatically affected people’s choices on how they choose to make a living. During the pandemic, the self-employed suffered more than those employed by others. As the economy returned to normal people laid off by their employers and those who had to work from home gained a different perspective on work-life balance and self-reliance. Those harboring the desire to be their own boss have decided to take the plunge in record numbers.
Self-employment can take several forms, like starting a business, contracting your services, or the gig economy. Self-employment provides flexibility and control over your work. If you tend to be a loner, a good listener, and like being the decision-maker and think you are a disciplined self-starter, you are a likely candidate to succeed. It also helps if you have a good support system, meaning a partner and family that has bought into the potentially long hours and financial uncertainty (see my blog post “Why Entrepreneurs Fail at Relationships).
My experience has shown you can put people who strike out on their own into three categories – the entrepreneur, the consultant, or the technician. Each of these types reacts differently to self-employment. Therefore, knowing the category that fits your personality type is important to structure a business that is likely to succeed.
Entrepreneurs are resilient, willing to proceed into the unknown, agile, tenacious (some say aggressive), and passionate. Entrepreneurs are most suited for start-ups, buying a business or franchise. You tend to be goal-oriented, so you start with the end in mind providing a distinct advantage to marshal the resources and people to realize your dream. Finally, having a high tolerance for risk gives you emotional stability against the disturbing adverse effects of setbacks.
A consultant is a person who enjoys serving others. You tend to be risk-averse and have no desire to build empires. Your primary focus is to provide a specialized service. You are best suited for such activities as a business advisor, lawyer, dentist, financial planner, coach, or mortgage broker. You will work hard, but your business is you and what you do.
A technician is a person with a skill such as carpentry, plumbing, hairdressing, programming and trades in general. You are a self-starter and like to be your own boss. Working for a larger company doesn’t provide the freedom you want, and you tend to be a loner, wanting to do things your way. You are a sole proprietor lining up jobs or opening up a small shop.
The gig economy is another form of self-employment. It is the exchange of services between individuals or companies, usually by digital platforms, on a short-term and payment-by-task basis. However, little or no commitment is required, and you can continue working at more traditional jobs. So I don’t consider the gig economy to be self-employment, although some people can make a decent living.
I have found that both the consultant and technician personality types struggle as entrepreneurs. However, if you are an entrepreneur type, you can develop a scalable business around consulting and technician-type services.
Before you strike out on your own, create a business plan with an exit strategy with a clear timeline and under what conditions you should use it. Have a backup plan and a way to transition out of the business without causing irreparable financial hardship to yourself. Avoid business debt, if possible, and stay current on your taxes and accounts with your suppliers.
If you find yourself struggling to stay solvent because your plan is not working, get out before going too far into debt. Let’s face it, not every business succeeds, but at least you tried, and you don’t have to spend the rest of your life wondering. On the other hand, if you succeed, you’re living the dream.