3 Signs You’re Not Ready to Become Self-Employed

If it seems like everyone else you know is going into self-employment these days, it’s not just in your head. According to the Center for Economic and Policy Research, about 400,000 more people report being self-employed in 2023 than before the pandemic.

I became self-employed well before 2020. And I can say from direct experience that it comes with many benefits. I can set my own schedule, which is so important as a mom of young children. I also have the ability to say no to work that I find incredibly boring. You can’t do this – or at least not easily – as a salaried employee.

But as much as I love being self-employed, I’ll also be frank and say that it’s not for everyone. If these signs apply to you, you may want to stick to salaried employment – ​​at least for now.

1. You tend to get distracted easily

There’s a reason why I try my best to take work that I find interesting. If a given assignment bores me, I’m more likely to procrastinate on it. But when I’m interested in what I’m writing, I tend to be hyper-productive. My husband, who works from home like me, can tell when I’m in the zone when he walks past my office – and he knows not to even say “hello” to me during those times.

But it’s important to be honest about your ability to stay focused if you’re considering becoming self-employed. If you are someone who gets distracted easily, there may not be immediate repercussions as long as you meet your deadlines. But you won’t be doing yourself any favors if you waste a lot of time, because that means you’ll likely earn less.

2. You don’t like taking risks

My main problem with self-employment is the lack of a stable or predictable salary. I’ve seen clients walk away from projects at the last minute or reduce my workload due to their own budget constraints. And while that’s understandable, I can’t tell you how many times I’ve had to scramble to return to a job out of the blue.

Now I do some things to mitigate the financial risk of self-employment. First, I keep my fixed household costs as low as possible. Second, we make sure we can cover our essential bills, like mortgage and car payments, with my husband’s salary alone, and we use my income for extras, like streaming services, activities for our kids and vacations.

But you may not have a stable second family income to fall back on. And if you don’t have a big appetite for risk, the independent lifestyle may not be for you. I say this from personal experience, because I often worry about money, even though I’m a pretty good saver.

Again, this is one of those situations where you just have to be honest with yourself. If not having a regular paycheck is harming your mental health, it may not be worth it to become self-employed.

3. You don’t have a solid emergency fund

Before I became self-employed, I built up a decent savings account, so that if it took me a while to get more clients and earn an amount I was happy with, I would have money to fall back on. support me. If you don’t have a solid enough emergency fund, I highly suggest waiting until you build one before giving up a guaranteed paycheck — especially if you don’t have a co-caregiver in your household.

In fact, if it’s just you, I’d say it’s a good idea to have a year’s worth of savings on hand. Remember, you may not just need that extra money at first. You might also need it during times when your workload dries up. And believe me when I say it can happen at any time, even if you’ve been doing what you’ve been doing for years.

Working for yourself has many advantages. But think carefully about whether it’s the right decision for you.

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