5 Reasons NOT to Work for Yourself

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Right out of the gate, I should point out that this title is disingenuous. I think working for myself is great. It has made an enormous difference in my happiness and the amount of time I am able to invest in people and things I'm interested in. But, self-employment has some major pitfalls, ones I understand completely after years of self-employment. I'm going to share these with you, as well as the ways that I compensate for them.

But first, I generally find that you can argue against any major life decision. As someone I know once put it, "No matter what you do, you'll regret it." As a recovering fatalist, I choose to reconsider that statement. Instead, whatever I do, I will make the most of it. This attitude has made big decisions like marriage, moves to other cities, and homeownership take on a completely different light. Self-employment can suck or it can be the best choice you make in your life. It all depends on how you react to these voices in your head, saying things like:

1. You are giving up such great benefits. I put the big one first. This one is real. If you work for yourself, you won't have a 401(k), you won't have employer subsidized health insurance, you won't have a free gym membership, you won't have your old workplace's "Free Acupuncture and Pretzel Tuesdays", and what have you. You'll be on your own. Benefits are nice; I won't deny that. This isn't much of a problem in Canada where I live (universal health care!), but if you live in the United States, it may be really tough to walk away from employer sponsored health care. But it can be done, especially if you are still on your parents' plan or you have a spouse/partner with employer health care coverage. As for the rest of these cushy perks I described, the company I worked for offered nothing close. That's how it is for most of you. Your employer benefits are nothing fancy. If you work for Google (GOOG), go on working at Google. If you have a normal job with normal perks, maybe you could do without.

Rebuttal: Unless your benefits are so good that you can't afford to live without them ... you can live without them.

2. The work is going to be inconsistent. Yes it will. This is the real world my friends. As a self-employed person, you won't have some benevolent dictator handing out a steady stream of juicy assignments to you, along with a reliable paycheck. Nope. If you want it to rain, you've got to make it rain. And that means creating work for yourself, providing reliable results, and basically just being a badass. If you think about it, this is how businesses get created. One person takes so much work on that they can't do it all themselves. Then -- BOOM -- employees!

Rebuttal: At first, maybe. Eventually, I'll have all the work I can handle.

3. You won't be able to build good credit or get a loan. This can be true, at the beginning. Banks and lending agencies like consistency on the part of their borrowers. If you have just started working for yourself, they may think that you're selling seashell necklaces on Etsy (ETSY), at a rate of three a month. They might not know that you work 60 hours a week creating your blog or designing websites. Until you can prove that you are a gainfully self-employed grown up person, you may not be able to get the banks to give you money for things like a house. Luckily, I have a conventionally employed significant other, and we've been able to squeak by in this regard while I've built my self-employed career.

Rebuttal: If you provide consistent results, lenders will see you as a legitimate borrower.

4. You'll get lazy. Sometimes you do. But this is both a danger and a perk. As a self-employed person, I can afford to take a day off once in a very great while. In the future, I expect to be able to take a lot more time off. But in the meantime, it's important that I stay busy: to build my business, to maintain/increase my income, to make connections, etc. In the early days, I was a lot more slack about my work. But one day I realized that self-employment was now or never. If I didn't make it work in the next 6 months, I would either have to quit and rejoin the rat race, or I would have to do a lazy job in eternal poverty. I chose to work hard, and I'm glad I did.

Rebuttal: Just work hard, you layabout!

5. You'll lose your career path. It's true. If you leave a conventional career to go it alone, it will be harder and harder to reenter that career path, the longer you stay off of it. That's why it's important not to do self-employment halfway. If you are going to do it, DO IT! Within a year of starting this path, I was able to more than replace the income I was making at my normal job. That's after taxes, folks. You too can do this. If you get to this point, you won't need to go back to your former career path. You'll have crafted one of your very own.

Rebuttal: I didn't need that old career path anyway. I made one of my own.

If you are considering self-employment, you have experienced these doubts. Maybe they have even come out of the mouth of someone you care about. These are big considerations, but as I've shown you, you can get over the hump and have an even better career than you had before. As someone who works in personal finance, this was important to me. I know the value of money, I like money, I don't want to give up money. But it's also important to me to live my own life. You probably feel the same, on some level. So figure out what you're going to do as a self-employed person, work hard at it, and stick to it. Chances are you'll be able to overcome all of these doubts I described.
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