Entrepreneurship and Self-Employment Skills
Entrepreneurs, freelancers and self-employed people work for themselves. They own or run their own business, which can be anything from a simple one-man band providing services such as dog-walking, decorating, or professional services, right up to a company established to produce and market a new piece of technology developed by the owner.
Entrepreneurs and self-employed people are likely to share some common traits and skills. For example, they are often very self-disciplined, and happy to turn their hands to a wide range of tasks. Although they may well have Leadership and Management Skills, they also have other skills that may be less important for those working in large organisations under contracts of employment.
This section of Skills You Need describes some of the skills required for self-employment and entrepreneurship, and explains how you can develop them.
How do you know if entrepreneurship or self-employment are for you? The first step is to understand the concept of entrepreneurship. Our page on What is an Entrepreneur? will help with this.
It considers questions such as:
- What do entrepreneurs do next?
- At what point do you stop being an entrepreneur and become a ‘captain of industry’?
- How do entrepreneurs define success? (clue: it is different for everyone)
Before deciding that entrepreneurship is for you, you may also want to read our page on Entrepreneurial Skills. This sets out some of the skills required to manage and succeed as an entrepreneur, which in turn gives you some idea of the sorts of things that you will have to do, and therefore whether you really want to set up your own business.
If you like the idea of being an entrepreneur, but do not want to commit yourself full time, you may want to consider portfolio working. This is a term used to describe a working pattern that mixes several different types of work, which may include both employment and self-employment, or different types of business.
For more about this, see our page on Portfolio Working.
Starting a Business
Once you have decided that you want to run your own business, there are a number of things to consider. Many businesses fail in the first few years, and planning and preparation are crucial. The first step is to decide on your business idea: what do you want to do?
Our page on Developing a Business Idea will help here, and also explains how to create a business plan.
Once you have decided on your business idea, there are a number of different aspects to setting up a business. These include:
- Financial issues, such as how to obtain money, and the balance between debt and equity (borrowing or investment) that you want in your business;
- Legal issues, such as registering the name of your company, the precise legal form you adopt, and likely changes over time, and any permits or licences;
- Finding a suitable location, including the decision on whether to work from home—and whether this is possible within your home insurance and/or rental agreement.
- Recruiting and managing staff, and getting good advice about running your business more generally; and
- Promoting your business, which may require you to develop your marketing skills.
Our pages that can help with this, include:
- Sole Trader vs Company – When to Incorporate Your Business
- Establishing a Business: Legal and Financial Aspects
- Establishing a Business: People, Place and Promotion
- Marketing for Freelancers and the Self-Employed
If you need any investment in your business, you could end up having to ‘pitch’ your business idea (present it to a potential investor). Our page on Pitching Your Business Idea will give you some idea of what to do to prepare, and what to expect.
Freelancing and Self-employment
Freelancing is one particular form of self-employment, defined as working for different companies or individuals on different projects. It is particularly associated with creative industries, such as journalism, editing and publishing, and information technology.
Freelancing offers the flexibility to work on what you want, and to your preferred working pattern, but it also has a number of challenges.
Perhaps the most obvious challenge is the number of distractions. Especially if you work from home, you are likely to have other things you would rather be doing than working. Being able to motivate yourself is key, and our page on Self-Motivation for Freelancers and Homeworkers explains more about how to do this. Our pages on Working From Home and Top Tips on Working from Home also contain ideas to help you manage your working life, and separate it from your home life.
You also need to find work. There is no way round this, and it can be very challenging, particularly if you do not already work in your chosen field. Once you have built a reputation, you are likely to start getting clients by word of mouth recommendations but, in the meantime, our page Finding Work as a Freelancer provides some ideas.
If you are short of time, our page on Top Tips on Freelancing contains good ideas for managing work as a freelancer, including finding work, managing relationships ,and contracting.
You may also find it helpful to read our guest post on Managing your Project Portfolio as this contains some useful tips for ensuring that you do not take on too much work, and can ensure that all your projects are relevant.
Unlike employees, freelancers have to manage their own disasters, whether that is your laptop dying on you, or the boiler breaking down in the middle of winter. Unfortunately, you also have to keep working despite the disasters. Our page on Contingency and Disaster Planning for Freelancers makes some suggestions for how to manage this.
Freelancing offers unprecedented freedom to work to your own timetable. For some, that includes traveling at the same time as working. Our page on Travel and Freelancing explains more about how you might manage this.
One area that is absolutely crucial for freelancers and self-employed people is building relationships, particularly with clients, but also with other people, such as other self-employed people, or local businesses. As an employee, your job may have involved client contact; as a freelancer, your whole business stands or falls by your contact with clients, and how you develop relationships with your customers. Get it right, and word-of-mouth recommendations will fly in. Get it wrong, and you will lose business hand over fist.
Our pages on Contracting for Freelancers: Building Client Relationships and Managing Ongoing Client Relationships as a Freelancer provide some tips for building and maintaining good client relationships, including by setting and managing expectations.
You may also like to read our page on Networking for Freelancers and Homeworkers to help you build and maintain networks beyond your clients as these can be vital ways to find work.
Financial Management for Freelancers
More businesses fail as a result of cash-flow problems than anything else. Understanding your financial position, and being able to manage your finances effectively, are therefore crucial skills for any freelancer or self-employed person. This does not mean that you should not employ an accountant, or that you expect to rival a bank manager in your understanding, but you do need to be able to understand your money and not make obvious mistakes. Our page on Avoiding Common Financial Mistakes in Business will help here.
One of the most difficult areas for many freelancers is pricing and invoicing. The two are not exactly the same: pricing and charging is about the rates that you charge for work, and invoicing is about asking clients for money.
For more about these two areas, read our pages on:
Franchising and Franchises
Increasingly, people wanting to set up their own business are drawn to franchising, where you buy the right to set up a particular business (that is, with a particular name and core business) in a particular area, and get support from the person who owns the rights to that name and business. This is popular because it allows you to share some of the risk of setting up a new business, and often links you to a source of expertise and experience.
In many ways, especially in the early days of setting up a business, self-employed people and entrepreneurs do have to be ‘Jacks-of-all-trades’, but that does not mean that they are masters of none. Most are highly skilled in one particular area, but also able to turn their hands to other issues when necessary. Flexibility is perhaps the most important trait in anyone setting up their own business.
Further Reading from Skills You Need
If you are thinking about running your own business, or already do so, but feel that you need some guidance, then this eBook is for you. It takes you through self-employment in easy steps, helping you to ensure that your business has more chance of success.
The Skills You Need Guide to Self-Employment and Running Your Own Business is the guide no new or aspiring entrepreneur can afford to be without!
Based on our popular self-employment and entrepreneurship content.