Published on 11/03/2014 by James

Self-Employment: Is It Worth It?

When you’re a salaried employee working for the man, it’s easy to romanticise about a possible life as a business owner. The wistful abandonment of incompetent bosses. The freedom to select your own hours. The pursuit of a profession in line with your passions. But does the reality of self-employment live up to the dream? Let’s look at what the research has to say.

Income:

A good place to start is with the money you make. Part of the allure of self-employment is that, rather than have your pay determined by a disconnected executive, you can take charge of your own earning potential. However, a report released by the Productivity Commission last year demonstrated that income inequality is lowest among full-time employees and highest among the self-employed. And, not unexpectedly, income for the self-employed is far more volatile. What this indicates is that even though some business owners earn a truckload of cash, a more substantial number do not.

Work Hours:

Forcing yourself to get to work at 9am when your body clock is telling you to stay in bed presents one of the most tempting reasons to start your own business – you get to choose your own hours. Plus there’s the issue of how much you work. Why put in 37.5 hours a week (if you’re lucky) when you can earn just as much in half the time? But that’s not how it turns out. An analysis by the University of South Australia has confirmed there is no evidence to suggest that being self-employed enables you to have a better work/life balance. This is especially the case with fathers. They tend to work six hours more a week than their salaried counterparts, which is almost an extra day away from the kids.

Stress:

When you’re a salaried employee, the workplace is a fountain of stressful opportunities. The bureaucratic nature of many organisations is one source of frustration. Add to the list the outdated systems, archaic processes, irritating customers, bothersome colleagues, unnecessary deadlines, and more. By starting your own business, you’ll be able to escape all that, right? On this measure, the research is somewhat mixed. Data from the University of Melbourne shows that salaried employees experience more stress when it comes to their lack of freedom and the low utilisation of their skills, whereas the self-employed have greater amounts of stress in relation to job insecurity and the demanding nature of their work. Regardless, job strain overall is notably lower for the self-employed.

Job Satisfaction:

Working for somebody else often means having little control of the tasks you do and how aligned they are to your talents and interests. By being self-employed, you can combine what you do with what you love whether that is within the beauty and health, fitness, or hospitality industry. Since a credible study comparing job satisfaction within Australia is elusive, we’ll have to instead defer to others conducted around the globe. In the United States, for example, Pew Research discovered that 39 per cent of self-employed workers are ‘completely satisfied’ with their job, which is roughly one third more than salaried employees. However, a similar analysis by a German think tank found that, yes, there is a substantial increase in job satisfaction when someone becomes self-employed, but it rarely lasts longer than three years. And it’s possible the increase is not due to self-employment at all but to the excitement that comes with any change in job irrespective of its status. So where does this leave us? Well, if you want to start your own business for the income or the hours, chances are you’ll be disappointed. But if you’re motivated mostly by a hope for less stress and more job-love, you’re more likely to be OK. Either way, even if self-employment fails you on every measure of success, it’s probably still worth a try. It’ll at least stop you from endlessly wondering.  

James

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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