What Risks to Expect when becoming self Employed
For many, becoming their own boss is a dream come true. However, becoming self-employed, especially without a second line of income, could be a high-risk move. Even then, it is one move that can make you super rich and highly successful in life. At the same time, in order to be successful, it should be done properly and cautiously with clear knowledge of what can go wrong and the contingencies that are appropriate for such instances. This article will discuss therisksthat you may encounter when deciding to be self-employed in the hope of making you better prepared for the challenges ahead.
Over reliance
If you were self-employed, one of the biggest risks would be for you to become ill or incapacitated to perform the daily functioning of your business or the enterprise especially in instances where you rely on yourself for most of the business-related functions. The same applies when you overly rely on one person to sustain your day-to-day business practices. Thus, it is necessary for you to adapt contingency plans to deal with such situations before you even think of becoming self-employed.
At the same time, when you rely on a single supplier or on a single buyer, there is a high risk of breakage in the supply chain or becoming stranded with the products you made without any buyers. Thus, it is important for you to distribute your risk evenly among different suppliers and buyers as it will allow minimizing the overall effect of any supply or purchase failures. At the same time, you will do better if you can identify the products or the services that you can provide and earn a consistent income when the ‘big orders’ are not forthcoming. Recognizing and utilizing such products and services as income generators would prevent you from becoming bankrupt or failing to conduct your daily business activities until you strike the next breakthrough deal.
Policy and legislation changes
At times, there may be changes in the government policy or in the legislation towards businesses such as the one you expect to or have already undertaken. In such instances, you may have to utilize the contingency plans that are in place to overcome such challenges and regain any losses that you may incur as a result of such policy changes or legislation alterations.
Other incomes
When you think of becoming self-employed, it is best that you maintain a second line of income preferably through part-time work, at least in the initial stages of your self-employment plan. This will allow you time to realize the potential of your self-employment dream and be confident in taking chances, as you always will have that second line of income to fall back on. However, not all industry experts agree on having a second line of income when realizing the dream of self-employment as it can cause complacency to set in, in the drive towards success. However, you may have to deal with losing many of the benefits and supportive structures, which are in place when you are formally employed under an employer. Thus, you should arrange for insurance, health as well as retirement benefits on your own when becoming self-employed.
It is apparent that becoming self-employed is a risky venture and before undertaking such a high-risk move, you should plan carefully and lay out contingency plans to minimize such risks as much as possible.
