Like many of the UK’s workers, you may find yourself furloughed or even made redundant as a result of the coronavirus pandemic. While these are certainly trying times, the lockdown provides a great opportunity for those that have been toying with the idea of self-employment to dip their toe in the water – whether that’s taking the time to set up a website, ramping up online networking efforts, or expanding a skillset.
Thanks to research done in January of 2020 by our sister company Dinghy, we’ve been granted a peek behind the curtain at what self-employment really means. While we here at Larsen Howie specialise in IR35 consultation and contractor business insurances like professional indemnity and public liability, Dinghy provides business cover for sole-traders and the more ‘traditional’ freelancer.
So, what is it about self-employment that’s so appealing to the 15million or so workers that have already made the jump? The following statistics give us a greater insight into what it’s like to work for yourself, touching on both the challenges and the rewards of being your own boss.
The Challenges of Self-Employment
It is no secret that the move to self-employment often takes a leap of faith. Going freelance is seen by some as a risky move but, as the saying goes, “high risk, high reward”; 91% of freelancers stated that being their own boss improved their quality of life.
That said, there are plenty of challenges to be had when contracting.
One of the biggest issues faced by the self-employed is non-payment of work. Almost a third of self-employed workers have experienced not receiving payment for work they have provided, and a lofty 40% of these cases were relating to clients neglecting to maintain contact after being invoiced.
Of course, being your own boss means providing and replacing your own equipment. 5% of freelancers that answered Dinghy’s survey also claim they had had a laptop or other work-related item stolen - out of those people, a following 9% were required to invest over £2,000 to replace what had been stolen.
Another prominent worry raised by Dinghy’s survey is that many contractors feel the need to compete with their peers, and therefore drastically overdeliver to stay in their client’s favour. Just over a third of the respondents claimed they overserve all of the clients they provide work for while a further 29% claimed they overserve at least half of their clients. It’s understandably hard to leave your work behind you when there is the constant desire to be the best in your field and provide the best service for your clients, but make sure you treat your hard-earned skills and expertise with respect and invoice for your time.
The Rewards of Self-Employment
Despite the noted issues, there are plenty of things that the respondents loved about being self-employed.
Flexibility and the freedom to work your way is one of the biggest motivations for making the leap. 47.8% of those surveyed said they maintain 3-6 clients at any one time, with a further 42% choosing to keep only 1-2 clients at once. One freelancer stated that they chose this style of work “because my job didn’t give me the flexibility as a mother”, crediting self-employment as the change that had allowed her to pursue her career without restraint.
Most respondents also appeared to feel financially secure; 33% of those surveyed rated themselves as being ‘secure in their work’ and a further 32% rated themselves as ‘very secure in their work’. 32% were actively excited for future opportunities, while the remaining percentage were eager to focus on creating new relationships with clients and expanding their businesses.
While it’s true that self-employment doesn’t offer the safety net that employment does, it’s clear that those that have made the switch don’t regret it – for many, the creative freedom and control over their day proves more valuable than a pension scheme or redundancy pay. However, it’s important to bear in mind that there are insurances available to help provide some safety net should you make a costly mistake, have equipment stolen, or have an accident that prevents you from working.
Getting the right business insurances to protect you
A whopping 98% of survey respondents said they feel more secure with insurance in place. It’s important that you take out adequate cover for your services - especially for those who work in the media and creative industry who are subject to certain industry guidelines, or IT professionals who could be dealing with highly sensitive data day-to-day.
This is a problem not limited to sole traders, but one that limited company contractors feel just as keenly. In fact, limited company contractors may find it difficult to get any work at all without a basic level of cover in insurances like professional indemnity. While Dinghy should be your go-to as a sole-trader, we here at Larsen Howie offer business insurances for contractors, including professional indemnity, public liability, and IR35 tax investigation insurance.
Want to know more about the survey results? You can see Dinghy’s findings in full here.
For more information on how we can insure you, or general tips and advice for the self-employed, take a look around our Knowledge Hub. Alternatively, you can call us on 01163 800 400 or drop us an email.