First of all, let us say a huge congratulations. If you’re at the point where your side hustle is a viable means for self-employment, this is a seriously impressive milestone!
Now it’s time to look at the pivotal crossroads you’ve reached. You can either continue the way you were, juggling your side hustle with other employment commitments. Or, bid a fond farewell to the security of PAYE employment and focus your attention solely on the realms of business ownership.
Whether your mind is made up or you’re still deciding about full self-employment, we look at the common signs that the time is right, and what to do about it.
How do I know when it’s the right time to go self employed?
There’s no dancing around the fact. Going self-employed and working for yourself in business almost always come with a certain level of risk. You’ll no longer have the relative safety net of a regular salary from an employer who is legally responsible for you.
However, as with most things in life, there’s never an ideal time to take a risk. So what key indicators might you take into account when considering self-employment?
A lack of time is holding you back
As a side hustle evolves, you might find that your other professional commitments become a hindrance to its growth.
A full-time job is just that – full time. It occupies a significant portion of your days and weeks, making it tricky to accommodate a blossoming side project out of hours.
You need more flexibility in your schedule
Regular employment usually means less flexibility and autonomy over your own working schedule. Juggling employment and your side hustle is also extremely demanding, and there really are only so many hours in a day.
When you start to spread yourself too thinly to deal with everything, all aspects of your life will eventually suffer. So, when the balance starts to tip, that’s when self-employment becomes a viable consideration. If you find yourself making mistakes or working unhealthy hours, it’s time to think about where your priorities really lie.
Your work-life balance is starting to suffer
As well as the time you dedicate to work, it’s essential that you nurture your downtime too. You need to take a break, and spend time with your loved ones.
Invest in your physical and mental wellbeing in order to be the best possible version of your professional self. If you’re struggling to do this as well as your job, and self-employment is a realistic long-term option, could it be the push you need?
You’re busy enough to start employing staff
Has your side hustle reached a point that you need to recruit an employee? When you’re realistically entertaining the idea of hiring staff, it likely means your side hustle business idea is proving profitable.
If you want to invest more time and energy into the venture and keep the momentum going, self-employment becomes the next natural step.
You’ve got resources and funding on your side
For many self-employed business owners, the main stumbling blocks are a shortage of skills, money, or both. If you’ve got both of these at your disposal, you’re already a step ahead!
What are some other common signs that it’s time to transition to self-employment?
As well as the points we mention above, some other deciding factors might trigger the change to self-employed working.
- There’s no room for progression with your employer.
- The confines of employment are negatively impacting your mental wellbeing.
- You flourish professionally when working for yourself.
- The opportunity to start a business with likeminded individuals.
- You want more involvement in key decision-making.
Making the decision to go self-employed is entirely down to you, and what you need from it. So, if you think it’s time to make a go of things, let’s address the current elephant in the room; COVID-19.
Things to consider about going self-employed in the COVID climate
OK, we know you don’t need us to tell you this, but we’ll say it anyway. The ongoing health pandemic and global economic crisis complicates the transition from side hustle to self-employment in 2021.
The current climate means there are some things worth careful consideration when thinking about going self-employed.
Limited financial support for the newly self-employed
The Self-Employment Income Support Scheme (SEISS) is only available to those already in self-employment. In order to be eligible for the SEISS grant, you’ll need to have submitted a 2018/19 tax return. If you’re looking to go self-employed in 2021 it’s vital that you’re aware of what is, and isn’t, available to you.
Stay in-the-know about what support you can access. It might be that you choose to wait a while longer, until more support becomes available to the newly self-employed.
A potential downturn in demand within your industry
With the global marketplace enduring a considerable shake-up, thorough market research is paramount before taking the plunge. COVID is affecting different industries in a variety of ways, which might evolve as the situation does. It’s something to factor into any decisions you make.
According to recent research by the Institute of Fiscal Studies, the sectors that have been most significantly hit by COVID are:
- Food and accommodation (hospitality)
- Leisure and arts entertainment
- The childcare industry
- What falls under the category of personal care (such as spas and salons)
- Domestic services
- Public transport
An increased amount of cyber attacks
Another concern arising over the past few months is a sharp increase in the number of cyber attacks. Sadly, there are predictions of even more COVID-related phishing and cyber scams on the horizon during 2021.
According to cyber security experts Centrify, 52% of business leaders are expecting a rise in cyber attacks over the coming year. As a self-employed business owner, cyber security is vital no matter what the circumstances, but particularly important (and potentially costly) right now.
Making the transition to self-employment
Once you make the decision to go self-employed, you might feel like you’re on somewhat of a rollercoaster. With that in mind we’ve put together some tips to help make the process run as smoothly as possible.
See if you can negotiate a gradual exit with your current employer
This may not be an option, but negotiating a gradual exit from employment can help soften the transition both financially and emotionally. For example, you might be able to agree with your employer that you’ll work part-time hours for a period of time before cutting ties completely.
This means you still have income from your job to rely on, whilst you acclimatise to your new status as self-employed. It’s not all one-sided, either. This option might appeal to some employers so that you can handover to your replacement, or wrap up any outstanding projects.
Create a strong marketing plan
Now you’re out in the big wide world as a self-employed professional, it’s time to shout about your product or service from the rooftops. The best way to do this is by formulating a multifaceted marketing strategy to cover all bases.
If you’re stuck for ideas, this might include:
- Social media. Twitter, Facebook, Instagram and LinkedIn are amongst the most popular.
- Paid social ads. Be aware that this might require a substantial budget in order to be truly effective.
- A website. Possibly including a blog platform, as well as a way to capture visitor data.
- Content marketing. Boost Search Engine Optimisation and where you appear on Google organically.
- Pay Per Click (PPC) Google ads. Again, this might require a significant allocation of budget.
- Email marketing. This is where collecting visitor data via your website comes in.
- Networking. Boost your profile, reach, and encourage word of mouth marketing.
- PR. Getting yourself out there via digital and print media channels.
Don’t be afraid to ask for help or seek training if marketing isn’t in your skillset. In fact, this goes for any element of running a business. If your expertise is lacking in a certain area, don’t hesitate to ask questions, or to outsource if you can afford it.
Use a reputable accountant
Enlisting the expertise of a qualified accountant will be instrumental in the success of your business. They can help you be tax efficient, fully compliant, stay ahead of tax return deadlines, and monitor what tax relief options are available to you.
An accountant can also:
- Help you develop your business plan.
- Represent you to HMRC.
- Help with making better business decisions.
- Guide you on funding opportunities and filling out applications.
- Save you a huge amount of time, energy and responsibility.
Having an accountant on your side will also help you deal with Making Tax Digital (MTD). MTD is a government initiative to help businesses and individuals get their tax right, by digitising the process for taxpayers.
An accountant will help you keep to the MTD rollout deadlines, and ensure that you remain fully compliant along the way.
Consider cloud-based bookkeeping software
Speaking of Making Tax Digital, going self-employed means recording your business’s finances in order to report and pay tax on them. Using straightforward bookkeeping software which is MTD compliant will ease the process.
It can also help you stay on top of important dates and give you a valuable insight into your financial profile and cash flow. If you’re new to the concept, the benefits of cloud accounting include:
- Remote access from anywhere with an internet connection.
- Staying on top of late payments and overdue invoices more efficiently.
- Quick and easy bookkeeping on the go (such as being able to capture and store receipts against businesses expenses via the camera on your smartphone).
- Automated reminders to reduce the risk of missed deadlines and penalties from HMRC.
- No need for time-consuming back-up processes.
- A more secure way to secure important data and information.
- Less need for paper and therefore a more sustainable way to operate as a business.
- Reduce the burden of admin, by automating processes such as bank reconciliation and chasing late payments.