We should ready ourselves to be self-employed. Most alarmingly, the digitization of the businesses has obsoleted millions of jobs. In fact, this is happening right now in the financial sector of South Africa. As a result, a couple weeks ago, one of the four universal banks in South Africa announced that it will close 91 branches. That will leave about 1200 employees without a job.
The bank can hardly be blamed for closing its branches. I mean, when last did you visit your bank? If you’re looking for something to blame, you need to look no further than the digitization of the banking sector. Also, the entry of new digital players has challenged the status quo in the market, said Jorge Camarate, Strategy& Partner in PwC’s financial services division recently in ITWeb.
The digital disruption in the banking sector will sadly continue to cause more job losses. And this is happening across industries. So, 1200 bank employees will soon face the reality of surviving without their salaries.
As a result, the retrenched employees, especially the breadwinners, may have no other option to be self-employed.
What does it mean to be self-employed?
Wikipedia explains that to be self-employed is a state where you’re working for yourself rather than for a boss. At the same time, self-employment may be seen as a survival strategy for those who cannot find any other means of earning an income.
Working for oneself may be the secret dream of many people that work their arses off every day with little money to show. However, to be self-employed may be not so idealistic and it’s definitely not for the fainthearted.
But for many there are no other choices but to face the challenge of being self-employed. And the point of departure for them is to start their own businesses.
Although starting your own business may provide an outcome for the millions of unemployed in South Africa, almost 80% will fail within the first three years (advertorial feature, Mail and Guardian).
Your chance to be successful self-employed may increase if you do the right thing from the beginning.
Getting it right with self-employment
It’s an extremely traumatic experience for most people when they lose their steady jobs. Especially after a month or two – when they need to pay the monthly bills…
I know what it feels like, because I was there, twice!
You need to clear your mind of all the negative thoughts. It’s better to see your situation as an opportunity rather than a threat. Also, be honest with your family and friends about your situation and try to win their trust and support.
Once you’ve reach the unavoidable point of self-employment, best is to start on the right track.
To succeed being your own boss Susan Ward in The Balance suggests the following:
- Be sure you want to be self-employed. Does self-employment suit your life circumstances? Is your personality suited to self-employment?
- Get financing in place beforehand. Perform a complete review of your finances and estimate your needs as closely as possible, then (if needed) consider possible sources of financing such as family, friends, or business loans from financial institutions.
- Create a business plan. Having a solid business plan and updating it on a regular basis gives you a blueprint for success.
- Name, register, and insure your business. Do this before you open your business doors and taking on clients.
- Market your business. When starting a new business the major challenge is usually getting the first few paying customers. It helps if you’ve transitioned from a full-time job in the same profession you may have the advantage of having potential clients already.
- Be your own accountant, at first. You can save money on accounting fees by using free time to organize how you want to keep your books, invoice your customers, etc.
- Be professional at all times. Don’t let your customers be put off by how you look or behave…
- Build your reputation with best practices. Develop your reputation and make good on all mistakes.
- Don’t try to do everything — outsource if you need to. Outsourcing some tasks can free up more time to focus on your core business activities. You can even ask family members to help you.
- Don’t forget the rest of your life. Try not to let your business become your entire life.
The responsibilities of being self-employed
The one certainty of being self-employed is that cash flow isn’t predictable or guaranteed. Therefore you need to be extremely disciplined when it comes to money matters.
Mduduzi Luthuli (Business Day) suggested the following tips for those working for themselves:
- Pay yourself a regular salary. The key to dealing with irregular income as a business owner is to mimic a regular income schedule as much as possible.
- Pay yourself the bare minimum. Create a budget to determine what the minimum amount of money is that you need to survive each month.
- Set aside bonuses and raises. If you score a big pay-out don’t go on a spending spree. Rather put this extra money into a separate supplementary savings account. Because you may need it in times of little of no income…
- Risks to navigate. You need to take out insurance policies to cover you should you become seriously ill or disabled. Additionally, you needn’t to work till you die – make provision for your retirement.
Young people , students and those still in school need to be prepared to be self-employed for the rest of their lives. Indeed, the era of white collar jobs may be gone for ever. Use your talents and passions to get your career as a self-employed started.
Read also: The Business of Taking Risks
A well researched and written Business Plan helps to get your business started the right way.