What are the risks of self-employment? Great question.  Risks and life go naturally together. It's as natural as ham and pineapple pizza gin and tonics and cheese pickle sandwiches.  That's no different when you enter the world of business and you start working for yourself and become, self-employed think of those risks as part of your route to self-employment.

In this podcast, I will guide you through some of the main issues that you are likely to face. I'm going to discuss how to best prepare for them, knowing and dealing with those risks gives us a clear path to success.  Hi folks. My name is Mahmood. I am the podcast host of I hate numbers and my mission in life is to simplify the world of finance and numbers for business owners, help them make more time, help them save tax, make more profits and improve what goes on between their ears.

Self-employment versus employment

There are many benefits to going alone, there are also downsides.  Control, responsibility, destiny, and money are some of them.

Wanting to explore the tax differences?  Check out or FREE online calculators.

What are some of the other risks of working for yourself looked at in this podcast?

• Uncertainty, risk, and your money attitude
• Working capital, money fuel to run your business.
• Mistakes, and what Edison’s take on it is
• Pricing your products and services correctly
• Tracking and understanding your money in and money out
• Sales and marketing. It’s more than your website and a bunch of business cards.

Check out or FREE online calculators.

Moreover, do you want to know the answer to the question ‘What are the risks of self employment ?  This podcast tells you all you need to know, with tips, and advice

Listen to find out more.

Firstly, I love to help business owners connect with and understand their numbers.  Above all I want you to improve your attitude to money, make more profit, save tax and time.

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Risks and life go naturally together. It's an inevitable part of life, and it's as natural as ham and pineapple pizza, gin and tonics, and cheese and pickle sandwiches, and that's no different when you enter the world of business, and you start working for yourself, and become self-employed. Think of those risks as part of your

route to self-employment. Make sure you're aware of the opportunities that are in front of you, and the challenges and actions you need to take to reduce those stumbling blocks, and make the most of those rewards. Now, being self-employed is fundamentally different from working for somebody else. It's not better, not worse,

but it's fundamentally different. In this podcast, I will guide you through some of the main issues that you are likely to face. I'm going to discuss how to best prepare for them knowing and dealing with those risks gives us a clear path to success.

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Hi folks. My name's Mahmood. I am the podcast host of I Hate Numbers, and my mission in life is to simplify the world of finance and numbers for business owners, help them make more time, help them save tax, make more profits, and improve what goes on between their ears. Let's crack on with the podcast. Now,

if we consider self-employment versus employment, you may be wondering what the difference is between those two. Well, when you become your own boss, you'll find that the distinction between your own work time and personal time becomes blurred. Your business decisions will have an impact on your personal life, and in effect, you'll be on call 24 hours a day.

I speak from good experience, having launched my own businesses from my own back bedroom 26 years ago. So, all the things that I can refer to in this podcast are drawn from my own personal experience as well as my clients’ experiences and the people that I help in the world of business. Now, of course, there are many benefits to going alone.

You are more in control of your destiny. You take credit for your successes, and you step forward for any failures, and ultimately, you reap the financial rewards of your success. Having said that, there are several risks you need to be aware of and consider as you embark on your business journey. Now, self-employment is a great way to be your own boss and have the flexibility of working when you want.

However, it's important to understand that being self-employed is more than just having control over your schedule. You'll take on many different responsibilities for your business to succeed, and here are some of the nine things you need to consider when you are in that world of self-employment. Uncertainty. Now, sometimes you will not be clear as to what lies ahead for you.

On many occasions, you may not even know if you've got a project that's going to take place after the current one is finished. You have little time to look around for new assignments or sales, so you need to consider the next opportunity, put money aside, make financial savings for those quiet times when you need to be marketing, working on your business, selling to keep that cash flow coming in.

Risk number two, being money-minded. You may have to go a few months without having any earnings at all as you build up and you develop your business. You may find that you need to take on a part-time job to keep up with your living expenses. In the early years of my business, I had three or four part-time jobs, and my main priority was to make sure I didn't go back to a proper job and work for somebody else, but also to keep the wheels of a cash flow machine turning so I could continue that independent existence.

A normal rule of thumb is it takes businesses at least two to three years before they establish roots and start generating some degree of value. Thirdly, there will be no employee benefits when you work for yourself. Effectively, in visual terms, you are your own boss, but you won't have the benefit of holiday entitlement, sick pay, and company benefits such as a pension scheme.

If you are ill, if you want to take time off from work, there won't be any financial cover for you because you will be primarily responsible for making your own living. You may wish to consider, check out an insurance policy, to take into account those times when you are unable to work, but certainly, putting money to one side, you need to make sure you cater for those quiet times.

A fourth risk is what finance people call working capital. Now, working capital, I'll draw a parallel with running a vehicle. If you imagine you have a car, your car represents your business. However, that car is not much good to you unless you can put petrol in the tank to keep it moving. The same concept applies to your business.

You need funds to take care of the day-to-day business activities. Many people who run their own businesses, who set up, underestimate how much money is needed to run the business, even if you're simply running it at home with a laptop at your kitchen table. It's important that you figure out how much money your business will require, not just the setup costs, not just the cost of buying a pc, kitting out your home office or your office away from home, but the cost of remaining in business.

For example, what will your ongoing overheads be? The cost of your subscriptions, your website fees, your insurance, and money to pay yourself. It's important to remember that many businesses take a year or two to get fully going. Customers get to know who you are. You will make inevitable mistakes in the early stages.

I can speak from bitter experience of having made those mistakes, but I'm going to take a leaf out of Einstein's book. There were 1000 attempts until he came up with the final version of the light bulb. I when asked by a journalist what he felt about those 1000 mistakes. He said they were just 1000 steps to get to the end conclusion.

Another risk that is very prevalent amongst businesses, and that's not just the beginning of your business cycle, is failing to price your services correctly. Many people who start their business journeys overestimate the number of clients they will be able to work with, and undervalue the skills and services they provide.

They don't consider all the costs of running a business. They don't consider their own value that they're bringing to a customer. So, it is not unusual to be undervaluing what you are charging to your customers. Now, as a short pause here, folks, if you want some help calculating some numbers, working out a start point or an endpoint for your services that you're charging, or your products, then hop over to my website, and there's an area on the website for business calculators where you'll be able to play to your heart's content a simple slider.

Punch a few numbers in there and by the powers of magic, figures will appear in front of you. I'll leave a link in the show notes for you to look at. Now, we've covered pretty much five key risks here. Let's go onto number six, and that's overdependence on a single customer. When businesses start, when you embark on your own self-employed journey, your first client

is likely to be the company that you used to work for. Now at first, that looks fantastic. You know the company, you know the individuals, they know you, and before you know, you've got a steady stream of work coming from that one single organisation. And then, that realisation will strike and you realise you're at their mercy.

Now, whenever you have one customer, whether that is a former company you used to work for, that's so big that losing them would make the difference between success or failure, then watch out. Having a large number of smaller clients is a much safer option, and you can spread the risk accordingly. Let's go on to risk number seven.

Poor financial controls and planning. Yes, it’s critical not just to keep the tax man and the authorities happy with good financial and business record, you need to review your revenue in expenses each month. You need to know what you are spending, what you're spending it on, where the money's coming from, and you will need to make key decisions in your business about profitability, where these costs can be challenged, and you need good, clear records as well as some financial oversights.

Risk number eight, failure to clearly understand your market, your customers, and your customer’s buying habits. One of the key risks of self-employment is not answering some basic, fundamental questions. Questions such as, who are your customers? Are they companies? If so, what industry? What size, how big are they?

Where are they located? Are your customers individuals? Are you selling B2C? And if they are individuals, what can you tell me about those customers? What gender, what age, what type of issues, what type of challenges, what type of pain points do they have that you can clearly identify, and help? And try to encapsulate that in a short number of sentences.

If you cannot explain who your customers are, what your customer's pain points are, what the transformation that you're looking to provide, then you have a problem Houston. Lastly, ineffective sales and marketing. Now, setting yourself up in business, getting a fancy website, getting some business cards, all great stuff, but they're not enough to get potential customers beating a path to your door.

You need to learn the basics of sales and marketing, and you need to make sure you track the success of each technique that you use. The ones that don't work, the ones that don't bring you into conversation with those prospects, the ones that don't eventually get you conversions, or the ones that you need to think carefully as to whether you should be expanding your time and energy on them.

Okay folks, so let's just round up what we said on this podcast. We've got a number of risks. Being aware of what lies ahead, being aware of what those business risks are, is not to put you off self-employment, but to actually make sure that you can actually cater for them and plan for them. Planning is a natural and a fantastic way to reflect all these risks in.

If you want to get some more resources, check out some more tools, all free of charge, then, hop over to the website, check out previous episodes of the podcast, and folks, if you'd liked this podcast, if you've got some value from it, give me some feedback. Show me some love, but I’d love it if you could subscribe, share it with your friends and family.

I know I'm asking a lot there. And if you've got any comments or feedback, or perhaps, you've got some ideas for a future podcast episode, a topic you’d like covered, then drop me a line. Check out the show notes. Until then, folks, have a fantastic week ahead. We hope you enjoyed this episode and appreciate you taking the time to listen to the show.

We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.