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The Disadvantages of Self Employment

Independent Consulting is not all a Bed of Roses...

Outlined here are some of the disadvantages of self employment. My intent is to give you a sense of the realities that you will face if you decide to start your own consulting business.

The freedom comes at a price. I make no apology for some straight talking on this page. With foresight and planning all of the disadvantages of self employment can be overcome and the assocaited risks managed, but you need to understand the realities and be clear on how you will handle them.

Personal responsibility for your own Training & Professional Development
  • Continuing Professional Education (CPE) is essential to maintaining your skills and credibility i.e. your 'licence to operate' - Time out of the business for CPE is lost (client) chargeable time
  • You will need self-discipline and objectivity to identify your own training and development needs and the resolve to take time out from client work to execute your T&D plan
  • You will need to finance and make time for your own training and development activities to ensure that your skills remain current and appropriate to the work you are undertaking
  • If you are a qualified Professional then appropriate CPE should be undertaken each year in line with guidelines issued by the Professional Institute of which you are a member

Risk - Professional Liability
  • One of the most significant disadvantages of self employment is that the Buck stops with you; You will be solely responsible the work that you deliver and the advice that you give your clients
  • You may face a personal legal liability if you make a mistake or a client is not satisfied

Financial Risk
  • There is a risk that you will sometimes be without chargeable work i.e. there is no money coming in for a period of time
  • You will need to manage your cash flow in a disciplined manner, maintaining cash reserves to cover any lean periods and ensure you have sufficient cash available to pay business expenses and tax bills


Side bar

But, balance against these financial risks the following questions:

  • How secure are you in your current employment?
  • Could you be faced with redundancy in the next 12 months?
  • How sustainable is your current work / life balance?


Hard work
  • On becoming self employed, you ARE the business. If you don't do it, it either doesn't get done OR it doesn't get done right
  • You find the opportunities, build and maintain the relationships, sell the work, deliver the work, handle the invoicing, pay the expenses, deal with the business administration etc.
  • You are the Hamster on the wheel, the Goose that lays (and sells) the Golden Eggs

Impact on lifestyle and family life
  • At times you will have to make some tough decisions - - you may need to sacrifice some time with family and friends in order to deliver the project for your client
  • Travel - you may need to work away from home for periods of time to meet the demands of client work
  • No more Business Class and 4/5 Star hotels - - Your business (i.e. YOU) will be paying your travel and accommodation expenses - - You will probably choose to fly economy and stay in No Frills accommodation, at least during the initial couple of years
  • You will occasionally need to work long hours, sometimes crazy hours to meet a client delivery deadline - - This is where the Rubber hits the Road
  • There will be stress, but ultimately it will be on your terms - you are in control
In my experience, in the medium to long term, the disadvantages of self employment such as those outlined in the above paragraph are a worthwhile sacrifice. You're working for your own benefit and for the benefit of your family, all on your terms and within your control.

Support Network
  • You will need the support, encouragement and flexibility of family and friends
  • You will need to find a mentor to help you maintain focus on your strategic business and financial goals

You will have an idiot for a boss!
  • It is often said that on becoming self employed you suddenly find you have an idiot for a boss...

  • You will need to be VERY organised to be successful as an Independent Consultant
  • Rigour and organisation will underpin everything that you do and will enable you to succeed
  • You will need to get organised or you will sink - Link 'Getting Things Done'
  • You need to decide what to retain and do yourself and what to delegate to others. more on this later. In summary, you should do ONLY the things that ONLY you can do

Side bar
Being well organized is of critical importance.
Your effectiveness in getting things done will be central to your success or failure as an Independent Consultant. This will apply to all aspects of your new life including:
  • Delivery of projects when client facing
  • Managing your home, family and social responsibilities
  • Processing your business administration and minimizing the percentage of your time that it takes

You will need to be ruthlessly efficient in managing your time. If you currently spend hours per week watching television or playing computer games then get ready to ditch those pleasures and get serious about how you spend your precious time.

  • Look objectively at your own sickness record as an employee over the past 12 months
  • If you have health problems then you need to be realistic about how these challenges will impact on your ability to operate a self employed business
  • Do you have trouble getting out of bed on cold, wet mornings or regularly wake up with a bad hangover? If so, then think carefully about whether you currently have the self discipline that you will need to start your own consulting business and make it a success

Working from home
It can be surprisingly difficult to carry out contract work at home:
  • Do you have a room that can be used as a dedicated home office?
  • Are there children or elderly relatives living in your home?
  • Is the atmosphere in your home suitable for working, concentrating, making business calls?
Ideally you should not use your home office to meet with clients - it should be your private business working space. You should meet with clients at their business premises or use a serviced office / neutral location.


OK, so I'm glad to have got that little lot off my chest! I've summarised what are, in my opinion, the main disadvantages of self employment.

There is no doubt that there are some serious challenges associated with being self employed. BUT, in my experience the disadvantages of self employment are far outweighed by the advantages.

Almost without exception, when asked if they would ever consider going back to an employed position having made the break to self employment, my peers and contacts respond with a emphatic 'No Way...'

Browse the content elsewhere on and form your own view. If you have any specific concerns about the potential disadvantages of self employment that are particular to your own situation then please feel free to get in touch using the contact form below - I'll do my best to answer your question.

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