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If you’re miserable in your poorly paid office job, the word self-employment instantly triggers fantasies of freedom. It’s the idea that you can choose your work times and location regardless of a grumpy and incompetent superior.

In this article, we’ll take a closer look into self-employment, how to transition into a self-employed career, and how it relates to entrepreneurship.

Terminology

Before we dive into the specifics of how self-employment works, we want to discuss the four most important terms to navigate this topic: self-employment, business ownership,  freelancing, and entrepreneurship. Since most of these terms are sometimes mistakenly interchanged in conversation, it’s important to know the differences.

Note that these terms can have slightly different meanings, especially concerning taxes and the law, depending on the country you live in. The following are general working definitions for the purposes of this article.

Self-Employment 

Self-employment means you’re working for yourself, rather than an employer. You don’t receive a salary from any superior, but rather independently find work through collaboration with businesses.

There are three main types of self-employed people. All three terms come with extensive legal jargon, so we want to break it down to the basics.

The first classification is the so-called sole proprietor, which refers to a business that is run and owned by one person, with no legal distinction between the two entities. As a sole proprietor, you are responsible for all aspects of your business and reap all profits.

The second classification is independent contractor, which means you work independently from contract to contract for other businesses. You choose your customers freely.

The third and final self-employment type is being a member of a partnership of two or more people. A partner is not considered an employee and thus,  gains the self-employed status. It functions similarly to sole proprietorship.

Business Ownership

Business owners can be self-employed and enjoy many of the same freedoms as self-employed workers. The main characteristic of business owners is that they’re able to hire employees and a manager if needed. Having others work for you is a defining quality for business owners, as opposed to being the sole worker in your business when you’re self-employed.

Freelancing

We often hear self-employment and freelancing being used interchangeably, but they describe slightly different occupation statuses. Definitions vary, but in general, terms, being a freelancer means you take on projects from other businesses. This sounds similar to independent contractors who are considered self-employed. In fact, some freelancers can be self-employed and vice-versa.

The main difference is that freelancers often have day jobs and freelance on the side, whereas self-employed workers focus on the business they’re trying to develop. Freelancers also take on multiple job offers at once, working for more than one company. They typically work alone as opposed to self-employed workers who often work with a team.

Freelancers are particularly common in creative industries. Artists or writers often find work through temp agencies. They face less control over the specifics of their work than self-employed workers typically do, given the signing of contracts produced by their clients.

Entrepreneurship

Where does entrepreneurship fit into this system of terms now? There is considerable overlap between some of these occupation statuses and entrepreneurship. An entrepreneur is defined as

someone who transforms a business idea into an enterprise that generates goods or services and labour.

Entrepreneurship means playing a game of risk and reward in just the right way. It’s about innovation, creativity, and ambition to work your target audience in your favour. Entrepreneurs are also long-term oriented and value sustainability.

Entrepreneurs and self-employed workers share many qualities. Though, self-employed workers typically won’t strive for innovation as much as entrepreneurs do. If you’re self-employed, you’ll likely offer products or services that already exist. You also take fewer financial risks than entrepreneurs usually do. As an entrepreneur, you try to make smart investments and calculated risks.

How Do You Become Self-Employed?

We’ve covered the main terms now, but how does self-employment actually work in more detail? How do you become self-employed, and what should you consider?

We’ve created a simple step-by-step guide for anyone unsure of how to make their dream of self-employed freedom a reality. These steps will help you make that transition and give you the necessary tools to succeed.

Step 1: Consider Your Options

Very few people make drastic financial decisions before considering all the available options. You don’t want to change your career path without knowing most if not all potential risks and outcomes.

Consider all relevant options before taking any further action.

Decide whether you want to become a member of a partnership or found your start-up. Maybe you want to be an independent contractor. Even at this stage, think about your future in a long-term sense. You could turn your self-employment into an entrepreneurial effort after a learning curve. 

Step 2: Determine What You Have to Offer

What do you want to build your business around? Consider your skills and interests and figure out a way to turn them into something you can take advantage of. If you’re thinking about entering the self-employment career path, you probably started out with an idea already.

In case you haven’t pinpointed an exact niche for your business and just want more autonomy as a self-employed worker, determine what you have to offer to the market. The more specific, the better.

Step 3: Know Your Audience

You decided what it is you want to produce or what service to offer, but you haven’t researched your future customers yet. Defining and catering to your target audience is the most important pillar of any business, regardless of its size. Without customers, what you have to offer is rendered meaningless.

Once again, specificity is crucial. Having a vague idea of who will like your products is not good enough. Eliminate any “hope for the best” attitude and get serious about your target audience.

Step 4: Prepare Your Business

This step includes all administrative work that needs to happen before you ever earn any money. Sort out your tax and financial situation according to the type of self-employed worker you will be. Design a logo and website and set up production if needed. Settle on pricing and customer service options. Create the best system that works for you to organise yourself.

At its core, this step requires you to set up a business plan. Determine realistic but ambitious goals you want to achieve in a certain amount of time. If you’re serious about self-employment, treat it like any other business and cover your bases.

Step 5: Learn How to Be Your Own Boss

After setting up a business plan, decide on your work hours and place. This may sound like an obvious step, but working for yourself means you have to create a workspace somewhere. For a lot of self-employed workers, that will be within their own home. Without a proper office area, your productivity will likely suffer. The COVID-19 pandemic has made that blatantly obvious for many workers.

This step depends on the type of work you’ll be doing, and an office space might be suitable for you as well. The same applies to joining a partnership or becoming a sole proprietor and renting out a shopfront or office in your area.

Step 6: Market Your Business

You have all the ingredients to start production or the beginning of your service, so now it’s time to get your name out there. Knowing your target audience and potential investors, make sure the public knows who you are and what you do.

Build connections and take advantage of social media and your website. Even the most successful big businesses started out as nobodies, so get ahead of the game as soon as possible.

Step 7: Be a Hard Worker

Hard work is the key to success. 

It’s a phrase we hear no matter what career we strive towards. This principle naturally applies to someone who is their own boss as well. Without external pressure from a superior, you will adjust to setting your own deadlines or working towards the deadlines of your customers.

Work hard and fulfil the promises you make in your self-marketing and contracts with customers. You want a good reputation for yourself because you are your business as a self-employed worker. If your work ethic is noticeably lacking, your entire business will suffer.

Self-Employed Entrepreneurs Examples

Many entrepreneurs began their careers as self-employed or freelance workers. After earning some work experience and knowledge, they founded their own companies.

One illustrative example is Brian Wong. After working as a freelancer in designing ads, he founded his own company, Kiip. This company took smartphone advertisement to the next level via a rewards system. While no longer active, Kiip still shows how someone can turn their freelance side-hustle into a great business as an entrepreneur.

The same applies to self-employed workers. For example, if you make jewellery and start out as a company employee, you can use that experience by taking the risk and founding your own business. At first, you are a self-employed sole proprietor or a business owner. Though, you could take that to the next level and incorporate something innovative and entrepreneurial.

If you want to learn more about the options you have as a self-employed entrepreneur, visit our blog article “Industries to Be Your Own Boss In“.

Conclusion

If you seek more autonomy and freedom at work, self-employment could be an option for you. Depending on you, self-employment can be a fulfilling career while offering the potential to then become an entrepreneur.

Bravery, consistency, and a great work ethic are requirements to be successful in both career routes.

Want to start and grow your own business? We have the perfect solution for you. We built a platform with over 17 courses designed by serial entrepreneurs to help you build a sustainable business. You will get access to hundreds of resources, tools, legal templates, and much more. Save time and money and become more successful by subscribing to our EWOR Platform. What are you waiting for?

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Our Programs

Fellowship

An exclusive 10-month, fully-sponsored, program designed for aspiring entrepreneurs who want to make the world a better place.

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Academy

An exclusive 10-month, fully-sponsored, program designed for aspiring entrepreneurs who want to make the world a better place.

Learn More

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Learn how to conceive, prototype, test, and launch an impactful venture with over 17 courses to help you start off.

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Daniel Dippold

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