Note that this is a shortened version of a detailed guide I have put together. The full guide goes into details about the thinking behind the various questions posed and gives some thoughts about what you can do to overcome the impact of answering ‘No’ to some of the questions. If you want the full version please request it via the ‘Contact Us’ tab on www.taxassist.co.uk/miketombs. You will not be spammed with anything else or put onto a mailing list as a result!

Do you have what it takes to become self-employed?

Everyone has skills, be they in washing cars or putting together multi-national financial transactions. The people valeting cars at the local shopping centres are self-employed, so what’s stopping you?

For people who are unemployed or earning very low wages, the risks of becoming self-employed are relatively small. An unemployed person who decides to become a market trader may lose a few pounds that he really can’t afford to, buying goods he can’t sell on, but he’s not risking a weekly or monthly wage by leaving a paid job to work for himself.

A car mechanic working for a local garage may well be able to make more money by branching out on his own. If it doesn’t work out though, he will have lost his job, his wages, and possibly pension contributions and other benefits too. It could take months for him to find other work.

Of the nine out of ten businesses that fail, many will be through no fault of the owner at all. Like everything else, business is unpredictable. We have all seen the effects of the economic collapse which has impacted on the small-business sector as much as on any others. In the United Kingdom the five-year survival rate is about 17%.

Common causes of failure include:

• Insufficient capital to get through the initial or expansionary phases
  
• Lack of skilled personnel
  
• Failure to demonstrate a sustainable marketing advantage
  
• Lack of bookkeeping and other administrative skills
  
• Failure to collect sums due from customers
  
• Reluctance to seek professional input and advice
  
• Inadequate attention to the business by the owners
  
• Inadequate insurance
  
• Over-pricing or under-pricing goods and services sold
  

Self-employment is not for the faint-hearted. Most people starting out underestimate the pitfalls and overestimate the upside potential. Equally importantly, they overestimate their own suitability to enter the world of the self-employed.

To get an indication of how suited you are to self-employment, answer the following questions honestly. The only person you can cheat is yourself.

To obtain the full version of this guide please request it via the ‘Contact Us’ tab on www.taxassist.co.uk/miketombs.