Going from employee to self-employed is a life-altering decision. Consequently, it is crucial to understand the benefits and losses.
Should Everybody Become Self-Employed?
I am a big proponent of the idea “everybody who has the skills and experience to become self-employed”.
However, this is an honest comparison with the true upsides and downsides.
Everybody’s story is different, an informed decision is key.
I made a quick comparison grid below, check it out.
|Independence||You are an independent entity. You are seen as an expert, and your opinions are valued. You can choose your days-off, and take a variety of decisions by yourself.||You represent a company. Your value is based on your efforts and years in the company rather than your potential. You need a manager’s permission to do nearly everything.||Self-Employed|
|Compensation||In some PM positions x3 higher than an employee. Expect to be paid better than 90% of the employees at your level.||More your employer pays for you, more of a cost center you become. Your income is fixed, not scalable, apart from occasional bonus and measly yearly increases.||Self-Employed|
|Job Security||Your contract can finish any time within the notice period.||It is harder to remove an employee, and it has by far a higher cost.||Employee|
|Expenses||You mostly pay your own expenses. You have to pay your own insurance, your retirement, your trainings, your accountant, lawyer and tools.||Mostly covered by the employer.||Employee|
|Paperwork and Administration||Mostly your responsibility.||Mostly handled by your employer.||Employee|
|Freedom in Self-Development||Paying for your own destiny lets you choose which training to follow without needing a manager’s approval.||You need approval for even a book or course to buy, often series of HR and direct managers involved.||Self-Employed|
|Personal Development||Freelancing makes you focus on professionalism, discipline and carrying responsibility by design.||Your company has to align in order to gain self-development advantages you want to draw for yourself.||Self-Employed|
|Freedom in choosing whom to work with||You can work with whomever you want to: multiple clients or a single client. You can fire a client.||You can often only work for one company. Since it is a more permanent relationship, you can’t quit easily.||Self-Employed|
|Value of Experience||Your multiple years of experience in multiple clients is seen as an exponential asset. You can talk from an outsider’s point of view.||Your experience counts well in the company, but externals are hired to advise you.||Self-Employed|
|Motivation and Coaching||Completely your responsibility. Self-motivation becomes real. You need to review yourself and have a serving attitude.||Your company takes responsibility in your motivation, and shares it. Too much of it can be detrimental, watch out.||Employee|
|Hiring Processes||Usually easier with freelancers, with quicker start dates.||Usually takes multiple interviews and through multiple departmental hoops.||Self-Employed|
|Hiring Reason||To fill a gap in skills and experience immediately.||To have somebody with adequate skills and train them up for the long term.||Tie|
|Office Politics||Usually you are exempt.||Employees must have a deeper understanding of it and have to put up with it.||Self-Employed|
|Sense of Ownership, boredom||Usually you own your piece and run with it. You have the liberty to deal with boring tasks in innovative ways.||Repetitive jobs, having to get permissions can get boring.||Self-Employed|
Who is the Winner?
I hate to use the cliche, but “it depends”. You’ll need to see it according to your own conditions.
Becoming a self-employed provides a rich life with more income. But a lot of people prefer the perception of security.
Are you interested in becoming a Freelancer PM, Tech Leader, or Technical Person?
I’ve coached many professionals like you to become a self-employed consultant. I’m happy to help you too.