So you are considering self employment as an alternative to the 9-5 daily grind. There are many options for working for yourself. Let’s jump right in and look at the pros and cons of a few of them.

Types of Self Owned Businesses

Brick and Mortar (Storefront)

If you have a passion, like photography, you can start a brick and mortar store (that just means it is a physical location). You will need to research your market first to determine the viability of your idea in your location.

Costs are high in this business model: you have all the costs associated with a physical store, including rent, utilities, insurance, display and equipment, product stocking, and employees. In addition, you have the usual business expenses which include advertising and marketing. If you borrow money for the start up, you will also have interest expenses.

Franchise

The number one reason to invest in a franchise is the recognized brand. Starting a business has risk involved, and one of the biggest first hurdles is attracting customers. With a recognized brand, you have an established customer base.

Ensure you have sufficient funds to cover 6-12 months of expenses. This will give you the time needed to get established. As business cash flow increase, the relative load of expenses on income lessens.

In addition, you do not have to invent the business: a franchise comes preplanned. There are standard operating procedures, and a built in support system. You have some idea what your income will be, and you know exactly what your costs will be.

Speaking of cost, franchise cost is high: in addition to all of your normal start up costs for a Brick and Mortar store, you have your franchise fees on top of it, these can be as high as 500K.

Many franchise owners work 80 hour weeks, and in most cases the income is 100K or less. You have employees to manage with all that entails. The initial investment ties up a lot of money. Franchise purchase is very expensive.  Think of it as a parking lot for your money.

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Self Employed

If you have a marketable skill, you can become self employed. Think tradespeople (electricians, HVAC, computer repair), skilled performers (music teachers, photographers), artisans (crafts, performers), medical/coaching (counsellor, home health care, personal trainers, etc).

This model has many of the same costs as Brick and Mortar. You will need a location, which may not need to be a storefront, and therefore may be part of your home. In addition, you will need equipment and supplies. Hidden costs include accounting and support. This model has no built in support, and since starting out on your own is challenging, so you may want some form of support.

Advertising and marketing are factors. Again, it is imperative to determine if there is a viable market in your area, and a viable customer/client base.

You are the commodity here, so your self-employment is a full time commitment. Ensure that your business plan has built in vacation. For example, a music teacher may have summers off. If your off time is consumed with worry about income, you can’t really enjoy it.

Party Businesses

These are a smaller form of the Self Employed market, and come with some of the benefits of a franchise. Avon, PartyLites, Steeped Tea, Epicure, Tupperware are some examples. You get the benefit of a known brand.

The business model is direct sales. Many of these require monthly sales quotas. They may be very attractive if you like their social aspect (product parties). These are particularly good as a side income, but may be grown over an extended period of time to full time employment with a full time income.

These are low profit, high volume product lines. Expect to need large volumes of customers, which means you probably need to have a certain level of population to draw upon, depending on the income level you are seeking.

Online Business

Compared to the other self-employment options, Online Business has the lowest start-up costs. There is no storefront, so no brick and mortar fees.  On a going forward basis many online businesses are part-time.  In these cases your earning potential is no longer linked to the number of hours you work.  A lovely side benefit of this is that those insidious salary ceilings are gone….the income potential is unlimited.

In most other models you need to be located in a densely populated area. With online business, the world is at your doorstep, so you have access to a huge market place.

Advertising and marketing are typically undertaken on social media, which has a cost much lower than other forms of physical marketing.

Start up costs typically are in the 1000-5000 level (plus advertising) if you work with a parent company.

Or you can start up without a parent company. Depends on your level of tech savvy. Usually this results in costs equivalent to or greater than the costs of starting in partnership with a parent company.

Alternatively, you can avail yourself of a training guru in your chosen online genre who will show you the ropes. This again brings your start up cost on par with that of working with a parent company.

No way around it: there are costs associated with owning and operating a business.  

Summing it Up

Up until this point in time, it was either very expensive to own a business or you had to have an expert skill to offer, and in most cases there was huge risk in starting a business.  Today with the internet you can start a turn-key business for $5000-10,000 or less, with very good chances of succeeding (70% of online businesses succeed in the first 3 years).  The success determining factor is you:  if you are motivated, committed and do the work, you have a very good chance of success.