Archive for October, 2010

Small businesses are on the increase, despite the recession.  Figures from the Office of National Statistics show there were 3.7million small business in 1999 and this had grown to 4.8million in 2009. Of these, the vast majority are solo business owners.

It seems that greater numbers of people are deciding that working for themselves may be a better option. Now there could be many reasons why individuals are deciding to take the risk of setting up in business for themselves.

But is working for yourself that much riskier these days than working for a large organisation?

Given the current economic situation, jobs are no longer secure and redundancy is common place. Job security is much reduced. Even roles within the public sector which had previously seemed a safe bet are now being cut.

However, this is not just due to the recession. Many firms have been undertaking cost saving exercises before the recession started in order to keep abreast of the competition. Pressure to make profits ranks higher than any social concerns about looking after employees.

Loyalty also seems a thing of the past, on both sides of the fence. Once, many organisations offered a job for life, but no longer. Employers want the best people around and won’t carry anyone that is not performing. Likewise, expectations from employees about their developmental career path is high, especially with the younger generation and if they cannot see clear opportunities they will soon move on.

Also, many of the financial benefits associated with employment such as bonuses and pension provisions are being eroded.  The investment risk within pensions is now transferring from employer to employee as we are seeing the demise of final salary schemes.

With increasing pressure to work longer hours as well as the factors referred to above, many are deciding that there is less of a benefit to work for someone else. The gains in time and flexibility over lifestyle management, often outweighs the risk of any reduced income which is likely, especially in the early years of a start up. Furthermore, being free to make the decisions about their work life gives them a greater sense of comfort and security then being at the mercy of someone else’s decisions.

We may now be witnessing a much longer term trend of freelance and self-employed working too, allowing individuals to maintain control over their work life and sub-contract back to larger organisations. The advantage for an employer is scalability of numbers depending on demand without high costs of redundancy and subsequent employment. For individuals it means that they can find more than one organisation to work for so that they are not totally dependent on one employer and, if work ceases, they can still have some form of income.

Clearly, this will be a slow transition and only time will tell if this is a trend or merely a reaction to the current economic climate. However, here is no doubting that more and more people are deciding that the risk of working for themselves is certainly not as great as it used to be.