Spring Budget 2023 - what does it mean for the self-employed?
The Spring Budget was announced on March 15, 2023 - we unpack the key announcements and what they mean for the self-employed.
January is traditionally a time of year where resignations spike - after a period of reflection perhaps during the time off over Christmas, or simply a natural watershed of the new year. Many of you this year might be considering taking the leap into freelancing or starting your own business.
Great news! We’d love to welcome you to the world of self-employment!
Self-employment can be a wonderfully liberating style of working, giving you more flexibility and control over your schedule and over the type of work you do, and can be hugely fulfilling - but it takes work, and most freelancers will quickly discover its not all coffee shops and passion projects.
Leapers was established as a place for the self-employed to make connections and support each other, and provides a hugely valuable community for anyone who is considering self-employment to join, ask as many questions as you like, and get a more authentic picture of what the experience might be like.
Here are ten questions anyone considering working for themselves should ask before they commit to working in this way - we’re not going to offer you the answers though, as everyone’s answer will (and should be) unique, but if you haven’t asked these questions yet, spend some time in January having conversations with existing freelancers, or taking time to reflect for yourself.
This is probably the most obvious factor of self-employment - no regular income. Do you know how long you can afford to be without any income? Not just at the start, but over the course of a full year?
It won’t surprise anyone that working for yourself means the end of a salary. Now, depending on how you work, there’s no reason you can’t pay yourself a regular income - in fact it’s one of the most sensible strategies, in order to keep your income consistent, and weather the storms when you don’t have work coming in, but it requires you to plan ahead, understand your finances, your costs and outgoings and be prepared for the often ‘feast or famine’ experience of freelancing: periods of time when you’re so busy, it can be hard to get it all done; and then periods of time where it feels like there’s no work for weeks on end.
And don’t forget, that just because you’re working in one month, that doesn’t mean you’ll get the money the same month, generally you’ll be receiving money at minimum 30 days after you’ve completed a project - for example: if a project takes you 30 days to complete, you’ll be going for two months without income (30 days of the project, invoice gets paid 30 days after that).
If you can’t answer this question with tangible numbers, i.e. how long can you afford to have no income, it’s really important to go to your finances and get an answer. What do you need to make each month, how much emergency funding do you have in case you aren’t working, are you willing to dip into that, is there a limit you won’t go below? Get serious when it comes to looking at and understanding your finances before you take the leap.
Another common factor of self-employment is uncertainty - and not just about finances. There’s no guarantee of the next project. We’ve all had a significant dose of uncertainty over the past two years, and the self-employed in many ways were more prepared for this than others - as uncertainty is the only certainty. If uncertainty throws you completely off-course and you struggle to manage, you’ll need to find coping mechanisms and design approaches to dealing with change and uncertainty. Even if you enjoy uncertainty, dealing with it over the long-term can be tiring.
Even if you do find uncertainty a cause of anxiety - that doesn’t mean self-employment isn’t for you. There’s no single ‘way’ of working for yourself, and plenty of ways to reduce uncertainty and create some structured around how you work, who you work with, build longer term relationships, create more patterns and habits and reduce the potential for change, but being aware upfront of how you react, being aware of the symptoms or signs of when you’re struggling with uncertainty and finding some coping mechanisms to implement can help you get off to a great start.
Self-employment isn’t the ‘opposite’ to employment, nor is it the answer to all of your frustrations in your current role. You’ll still need to navigate the politics of organisations, you’ll still have to deal with difficult people. No, you won’t have a manager any more, but you will have multiple clients, which sometimes can be the same as having several managers, but none of which have your back. If you’re looking for more flexibility, sometimes freelancing means you’re less in control over your calendar. It’s really worth looking at the reasons you’re looking to go freelance, and ask is freelancing the only answer, or are there other ways of solving those frustrations?
Regardless of your reasons, it’s really important to note them down at the start of the process, and keep hold of them - as you move into working for yourself, setting your own boundaries, values and principles for how you work is essential, and referring back to those reasons for taking the leap can be hugely valuable - not only in reminding yourself of what you’ve stepped away from, but also in making decisions.
The trigger for people taking the leap is often the first project, the first customer who said “yes, let’s do this”, giving you the confidence to start working for yourself. Yet, after the first project has finished, many will rapidly realise there’s no second customer knocking on the door. New business and building up a customer pipeline takes continual effort, and can’t be something you’re only doing when you’ve not go work on - it can take weeks to warm up a client to work with you. If you haven’t already got a bit of a pipeline of projects, start working on that now, even before you officially start. Get oversubscribed. If you have people waiting for you to go freelance and start working with them, you’ll be in a better position.
You’re skilled in something - and that’s probably what you’ll be selling to your customers. However, when you’re self-employed, you’re no longer just doing the job - you’ll also be doing a whole host of additional tasks to run your business, tasks which were probably done previously by other people in the company you worked for. Marketing, accounting, legal, sales, tax, IT, booking meetings, upgrading your laptop, sorting out the website, fixing email issues, chasing invoices, writing proposals, dealing with clients, reading contracts, writing social posts. And doing your work fits in there somewhere too.
This can be one of the steepest learning curves which few are prepared for, and even fewer recognise how much time (and energy) this can take up. In a job, you’re probably 80% focused on doing work. When self-employed, that number is likely closer to 50%.
Many of the tasks are easy enough - they just take time. Many of the tasks require new skills, that can be learned, or outsourced to another - accounting for example, and it’s an important part of managing your time in making decisions on what you’ll do, and what you’ll ask others to do for you. The truth is you’ll never be truly prepared for the additional tasks until you’ve got stuck in to it, but have lots of conversations with existing freelancers to understand what additional items you’ll discover on your todo list.
Ignorance is not an excuse in the eyes of the law or the taxman - and in recent years, legislation has been getting harder and more complex for small businesses, whether it be IR35, post-Brexit rules on working with the EU, different forms of registration of working, or simply keeping on top of the different dates for paying tax - as you will need to figure this out for yourself now, tax isn’t deducted automatically from your salary (and wait until you discover what ‘payment on account’ is - you’ll actually end up paying your tax before you’ve even received the income!).
Don’t fret too much - it’s generally simple once you’ve got your head around it, and having really good advice, whether from an accountant who specialists in small businesses or freelancers, or from others who you trust, you’ll be able to navigate it, but it can often be a case of ’not knowing what you don’t know, so get ahead on this one.
You might have an outline business plan already - or at the very least a sense of what you’ll be doing, how much you aim to make, what your costs are, who your customers are, and what things you’ll need to make your business successful - but are you missing an important chapter in that business plan?
You are the most important asset within your business, and making sure that you’re taking care of your own wellbeing, so you’re able to continue working, is an essential part of a sustainable business. If you burnout, your business burns out.
Your wellbeing at work needs to be actively designed - and putting some things in place to make sure you’re taking adequate holiday (the self-employed struggle to take time off, despite effectively having unlimited holiday allowance!), establish good boundaries between working and not working, techniques to deal with stress, anxiety, lack of confidence, conflict and uncertainty, and plans in place for if things go wrong.
Don’t worry - most of the self-employed don’t have a wellbeing plan in place either, but establishing healthy ways of working and support structures for your new business is so much easier at the start before you’ve fallen in to bad habits.
A huge part of your wellbeing plan is a support network - people you can turn to for advice, ask questions of, professional and personal, mentors, advisors, collaborators, or just friends to share a cuppa with. Building this support network from before you start working for yourself is essential. Find communities focused on small businesses, start conversations and build relationships with people.
It takes time to create trust and get to know people, starting now before you take the leap means you’ll already have a network around you when you hit that first hurdle, or a group to celebrate with you when you get that first win.
So often, people will move into self-employment excited about the prospect of working in a new way with more control over their work, but haven’t set themselves an objective or goal, or defined what success looks likes for them. Whilst you don’t need to necessarily have an ambition in place, or specifics around financial or emotional goals [they can really help, but don’t work for everyone], you do need to have an idea of whether things are working out for you.
This isn’t always about the end goal or destination, but rather signs that you’re headed in the right direction. They might be markers like having more time to spend with the family, having more time for your hobbies or away from the computer; it could be something like increased revenue, or decreased travel costs; it could be feeling happier or more of a sense of purpose; it could be reduced anxiety or the opportunity to move to a new city. It’s entirely subjective, and they are likely to change over time, but what are the things which you want to keep an eye on to know if you’re moving in a positive direction?
Finally - is taking the leap the right approach, or are there ways you can dip your toe into different ways of working to try things out for yourself before you commit. Are there ways of changing or reducing your hours in your job, to create more time for trying aspects of your business in evenings or weekends? Can you create a prototype version of your business to see if there’s interest before jumping in with two feet? Or if you’re going to do it all at once, when, and what do you need to get in place before you commit?
Whilst not everyone gets to choose to go self-employed, as many find themselves having to generate an income working for themselves with little other option, if you are planning to work for yourself, it can be hugely valuable to ask yourself some of these questions in advance.
There are no single answers to these questions, they’re very personal, in relation to your own circumstances and situation. And you don’t have to come up with the answer on your own - working for yourself doesn’t mean working by yourself.
There are thousands of freelancers and small business owners who are happy to share their experiences, answer questions and support you on this journey and many of those communities are free, open and welcoming.
Start your self-employed journey at leapers.co/join
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