Flexibility, independence, and control are the biggest driving factors for becoming self-employed, new research has revealed.
The study, which was commissioned by Tide, surveyed 1,000 UK respondents to discover the main motivations and deterrents to becoming self-employed.
To get an overall view, self-employed respondents were asked what their motivations for going self-employed were, and why they didn’t become self-employed sooner. Employed respondents were asked what is stopping them from becoming self-employed themselves.
The research found that the top motivations included:
- Flexibility (44%)
- Independence (43%)
- Control of own time and workload (37%)
- Better work/life balance (26%)
- Unhappy in previous role/company (18%)
- Specific business idea (18%)
- Aspired to be an entrepreneur (17%)
- Financial reasons e.g. increased earning potential (13%)
- Reduce remove commute (8%)
- Childcare reasons (7%)
- Lack of progression in previous role company (6%)
- Spotted a business opportunity as a result of the pandemic (6%)
- Lack of viable alternatives (5%)
- Redundancy (4%)
- Caring for family member (4%)
- Other family reason / Other (3%)
– All respondents were able to select up to five main reasons
The findings highlight that flexibility, independence, and control are the biggest driving factors for becoming self-employed. More than a quarter (26%) wanted a better work/life balance, and 18% were unhappy in their previous role or company.
Having a specific business idea (18%), entrepreneurial aspirations (17%), or spotting a business opportunity as a result of the pandemic (6%) also featured. Financial reasons were cited by 13% of respondents, reducing commute was a key benefit for 8%, and 7% cited childcare reasons. Lack of progression (6%) in previous role or company, lack of viable alternatives (5%), redundancy (4%), and other family reasons (4% for caring for family member, and 3% for other family reason) all just missed out on the top 10 driving factors for becoming self-employed.
When it came to gender splits, women ranked independence as their number one driver, whereas men chose flexibility. Women were more likely to have become self-employed due to unhappiness in their previous role or company, and childcare reasons were also more of a driver for women – 10% versus 2% for men.
Men were more likely to cite entrepreneurialism as a reason (27% versus 12% for women), also being more likely to have a specific business idea driving their decision (31% versus 12% for women) or spotting a business opportunity as a result of the pandemic (9% versus 4% for women).
When it came to deterrents or turn-offs, the research revealed that:
- Perceived reduced financial security (34%)
- Perceived reduced job security (31%)
- Lack of sick pay (27%)
- Perceived lack of progression (25%)
- Lack of holiday pay (24%)
- Start-up costs (19%)
- Lack of maternity cover (18%)
- Lack of employer pension contributions (16%)
- Lack of other employee benefits (16%)
- Lack of confidence or belief in abilities (14%)
- Lose social element of having colleagues (10%)
- Admin (e.g. bookkeeping, self-assessment, taxes) (9%)
- Other financial costs (8%)
- Other (7%)
- Harder to get approved for mortgage (5%)
– All respondents were able to select up to five main reasons
Perceived reduced financial security, perceived reduced job security, and lack of sick pay were found to be the biggest turn-offs overall. Perceived lack of progression was cited by a quarter of the respondents, and lack of holiday pay was another big turn-off (24%).
One in seven (14%) cited a lack of confidence in their abilities as being a main obstacle. Lack of employee benefits – including lack of maternity/paternity cover (18%), lack of employer pension contributions (16%), and lack of other employee benefits (16%) – featured heavily in the top 10. Financial aspects (start-up costs and other financial costs), social aspects (losing social elements of having colleagues), and admin aspects were also mentioned.
When it came to gender splits, lack of confidence in beliefs was more of an issue for women (15% versus 11% for men). Lack of maternity/paternity cover was an equal issue across genders (18%), highlighting that many are potentially using new changes around shared parental leave.
Liza Haskell, Chief Administrative Officer at Tide, added:
“For many, the benefits of becoming self-employed far outweigh the potential negatives. Many use self-employment to boost their earning potential, whilst also benefiting from additional flexibility, independence, and control over their work.
“A quarter were concerned that becoming self-employed might negatively impact their career progression – this is perhaps due to many people viewing more conventional routes (‘climbing the ladder’) as success, but we should work to change the mindset on this. Conversely, 6% specifically cited this as a driving factor for becoming self-employed, wanting to be in charge of their own progression and not held back by someone else’s plan. Self-employment or freelancing also gets you out of your comfort zone, which can often lead to fast-paced professional development in new, and potentially unexpected, ways.
“With the pandemic causing mass redundancies in 2020, job security is understandably at the forefront of people’s minds. However, while perceived reduced job security is one of the biggest turn-offs for becoming self-employed, having multiple clients through being self-employed is, in some ways, more stable than having one job that you could lose at any time.
“Tide is committed to supporting diversity and inclusion, and by the end of 2022 we will help at least 50,000 women and 20,000 people from a diverse range of backgrounds get started on their entrepreneurial journey. We hope this research gives prospective businesspeople the inspiration and encouragement to start their own ventures in 2021.
“With Tide, business owners can register a limited company and open a business account, all in one go, for free. It takes minutes to apply, and you can have your certificate of incorporation within hours*. We even pay the £12 incorporation fee on your behalf”.
For more information, visit: https://www.tide.co/blog/business-tips/motivations-and-blockers-of-self-employment/