The 10 biggest disadvantages of self-employment

I have been self-employed full-time since September 2016. The first two years were characterized by uncertainty. Again and again I doubted that I would get there financially. My wife, I and our child, who was born at that time, had to live on my income. Emotionally it was a burden that meant that I sat on our cold kitchen tiles a few times and had to collect myself.

This post is about that Disadvantages of self-employment.

Disadvantages of being self-employed: man carries a brown briefcase

Risk of failure

The danger of failure is a constant companion, especially in the early days. I had a whopping 9,068 euros profit in the first full financial year. How we got by with it is a mystery to me today. It took three years before I could be sure that my business model was viable – even though I had already started full-time self-employment before I started my own business > important basics had created.

It may take a while until you are in financially calm waters. It is uncertain that you will even reach them. In the worst case, there is a risk of personal bankruptcy – especially if you work with outside capital. We haven’t even talked about liability risks that arise from your business activities.

Even if you find yourself getting there somehow:

With the chance of an above-average income, the risk of a below-average income goes hand in hand.

In 2014, the > WORLD fixed:

A quarter of all self-employed earn less than the minimum wage.

Admit to yourself that your own venture should better be ended again? It’s not just an emotional challenge. Financially, too, you are often back to zero. If you switch to a job, in the best case scenario you will have to make up for a few years that you are missing for your pension entitlements and wealth accumulation. In the worst case, you can still repay debts from self-employment.

Incomprehension in the environment

My entire environment was employed at the time. Consequently, the understanding of my independence was manageable. My mother regularly asked me when I would like to do something right 😉 I didn’t mean bad – but I felt that she wanted her son to be more secure.

Fortunately, my wife supported my independence from the start. That was crucial. In addition, even then I was able to exchange ideas with colleagues who had significantly more experience.

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If you don’t have anyone around you who is willing to listen to you, then look for someone. Alone I would have been lost.

Constant self-motivation necessary

The freedom of independence is often touted.

Finally be your own boss!

What sounds nice quickly becomes a burden. Every day you have to motivate yourself. Nobody tells you what to do. Work in the shade at 30 degrees or go to the lake with your son? The choice is yours – day after day. If you decide against your work too often, your professional success will fall by the wayside.

That’s why I’m not a fan of having Plan A and Plan B prominently in the drawer in the event of failure. Having no alternative gave me an incredible boost. But everyone is different. After all, pressure can also be paralyzing.

I can remember the first time I called a potential customer. At that time it was a horror idea for me to call a stranger and “sell” him something (she had asked me via email). So I’m sitting in front of the phone and my heart is pounding. But what should I do? At that moment I thought of my son and that I am responsible for him. A few seconds later I had the phone in my hand and dialed the number. The result was my first client. We’re still working together today.

Holey social network

I have no employer who pays me my wages in the event of illness and no colleague who can replace me one-to-one.

In the beginning, a long illness would have been a financial disaster. I once got food poisoning. For 24 hours my insides turned inside out. Nevertheless, I dragged myself to the office and had my first interview. Simply because I needed the assignment. Had I been employed, I would have called in sick for at least two days.

Lean spells

Even after 5 years I still have better and worse months. For 2020 as a whole, I even had one in the wake of Corona > Decline in sales.

Many self-employed people experience dry spells. Deal with them? A challenge. Because ultimately you are responsible for your business success. If it does not happen, it is a personal setback that can extend into the private sphere. I used to be in a bad mood at home when things went poorly. My wife and child suffered from this in those moments.

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I still find it difficult to switch off from work at home.


Self-employment is an up and down. Setbacks are inevitable. I have the Sparkasse’s refusal to finance my start-up loan framed on my desk.

The Sparkasse's refusal of financing is framed on my desk.

Rejection of the financing request for my business start-up

I have received a certificate from a higher authority that my business concept cannot be implemented. I had to prove the opposite without starting capital. That’s just one of the many setbacks I’ve had to accept.

  • Orders that do not materialize
  • Business decisions that don’t work out as intended

You are confronted with such things as a self-employed person every day.

Work creeps into free time

When I fall asleep, I think about work.

When I shower, I think about work.

When I wake up I think Get to work.

My independence accompanies me in my free time. This particularly applies to quiet moments in which I have time to think. In moderation, that’s not a problem, as my work is partly a hobby. But if it gets too much, it has a negative impact on my quality of life. I can enjoy beautiful moments less and recover less. So, bit by bit, I try to mentally separate work and free time. Even if I manage to do better and better, it is a process that is ongoing.

To go on vacation? A challenge.

Vacations lead to extreme densities in the calendar. I do all the appointments and tasks that would fall during the vacation period before or after the break, which leads to peak loads.

You could almost say that I only need the vacation to recover from preparing for the vacation and to recharge my batteries for the follow-up work.

Nobody applauds

We humans are social beings. The feedback and recognition of others is an important feel-good factor for us. As a self-employed person, this is often neglected. There are no promotions that you can use to excel in the family and in front of colleagues.

If anything, I get asked every now and then: How’s it going?

My answer then is: good

That is the end of the subject. I therefore get my confirmation from the feedback from my clients, which fortunately is sufficient for me.

girl for everything

I like doing my job. It goes so far that my wife mentally books my working hours under free time from time to time (which leads to frustration on both sides again and again). There are some activities that I would like to do without. Things like logging, compliance with legal frameworks, preparation of offers, editing podcasts and taxes are not my great passions, but I still do them.

I hand in work piece by piece, but new ones are added. With employees, for example, completely new administrative and emotional challenges arise.

Summary: Handling the disadvantages of self-employment correctly

All of these points together are an enormous challenge. Especially at the beginning of self-employment, it is important to deal with uncertainty and perhaps also with existential fears. The fact that my independence had to work so that we could live our lives as a family left me anything but indifferent.

After 5 years of full-time self-employment, I can say that most of the disadvantages of self-employment can be handled.

  • Girl for everything? Start delegating.
  • Nobody around you applauds? Get confirmation from your work and the feedback from your customers – or better yet, your ego doesn’t need confirmation.
  • Does work creep into your free time? Work on your “mindset”.
  • Is it difficult to go on vacation? Hire employees.
  • Setbacks? Learn from it.
  • Lean spells? Work to make your cash flows more stable.
  • Holey social network? Build up reserves.
  • Self-motivation? Get routines.
  • Misunderstanding in the environment? Not everyone has to like what you do.
  • Risk of failure? That makes life exciting 😉

Dealing with these downsides is clearly a learning process that never ends. But if you’re willing to go through that process, the benefits of self-employment may outweigh it – and they do in my case. I love my company and the freedom it gives me.

Your finance cook
Christoph Geiler

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