What Does Self-Employment mean?

Self-employment is a largely self-determined form of gainful employment. The self-employed earn their living as tradesmen, craftsmen, farmers, freelancers etc.. It is characteristic of them that they bear the entrepreneurial risk themselves and regulate the modalities of their work themselves.

Project ‘Self-employment’ – what is to be considered?

For many self-employed and freelancers the realisation of their own ideas and goals is the decisive driving force. This applies especially to those who want to go this way alone, the so-called solo preneurs. Another motive is the desire of dependent employees to be more responsible in their work and to be their own boss in the future.

However, young companies in particular are highly dependent on individual customers, and there are also stress factors such as tight deadlines and long working hours. Particularly in the critical start-up phase of self-employment, there is often a lack of money to hand over tasks to experts or to buy consulting services. Thus many good business ideas fail because of the famous devil in the detail. Although they “constantly work themselves”, many self-employed do not get into a green branch. The path to self-employment all too often leads to private bankruptcy and unemployment, especially for solo preneurs.

It is important to bear in mind that the self-employed do not pay into unemployment insurance and are therefore not entitled to unemployment benefits. In addition, they have to pay for their health, long-term care and pension insurance alone. Private pension expenses are particularly painful financially if customers are temporarily absent and no surplus can be generated. While an employee sees on the basis its wage slip, how much is to him month for month at the disposal, then a self-employed person must calculate its profit and the available income only.

In the case of self-employment, income may be lower than expected and reserves may be required. If the reserves are not sufficient to survive an economic dry spell, the self-employed person must obtain additional outside capital. Since they do not have a regular income, they need other securities.

Of course, independent professions should be designed in such a way that, if successful, they also lead to the desired prosperity. With a detailed business plan and professional start-up advice, the described risks of start-up projects can be significantly reduced. A further possibility is the part-time entry into self-employment.

With the acquisition of a franchise licence, founders can also reduce the risk of becoming self-employed, provided that this is a proven, promising business concept.

Setting up your own business as a franchisee

The franchisee acts in his own name and for his own account. The franchisee has the right and the obligation to use the franchise package against payment. As a service contribution, it provides work, capital and information. Franchising is therefore more than just a distribution agreement, a concession or a licence agreement, as both parties undertake to provide services that go beyond the scope of a conventional business relationship.

Franchisees have less space to realise their own business ideas than would be the case with an individual formation. However, the chances of success of a self-employment through franchising are also better. In good franchise systems, the shortened build-up phase and the franchisee’s concentration on sales tasks ensure significantly increased chances of success. Franchisees do not have to act as lone fighters in the market, but can lead their business to success together with other franchise partners and the system headquarters.

More money, more freedom, more prestige – in franchising, all this only happens if you succeed. Only those who consistently and disciplinedly work towards this goal in their self-employment can reap the rewards later. The success rates of franchise founders speak for this path into self-employment. There is no guarantee of success like the F&C study ‘Franchising – Success Guarantee for Start-ups? How successful are franchise start-ups in the first few years’ from 2012?

Despite this widespread scepticism, the number of self-employed in Germany increased by around 800,000 to 2.6 million between 2000 and 2011. According to a study by the German Institute for Economic Research (DIW), this development can be attributed almost exclusively to the increase in solo players. For many of those affected, this solo self-employment represented a temporary emergency solution due to a lack of alternative employment. Their middle income is below that of the employees and only a minority achieves attractive incomes. Some solo preneurs and freelancers, as lone fighters, do not exceed the income earned by workers in the low-wage sector. So it is no wonder that the reputation and appeal of self-employment have suffered in recent years.

Every person wishing to set up a business should intensively check in advance to what extent they are suitable for self-employment on the basis of their experience, knowledge and skills. An aptitude test for self-employed persons or a competence test for franchisees can offer helpful hints. The wide range of information available on the Internet for start-ups and the often free services offered by various start-up institutions should also prove helpful.

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