Ready, steady, bake
When you think of the words brioche and protein treats, doughnuts are not something that comes to mind for most people. But this is the very foundation of David Ferguson’s business, Be Right Bake.
- 15 Jul 2019
The path to prosperity: How to improve the financial wellbeing of the self-employed
- 13 Mar 2019
Being self-employed means being the master of your own destiny – and taking on all the financial challenges that it may entail. This can be anything from the fluctuating income to limited access to financial support from government and the financial services industry.
A recent report by IPSE, The Association of Independent Professionals and the Self-Employed, and Sherpa, found that the economic health of the self-employed is divided, with just over half (52%) indicating that they are satisfied with their financial wellbeing.
The report, titled The path to prosperity: What financial wellbeing looks like for the self-employed, also found that nine in 10 self-employed people worry – at least occasionally – about their financial situation and half (51%) of those surveyed said they felt anxious or stressed as a result.
On the positive side, the research showed that there are a number of things that can be done to ensure that self-employment is a sustainable, fulfilling and financially rewarding way to work.
Preparation, preparation, preparation…
Just over half of the respondents (51%) cited irregular income as the main barrier holding them back from taking control of their financial situation. The report suggests one way to combat this is by preparing in advance for earning irregularities and unexpected business disruptions.
Self-employed people who said that they had not experienced any financial worries indicated they safeguarded themselves by putting aside savings for an emergency, as well as having a financial plan or a budget.
Two in five (39%) of the respondents suggested maintaining enough clients to avoid periods without work as another way for you to improve financial health. Building a stronger business network can help to generate referrals and more regular streams of clients, which in turn can increase earning potential and alleviate financial concerns.
Build up confidence and upskilling to improve earning potential
Almost half (47%) said that earning a higher day rate was a key factor that could improve their financial wellbeing. However, changing your financial situation is not that simple for everybody.
Upskilling and training can be a useful step to take to develop earning potential, particularly for those on a lower income. In fact, close to one in five (17%) of those surveyed felt that enhancing their skill set would help improve their financial wellbeing.
Upskilling can help boost confidence and for many small businesses, this can help them develop their career and earning potential. Previous IPSE research has shown that almost a third of the self-employed find knowing what their value proposition is (30%), and how to target the right audience (32%) a challenge when marketing their businesses. Therefore, the report recommends that training in these areas might be particularly useful.
Another recommendation is for training providers to offer advice to the self-employed on how to deal with irregular work patterns and being able to align their skills with the demands of running a business. This could help many self-employed people cope with stressful situations and financial worries.
The role of industry and government
While the self-employed can do a lot to improve their personal situation, there is undoubtedly space for both government and industry to contribute to their financial prosperity and ensure self-employment remains a growing and valuable sector of the UK workforce.
Nearly one third (31%) of the self-employed people surveyed said they have trouble with financial planning because of the volatility of government taxation and regulation policies. For policymakers, this means that fiscal policies need to adapt to the realities of the modern labour market, especially in areas such as late payment.
Research launched in July 2018 by the IPA (Involvement and Participation Association) showed that 63 per cent of the self-employed have suffered from late payment, while 43 per cent have, in some instances, not been paid for work at all. According to the report, this is a deeply rooted problem that causes financial hardship and cash flow issues for the self-employed, and it must be addressed.
In addition, one in 10 people surveyed in the Path to Prosperity study also suggested that products, advice and education tailored to the self-employed would help improve their financial wellbeing. The financial services industry should consider designing more products specifically for the self-employed – products that offer flexibility and account for irregular income patterns.
Patrick Muir, chief marketing officer at Sherpa, said: “This report is a major step forward in our understanding of the financial wellbeing of the self-employed. The factors behind financial wellbeing and contentment are simply different for them to 9 to 5 employees, and policymakers and business leaders need to understand this.
“For the moment, most self-employed people are clearly enjoying the advantages of being their own boss. But their worries about the future show that there are problems here. This report’s detailed and considered recommendations should help policymakers and industry leaders alike alleviate these problems and improve things for this vital and growing sector.”
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