In today’s economy, the concept of self-employment is becoming increasingly popular. Some persons desire to become their own bosses in order to give birth to business ideas that they always dreamed about. Others are forced to create their own incomes, as the contracting job market does not provide many options.

Unfortunately, the road to successful self-employment is littered with many casualties along the way, with people who have seen their entrepreneurial dreams transform into financial nightmares. Whether self-employment is your choice or you have no alternatives, it’s important to first consider if you are ideally suited to the rigours of this lifestyle.

Let’s look at some of the key factors that can help you to decide if self-employment is right for you:

Do you have the right personal qualities?

True entrepreneurs possess a curious mix of courage and craziness; they are willing to defy all the odds and pursue their goals with unending passion and persistence. To succeed in the self-employment game, you must have a driving force inside you that keeps you going despite the rejections that will inevitably come from potential customers, especially in the early days.

Along with a thick skin, to survive as a self-employed person, you must have the discipline and fortitude to work long hours without complaint. If you think that being your own boss means immediately having more leisure time, you will be in for a rude awakening. Being organised and time-conscious are crucial traits that will allow you to make the most of limited resources.

There really is no such thing as a self-made man or woman; successful business owners are created with the assistance of many behind-the-scenes people who provide them with support and guidance every step of the way. To enlist others to help you build your dream, you must be able to get along with all types of people, and have a genuine desire to see them succeed as well.

Do you have the required business skills?

Just like any other job, being a successful business owner requires technical know-how. Whether you are selling a product or a service, you must have attained a level of expertise in your chosen field, so that people will trust you. It’s also important to determine if your line of work is in demand — are people willing and able to pay you for your offerings?

It’s not enough to have knowledge on your products and services; you also need to understand the world of business. Many enterprises have failed because the owners were not competent in key areas such as marketing, negotiating, financing, communications and administration. Although you can hire others for these activities as the business grows, you have to get trained to handle them at the start-up stage.

The strength of your initial idea will ultimately direct the growth of your business, so it’s vital for you to be able to transfer your vision to others. Your leadership skills will play a huge role in marshalling others to produce, so this is a key area for you to develop. In today’s rapidly changing business environment, you will also need to devote a lot of time to strategic planning, as this will ensure that your vision remains fresh and relevant for the times.

Do you have adequate financial resources?

Some people go into business with the idea that by selling products or services, they will find a quick solution to their financial problems. They expect that a business will immediately provide for their personal needs, get them out of debt or supply the income for expensive acquisitions. It seems that they equate owning a business with winning the lottery!

The reality is that starting a business will cost you financially, as your operations probably won’t provide positive cash flow for a year or two. It is unadvisable to go into business without having savings to meet your personal bills, and enough funds to provide working capital for the first six months to one year. It’s been said that if you can’t handle going without an income for three or four months, then entrepreneurship is not the option for you.

Many business owners opt to borrow from a financial institution to deal with the start-up expenses. However, this source of financing can be risky, as the monthly loan payments can potentially cripple the operations, especially if it takes a while to gain customers and achieve consistent sales. If possible, try to raise capital from friends and family, liquidate assets to supply cash, or consider equity financing instead.

Self-employment will never be suitable for everyone; but if you have the desire, determination and drive to turn your business idea into a business system, then it could be a profitable and rewarding way of life.

Cherryl is a financial consultant and money coach, and founder of Financially S.M.A.R.T. Services; she is currently writing her first book, The 3 Ms of Money. Get free financial tools at www.financiallysmartonline.com and practical financial articles at www.financiallysmartadvice.com. Please email comments to advice@financiallysmartonline.com