• Learning for LifeandWork

Risks involved in self-employment

Self-employment is a term used to describe people who work for themselves. The person who is self-employed are their own boss as they have set up their own business and are making money from that business.


However, there are many risks involved in being self-employed. For example:

  • the initial cost of setting up the business may be high and the business may be in debt in its early stage.

  • the business may be difficult to get off the ground due to a poor economic climate and this could result in no income for a period of time.

  • the business may experience difficulties selling products due to poor market research carried out by the business.

  • difficulties may arise if the owner has to take time off due to sickness or go on holiday and so will receive no income for this period of absence.

  • there may be no-one to share decision-making with and so the correct decision may not always be made for the business.

  • there may be too much competition and this could result in the business losing out on sales and profit.

  • the self-employed business owner may experience difficulty with cash-flow in the business and this could put the business at risk.

  • the self-employed business owner may not be expert in all areas of the business and so could end up losing all of their investment in the business.


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