Challenges and Solutions for the Self-Employed

As the number of self-employed increases, so, too, does the competition for work. Here’s a look at today’s challenges for people who work for themselves, along with some solutions for overcoming the problems.

Self-employment is a way of life for millions of people in the United States. How many millions? Well, the answer to that question seems to depend on which statistics you read.

One report from the U.S. Bureau of Labor Statistics (BLS) states there were 9.6 million self-employed in the U.S. in 2016. Another BLS report says there were 15 million self-employed in the U.S. in 2015. Meanwhile, a report on freelancing published by Upwork in 2018 found there were 56.7 million self-employed in the U.S. It’s likely that the differences in numbers are related to how self-employment and freelancing are defined in each report.

One thing most reports and predictions about self-employment agree on, however, is that self-employment will increase. That trend already seems to be challenging today’s freelancers and independent contractors.

Increased Self-Employment Leading to Increased Competition for Work

According to a study by Quickbooks, self-employment is on the rise, some of which could be attributed to tech layoffs and the pandemic. But this rise in the number of budding entrepreneurs also means more competition. This and other challenges, such as getting paid and maintaining consistent cash flow, can cause self-employed individuals to feel financially insecure.

Lack of Time and Money Limit Growth

People who work for themselves have to fill many different business roles. Planning, sales and marketing, inventory management, order taking, producing and delivering goods and services, customer relations, website and social media management, and bookkeeping are just a few of the tasks that must be handled. Each takes time. Hiring other people to delegate some of that work to requires money.

Lack of Measurable Goals

Many self-employed people either have no specific growth goals or aren’t able to measure most of their growth goals. Written, measurable business goals can help business owners stay focused on success and see their progress — or lack of it. Running a business without measurable goals is like throwing a cork in a lake and hoping it gets to the other side by itself.

How to Overcome Self-Employment Challenges

To overcome the things that are holding you back, you have to identify them and then make appropriate changes. These suggestions may help:

Assess the situation

The first step in attacking the challenges of self-employment is to sit back and assess your situation. How strong is the need for your products or services? Is the need growing or declining? Are you getting new customers, repeat orders, and referrals? If not, why not? Who is the competition, and how are they doing? Is there anything they offer that you don’t? Or vice versa?

Be sure you have written and measurable goals

Be sure you list the steps that are needed to achieve your goals, and that you track your progress toward them. Goal tracking and time management forms can help you stay focused.

Implement cost-effective strategies for growing your business

Lack of money doesn’t have to limit your business growth. When cash is in short supply (and even when it isn’t), learn to put growth-hacking tactics to work to build your business. Identify and implement ways to get other people to talk about your business and refer you. Word of mouth has long been a leading source of business for the self-employed and other small companies.

Look for ways to streamline your work and save time

You can increase your productivity without working more hours by learning to focus and block your time. For instance, instead of logging into your social media accounts daily, block out time once a week to write out several social media posts. Then, use a social media scheduling tool like Hootsuite to automate sending the posts out to all your social media accounts on the days and times you want the posts to appear.

Manage your time better by planning and prioritizing tasks. Spend less time on email by turning off email alerts, and only reading and writing email on a schedule you set. Unsubscribe from mailing lists you’re not interested in. Move any non-important mail into a “read later” folder so you concentrate only on the important mail.

Systematize your work so you can delegate it

You’ll be able to grow your business faster if you can pay someone else to do some of the routine tasks for you. But to get good results, you’ll want to have systems and routine procedures in place that you can easily explain to the people you hire.

Other Issues and Solutions for the Self-Employed

Here are some additional challenges faced by the self-employed and how to deal with them:

Insurance coverage

Being prepared for every eventuality is especially important when you’re managing your own workload and are responsible for your business’s success. Although many self-employed individuals won’t face problems of this nature from clients, if you’re providing work or advice for clients, including handling data, you should take out insurance to protect yourself against any claims against you.

For instance, let’s say you make a professional mistake in your work, and your client sues you. Professional indemnity coverage can insure you in the event of business emergencies such as these and provide you with expert knowledge and flexible policies to help you manage the potential risks of being self-employed.

Money Management

Without a regular paycheck going straight into your bank account, it can be hard to manage money, especially if you’re being paid inconsistently or in batches. Poor money management could lead to an inability to take out a mortgage or even to pay necessary monthly bills.

You can lessen the impact of your irregular income by creating a budget and a spreadsheet to help you manage this. Another method to help you manage money is to keep a separate bank account for your savings and personal spending money, meaning that you can both save and view the amount of money that you can spend quickly and easily.

Saving for a Pension

Saving for a pension can easily be forgotten during months of unstable income and different workloads. Unlike the employed, who are enrolled in an automatic pension scheme after their probation period, self-employed people must actively save toward their retirement. Additionally, if you’re self-employed, you don’t have the additional encouragement of employers contributing to your savings.

The best way to overcome this is to pay regularly into your pension fund and realize the benefits of doing so: for example, you’ll get tax relief on your contributions.

Unstable Income

If your income is not stable enough to pay rent and bills effectively, the best solution is to open a savings account and put money into it when you can and when you get paid, rather than at the end of the month.

Differing Workloads

The best way to solve the problem of clustered workloads is by pre-planning. By understanding when you will get the most work, you will be able to plan effectively to spread out the impact of your workload and ensure that you can do as much work as possible.


Competition, lack of time, and lack of money have long been challenging for freelancers and other self-employed individuals. But you can still grow your business by learning to work more efficiently and keep your marketing costs down.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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