SELF-EMPLOYMENT is working for one's self rather than for another person or company. It is earning one's livelihood directly from one's own trade or business rather than as an employee of another. To be self-employed, an individual is normally highly skilled in a trade or has a niche product or service for his or her local community. With the creation of the Internet, the ability for an individual to become self-employed has increased dramatically. Self-employed people can also be referred to as a person who works for himself/herself instead of an employer, but drawing income from a trade or business that they operate personally. To be self-employed is not the same as being a business owner. A business owner is not required to be hands-on with the day-to-day operations of his or her company, while a self-employed person has to utilize a very hands-on approach in order to survive. According the US Bureau of Labor Statistics, only 44% of businesses survive the first 4 years in business. Policymakers increasingly view self-employment in the form of youth entrepreneurship as a possible solution to the youth unemployment crisis. However, many experts believe only 20% of all people are fit to run their own businesses, so it shouldn't be relied on as an "easy fix". In some countries, (the US and UK, for example) governments are cracking down on disguised employment, often described as the pretense of a contractual intra-business relationship to hide what is otherwise a simple employer-employee relationship. 1.1
Following are the characteristics of self-employment:
Self-employment involves doing something on one’s own to earn one’s livelihood.
It involves ownership and management of activities by a person although he/she may take the help of one or two persons to assist him/her. Thus, self-employment may provide employment to other persons as well.
The earning from self-employment is not fixed. It depends on the income one can earn by producing or buying and selling goods or providing services to others at a price.
In self-employment, the owner alone has to take the profit and bear the risk of loss. So, we find a direct link between the effort and reward in self-employment.
It requires some amount of capital investment, although it may be small.
In self-employment, a person is free to take decisions in respect of running his business profitably and avail of any opportunity that may come up for expansion of his business. It gives complete freedom to work as per one’s own will and within the parameters of the prevailing laws.
Career is a way of making one’s livelihood. Self-employment is also a career because one may employ oneself in business or in service activities and earn one’s livelihood. With growing unemployment and lack of adequate job opportunities, self-employment has become very significant. Its importance can be enumerated as follows:
Advantage of small business
Small-scale business has several advantages over large-scale business. It can be easily started, and requires small amount of capital investment. The self-employment involving activities on a small-scale is a good alternative to large scale business which has brought various evils like environmental pollution, development of slums, exploitation of workers, and so on.
Preference over wage employment
In self-employment there is no limit of earnings as is the case with wage employment. In self-employment one can use one’s talent for own benefit. The decisions can be taken quickly and conveniently. All these factors act as strong motivators for self-employment to be preferred over wage employment.
Developing the spirit of entrepreneurship
Entrepreneurship involves taking risks because the entrepreneur tries to innovate new products, new methods of production and marketing. Self-employment, on the other hand, involves either no risk or very little risk. But, as soon as the self-employed...
Please join StudyMode to read the full document