Obstacles to self-employment revealed
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PRIME has completed the final phase of its research into obstacles to self-employment among the over 50s in the East of England.
The main barriers according to the people who agreed to take part in the polls and interviews were:
Awareness: many people simply don’t think of self-employment as an option for themselves. They may not know any entrepreneurs themselves, and no one may have suggested it to them as a serious possibility.
Finance: there are several problems here, the most obvious being a lack of working capital for the early stages of the business and an inability or unwillingness to borrow it.
But an even greater barrier to more people setting up in business for themselves is the reluctance to risk existing savings. Of course this reluctance may be fully justified - it may be prudence rather than a mistake. But it does seem to increase with age.
Risk to existing security afforded by benefits or a low-paid job. There is a kind of poverty trap here that hits the over 50s especially hard, because if the business fails it may be difficult to get another even low-paid job because of the unwillingness of many employers to take on older people.
If you’ve been on Incapacity Benefit previously you may have to sign back on instead to Jobseekers Allowance, which gives you less money and has more conditions attached. Plus you are likely to have lost your existing Council Tax and Housing Benefit entitlement, and will have to start the whole means-tested claims process all over again.
Proximity of retirement affording insufficient time to get the business established and to repay any funds borrowed or to recover savings invested.
Worries about health of self and others. Caring for a partner or relative is one of the major reasons people stop working. They may later want to start working again, perhaps on a part-time self-employed basis. But it is hard to get a new business going successfully on a part time basis, or if you are constantly having to stop and start due to your own or your partner’s ill health. Again, the worries may be justified.
Lack of confidence in own skills or self-worth. This proved a particular problem for people who hadn’t worked for some time but now wanted to return in a self-employed role. Often it isn’t justified, and can be overcome with a bit of training, support and talking to other people. But making sales calls is something a lot of people report finding difficult.
Ability to earn from informal economy without going official. This is an opposite problem to many of the others. People are already working in the black, grey, shadow or informal economy - call it what you will, the one where you don’t tell the authorities. Once you find you can make money this way it is hard declare yourself self-employed officially. There may be good reasons to do so - such as the ability to advertise and market more actively, to borrow money and to apply for any grants or other assistance that is going. Plus it’s more secure.
The report also suggests fixes to some of these problems, and possible approaches to overcoming barriers that can be researched or even tried out in pilot projects. PRIME’s study was carried out as part of the East of England Development Agency’s Investing in Communities programme, which aims to bring groups in the region that suffer a disadvantage in the labour market back into the world of paid work.
The full report can be downloaded from the PDF link below.
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