Are You Ready for Self-Employment?

You’re done with working for someone else. Here’s how to assess if you’re ready to go out on your own.


After Mark Fornasiero was downsized from his investment banking job, he tried to find a new job, going to several interviews. He soon realized, though, that he didn’t want to be an employee again.

“In the interviews, I found my mind wandering, and I thought, ‘What am I doing here? I don’t want to do this anymore,’” he says. Instead, Fornasiero decided to go out on his own and do something that was “almost the mirror opposite,” he says, of his years in finance.

Just because you’re passionate about your business idea doesn’t mean you have the acumen to weather the ups and downs of entrepreneurship.

Fornasiero had always worked for major companies, but he wanted to do something with young and new enterprises. He also wanted to work with companies near Oakville, Ontario, where he’s from. So, in 2012, he started his own consulting business and began investing in companies, too. “I now charge people for my time and expertise,” he says.

While Fornasiero went from staffer to self-employed, it only happened after the layoff forced him to rethink what he wanted to do. For others with entrepreneurial dreams, deciding when, or if, to go out on their own can be difficult. Business ownership has many appeals – the flexibility, being your own boss, pursuing your passion – but it’s also “not for the faint of heart,” says Sheryl Troup, Director of Tax and Estate Planning in Advanced Financial Planning at Investors Group in Winnipeg.

Here’s how to assess if it’s right for you.

Add up the costs

Most people make less money when they branch out on their own, at least at first, since it takes time to build up a clientele. It’s easier if you have a multi-income household – but make sure your family is willing to delay that big trip or home renovation. If you have to rely on your paycheque to cover high monthly expenses, you may need to wait to leave your job, or be prepared to dip into savings or a line of credit.

Meanwhile, self-employed people have new expenditures, like office rent and marketing expenses. As well, tax write-offs aren’t as enticing as they may seem. “People get lured in with the notion of ‘I can write everything off,’ but forget what they have to pay out to even have that expense,” says Troup. A self-employed person can save around $30 on a $100 expense, she says, but they’re still paying $70.

Weather the start-up

For those who may not be able to give up a steady paycheque, Troup suggests a compromise: Build up a client base while still working full- or part-time. “If you have to get your name out there, go to trade shows and do advertising, you’re doing a lot of legwork, but you’re not necessarily doing a lot of profitable work,” she explains. If you can make your day job more flexible during this phase, you could make the transition work.

Assess your skills

Just because you’re passionate about your business idea doesn’t mean you have the acumen to weather the ups and downs of entrepreneurship. With self-employment, you have to be prepared for being “the creative force and the chief financial officer,” says Troup. “Cash flow can fluctuate dramatically, so you have to be able to manage it and squirrel away money when you have it coming in for the downtimes, which is hard.” Consider taking a course on cash-flow management or marketing to fill in your skills gaps before launching your venture.

Be realistic

Self-employment can promise flexibility and free time, but be honest with yourself about whether your venture will truly offer that. Will your clients want to see you nights and weekends? Factor in extra time for keeping books and doing paperwork, and understand that when you have a deadline for a client, you may end up working long hours to meet it.

For Fornasiero, being able to do things he’s passionate about has been worth the hard work and the financial risk, even though he has had to take a pay cut. “I wanted to do work that I cared about,” he says, “and I knew that if I did it well, I was going to make enough money to take care of the things I needed to take care of.”

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