Being self-employed has its perks. You can be your own boss and you can work in your pajamas late night or at a café sipping your morning latte. Gone are the days of stuffy cubicles and micromanaging bosses.
Yet if you are self-employed, you are no stranger to risk. Many of us took the risk of leaving a traditional job with benefits to build our own hustle, a business we can call our own. We ventured onto the path less travelled, where there are no guarantees of financial stability or help with unexpected expenses. We did it not because we are crazy, but because we recognize that risk breeds rewards.
But at the same time, while some risks are worth taking, others are worth managing. And if you are self-employed, you need to take steps to protect your hustle.
What is Risk?
Risk is the exposure to danger, harm or loss. Risk is inevitable, and as self-employed workers, we are constantly managing different professional risks. Our income is never guaranteed, and money flow could drop suddenly with the loss of a major client or an external blow to the industry of our clients, like the current pandemic-fueled recession.
Unexpected costs are another risk that is amplified for self-employed workers. When you run your own business, everything is up to you including overhead, marketing and sales.
We are no stranger to these risks; it’s part of the learning curve when you decide to work for yourself. What we tend to think of less are all the other types of personal risk that can deter our success. If we are hit by an unexpected illness, become unable to work, or experience loss of life, these can blow devastating impacts to our finances, loved ones and businesses.
The most obvious risk which has manifested for us all has been the pandemic, resulting in over 833,000 infections and 21,420 deaths in Canada. Without the benefits scheme provided by a traditional employer, many self-employed workers were unprotected as they had to leave work to recover, resulting in lost income and mounting debt. As of December, hours of work lost by self-employed workers accounted for about 45% of total work lost in Canada.
Other types of illness, including critical illness, also pose a risk; over half of Canadians will be diagnosed with a critical illness such as cancer or a stroke. This can result in lost income during treatment and medical costs not covered by provincial plans.
Another risk which can manifest, sometimes unexpectedly, is disability. One in five Canadians live with a disability which can limit their ability to work. The average length of a disability is three years, and without protection this can deal a devastating blow to one’s finances.
These are risks we’d rather not think about, and will hopefully not have to face. Each of us have a different level of exposure to these risks. But the cost of these risks manifesting can be extremely high. As self-employed workers, we need to not just understand our professional risks but our full risk profile.
At Bounc3, we have an easy risk diagnostic tool that will give you a free, personalized risk profile in less than three minutes. Use it as a first step towards understanding which risks you really need to manage, so you can continue to take risks, but only the ones that are worth taking.