The challenge

A person wearing orange gloves handling dental tools in a clinical setting.

Navigating the landscape of self-employment presents a unique set of challenges for those who want to work in their field and still enjoy the autonomy that comes with self-employment. Despite the allure of flexibility and freedom, self-employed individuals often encounter a myriad of obstacles that can impact their financial stability, access to benefits and overall well-being.

We surveyed self-employed Brits to find out what the top challenges are that they expect to come up against this year. The top issue faced is the erratic nature of income streams, with over half (51%) of self-employed individuals grappling with the ebb and flow of economic uncertainty. This volatility underscores the importance of prudent financial planning and risk management strategies when navigating the unpredictable terrain of self-employment.

Right behind irregular income in the list of challenges faced is a limited client base, with 34% of self-employed people struggling with the complexities of client acquisition and retention. It's clear to see how important it is to explore avenues for supporting self-employed ventures through strategic partnerships and marketing initiatives aimed at enhancing visibility. And in third place is seasonal fluctuations in demand (33%) showcasing the need for diversification in revenue streams and to align with cyclical market trends. Preparing for busy seasons in peak times and strategically planning leave in slower months can help with this.

The top 10 challenges the self-employed are facing in 2024

RankChallenge% Impacted
Irregular income due to economic issues 51%
Limited client/customer base 34%
Seasonal fluctuations in demand 33%
Intense competition 25%
Difficulty in budgeting and planning 18%
Challenges with invoicing/ receiving payments 16%
Tax-related issues 14%
Limited access to credit or loans 13%
Lack of industry-specific support networks 9%
Regulatory compliance issues 8%

Rob Rees, Divisional Director of Markel Direct, understands the challenges faced by the self- employed, but believes there are steps that can be put in place to mitigate certain levels of exposure.

He said ?The uncertainty surrounding the economy at this time is clearly impacting the self- employed, with over half experiencing irregular income as a result. Although we are starting to see green shoots, it will take time for this to improve.

However, with the right support, some of the challenges faced by the self-employed can be remedied. At Markel Direct, we provide policy holders with unlimited access to the Markel Business Hub, which provides advice on a range of business topics, including how to budget and updates on regulatory and compliance matters. Additionally, policyholders can access a 24 hour legal advice helpline that can assist with problems relating to late payers.?.

An older woman with glasses and gray hair, dressed in an orange shirt, working attentively on a laptop in an office setting.

Financial issues

In the world of self-employment, financial stability is often a top concern for entrepreneurs navigating the complexities of running their own business. And it appears that almost half (41%) of self-employed individuals have experienced a decrease in their income over the past 12 months.

Among those affected, the main reason stated by 62% of respondents for this decline is a lower volume of new clients and customers. In highly competitive industries, freelancers may find it challenging to attract new clients due to market saturation; with more and more freelancers offering similar services, standing out and securing new clients becomes increasingly difficult. This, combined with an economic downturn where businesses may reduce their spending on external services like freelance work, along with changes in consumer behaviour, can also contribute to a decrease in income.

Additionally, another notable factor contributing to a decrease in income is having to raise prices in line with the cost of living, with 56% of self-employed respondents citing it as their main reason for financial loss. While inflation may force freelancers to increase their pricing structure to maintain profitability, it can also result in resistance from clients or a reduction in demand for services.

This goes hand in hand with value perception; being able to communicate the value proposition effectively, clearly and confidently is crucial to justify higher prices and minimise potential pushback from clients, resulting in more money in the freelancer's pocket.

And finally, rising overheads and costs sit in third place, with 43% of respondents reporting they battle with it. Freelancers and the self-employed often take on various expenses, such as equipment, software subscriptions, marketing, and workspace costs. If they employ staff to work for them, the rise in staff costs due to increasingly higher levels of minimum wage will also have an impact. If these costs increase without a corresponding rise in income, it will quickly erode the profit margin and contribute to a decrease in overall earnings.

Reasons for income decrease

Reasons for income decrease% of respondents
Lower volume of new clients/customers 62%
Raising prices in line with cost of living 56%
Rising overheads/costs 43%
Energy crisis 30%
Increased competition 23%
Late payments 12%
A young caregiver smiling at an elderly woman who is sitting in a wheelchair, both enjoying an outdoor moment.

Government financial help

If you're looking to go freelance and are worried about your income or are currently self- employed and are struggling to make ends meet, the UK government provides various forms of support for self-employed people. This includes financial assistance and guidance.

Here are some of the key ways that the government can help:

  • Start-up period

    period: Self-employed individuals may be eligible for a 12-month start- up period, during which they do not need to look for other work.

  • Start-up loans

    These are personal loans of between £500 and £25,000 for business purposes and can help self-employed individuals to get their new business up and running. Free mentoring to help start a business is also included.

  • Employment and Support Allowance (ESA)

    Freelancers or self-employed individuals can claim ESA if they have a disability or health condition that limits their ability to work, depending on eligibility criteria such as having paid sufficient National Insurance contributions.

  • Regional funds

    Development grants and support schemes are available from many local authorities or sector-specific bodies across the UK. The Government has a list of these on their website.

Self-employment in the UK is characterised by both challenges and opportunities and is a dynamic environment for freelancers to navigate. While financial instability, limited access to benefits and rising living costs remain significant hurdles for many, there are plenty of growth opportunities and many Brits have been seizing them.

As a freelancer or self-employed person, working to navigate these challenges, and importantly leverage growth opportunities, it is essential to prioritise risk management and protection in the long run.

But what is public liability insurance?

Public liability insurance and professional indemnity insurance can be crucial safeguards, offering financial protection against unforeseen liabilities and legal claims. Public liability insurance covers businesses against allegations of personal injury and property damage claims made by members of the public. Professional indemnity insurance protects against claims of negligence or errors in professional services.

By investing in comprehensive insurance coverage and adopting strategic initiatives to tackle the challenges identified in this report, freelancers can safeguard their businesses and capitalise on emerging opportunities.