The metamorphoses of the self-employed

And so it continues. Yesterday’s labour market statistics showed that the self-employment figures are up once again. Close to 75,000 more people became self-employed in the last 3 months of this year, which means we’ve seen an increase of around 340,000 over the last 12 months alone.  A report we published a few weeks ago takes a closer look at who these people are, why they’re starting up in business, and what being self-employed means to them personally. Our attempt was to paint a much richer picture of what life is like for the self-employed, and to show how complex and diverse this community really is.

While we dug much deeper than most – for example, by creating a typology of self-employed ‘tribes’ – it still feels as though we only scratched the surface of this group. Why? Because our analysis was really only a static snapshot of a community of individuals who are in constant motion. Yes, we showed that the self-employed are a diverse and heterogeneous bunch, but I’m not sure we did justice to the way they change over time – in short, we treated them as static rather than dynamic. Indeed, the journey people go on when they embark on a business is rarely linear or straightforward. What a business looks like at its inception is vastly different to how it looks six months later, let alone a year or two after that (if they even make it that far).

A common theme that came up time and again in our interviews with business owners was that it took around 2 years for their venture to finally ‘begin working’. And usually this was only after some kind of light bulb, game-changing moment when they finally realised what was holding them back. For one person, it was spending vast mounts on advertising when they should have been drumming up business through referrals. For another it was biting the bullet and deciding to hire someone to take care of the more mundane activities that had left them unable to work on the business rather than just in it.

But it is not just the business that changes, it is also the self-employed themselves. In a rare paper on the personal development of business owners, Dr Jason Cope writes that people who embark on a new venture undergo a gradual metamorphosis, which involves long periods of calm (aka evolution) punctuated with short bursts of ‘critical episodes’ (aka revolution). The time just before start-up, for instance, is often characterised by a disruption (positive or negative), such as the loss of a loved one, a divorce, an inheritance, a birth or a job loss.

Cope suggests that, upon starting the business, the owner will usually reach a new equilibrium where their personal needs and those of their family come to align closely with the demands and opportunities of their venture. They may put in long hours and a great deal of toil at the outset, but this is compensated for by the rush, excitement and novelty that comes with starting a new business. Shortly after this stable period, however, there comes a divergence between the person’s needs and that of their business, as things become more serious and they find themselves absorbed by their venture. This is usually a time of great stress, partly brought about by a heavy burden of responsibility to make up for the income they lost at the very start.

According to Cope’s study, however, it can be overcome by another critical juncture – that of learning to ‘let go’ of the business and of seeing it objectively. In practice, this might mean bringing in staff to help with the workload (including unpaid family members), or by putting their ‘fortress mentality’ to one side and accepting support from external business advisors.  Cope suggests that by taking these actions, the self-employed are able to arrive an equilibrium once again.

Not every business owner will experience metamorphoses like these, of course. Some may shut up shop when they reach their first major hurdle, while others will have already started with a certain mindset and wherewithal that means these ‘episodes’ are felt more like minor blips than major junctures. But the point is that everyone is on a journey of some kind, and that therefore we need to treat the needs and wants of the self-employed as inherently dynamic rather than static. The lesson for government and others is that support needs to be mindful of these stages and to help business owners navigate their way through them. This is particularly important for efforts geared at helping people to grow their business and take the leap of employing staff.

How do we do this? Inspiration might be found in the work of Robert Kegan, a Harvard University professor who has been looking at adult learning for some time. In one of his most famous books, The Evolving Self, Kegan argues that people continue to develop cognitively and ‘psycho-socially’ long into adulthood, with adults moving through different stages of mental complexity over time (see table below). The difference between the stages is the extent to which people experience things ‘objectively’ or ‘subjectively’ – in other words, whether they are caught in the grip of something or able to achieve some perspective. The key point is that people in the more advanced stages have greater awareness of their emotions and are able to take more measured, balanced decisions.

To return to self-employment, it may be that business owners who have what is called a ‘self-authoring mind’ are more able to take a step back and manage the critical episodes they experience. The art of ‘learning to let go’ of the business is arguably only possible with a mindset that can see the bigger picture. And this begs the question of how mental complexity can be stimulated, if at all. Alas, little research has been undertaken to answer this question, but we can hazard a guess that it would involve making business owners more aware of their psychological quirks and frailties. For example, business advisors or accountants trained in cognitive coaching might encourage their clients to think more deeply about their mindsets, and train them in how they can be shifted. Networking groups such as the RSA’s Social Entrepreneurs Network possibly already do this by encouraging people to share their personal experiences with other members.

I’m conscious this is all starting to sound like a Paul McKenna blog, but the fundamental message is a simple and intuitive one: that people who embark on a business have to navigate very personal issues, and that those supporting them need to be mindful of these. Too often we treat business owners as emotionless robots, rather than humans with the same personal issues, quirks and dispositions shared by everyone else.

The RSA and Etsy are exploring similar themes in a new project, The Power of Small.

Follow Ben Dellot on Twitter.