Title: The self-employment option

Sub-title: Fed up with lining up for the few available jobs, an increasing number of Canadians are creating their own.

 

Canadians looking to keep their spirits up during current tough times got good news last week. The latest Statistics Canada Labour Force Survey showed that 36,000 net new jobs were created during April, a striking change from the five previous months, during which 357,000 were lost.

 

The gains, mostly full-time jobs, were concentrated in Quebec and British Columbia. The country’s unemployment rate remained unchanged at 8.0 percent, due to the fact that new job seekers flooded into the market. However the Statistics Canada data reveals an interesting trend: almost all of the full-time gains resulted from an increase of 37,000 Canadians who describe themselves as self-employed.

 

According to one expert, this trend should come as no surprise. “As was the case in previous recessions, the rise in self-employed individuals was sparked in large part by the dearth of other available options,” says Sébastien Lavoie, an economist with Laurentian Bank Securities.

 

As a result, the number of self-employed Canadians increased by 64,000 since last September to 2.69 million posts (close to one in six). Nevertheless said Lavoie, self employment during a time of recession is hardly a panacea. “For an entrepreneur, building up a solid revenue base is far harder when an economy is slumping.

 

A flight to self-employment

Benoit Durocher, a senior economist with Desjardins Securities agrees. “There are several differences between the current situation and the previous recession, which was almost 20 years ago,” said Durocher. “For one, there are far more independent workers today than there were back then, so there is broader acceptance of the phenomenon. On the other hand, many of these “self-employed,” individuals are doing work that used to be done by full-time workers, a factor which highlights the precarious nature of modern full-time employment.”

 

Making self-employment pay

There’s an old joke that “working for yourself ain’t easy - your boss is a jerk and your only employee is a lazy bum.” However experts say that there are some steps that those thinking of going into business for themselves can take to ease the process.

 

By far the most important thing that Canadians who are setting up shop on their own because there are no full-time jobs out there can do is to put a stark separation between their work and home lives. That’s because fledgling “half-hearted,” entrepreneurs, particularly those who are working out of their own homes will be sorely tempted during their first months by non-work activities.

 

These can range from simple a simple request by a spouse to go pick a few things up at the store, “since you are not too busy right now,” to calls from long lost family and friends looking to catch up, not to mention the ever present temptations of cable television and Internet chat. Successful entrepreneurs who work out of their homes often install a variety of subtle and not so subtle cues that place a sharp distinction between their personal and work lives. These include:

 

-         Setting up an office at home, and using it just for work. This creates a subtle barrier that puts them in “work” mode, when they enter the office each morning.

-         Keeping regular office hours. Many entrepreneurs fall into the trap of letting loose during their first few months in business, when contracts have not yet started rolling in. Keeping regular office hours, say between 9:00 and 5:00, even when not busy, serves as a reminder that when a self-employed individual isn’t busy, he should be selling or doing marketing.

-         Dressing for work each morning. When working at home, going to work in sweat pants may seem cool, but it can loosen one’s work ethic. Dressing for work, helps you recall what it is you are supposed to be doing.

 

It’s better than doing nothing

According to one expert, conditions for turning to self-employment will likely become increasingly compelling during coming months. “The (Labour Force Survey) was light years ahead of the still-hefty 539,000 U.S. job decline last month,” said Douglas Porter, an economist with BMO Capital Markets. “(However) we are highly doubtful that this marks the end to job losses in Canada. But at least the pace of deterioration is likely to be much milder than the horror show over the first three months of 2009.”

 

If Porter is right, those Canadians thinking of going into business for themselves will have an additional incentive, because even when job markets pick up, they tend to do so fairly slowly.

 

In any case, looking for contract work is much better than sitting around the house doing nothing.

 

Peter Diekmeyer is Bankrate.ca’s economics columnist.

 

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