Great Britain is a nation of aspiring entrepreneurs, according to a new report from Aldermore, the specialist lender and savings bank. Just over one in seven, the equivalent of four million British workers want to become self-employed at some point in the future, and more than one fifth (22 per cent) saying it has always been an ambition.
One in ten workers (12 per cent) are looking to make the transition in the next six months. For many (25 per cent) though, the goal is further away and could take over five years to reach. A further quarter (25 per cent), say they would only consider becoming self-employed if they were made redundant from their current job, whilst for 20 per cent, being unhappy in their current place of work would push them to take the plunge.
Reasons for becoming self-employed
Employees who have not yet taken the step, one of the most cited drivers is the opportunity to earn more money (37 per cent). This is particularly prevalent among those aged 25–34, of whom almost half (48 per cent) cited this as a motivation.
Being able to improve work-life balance (35 per cent) is also a top reason. The reality however is quite different. When asked, half (50 per cent) of those who are already self-employed say they have not been able to earn more money since becoming self-employed.
Perception vs reality of being self employed
Self-employment is no easy feat, and although for the vast majority (93 per cent) of those currently self-employed enjoy being their own boss, and feel in control of their own destiny (82 per cent), makes their role enjoyable, there are downsides, many of which are more prevalent than aspiring entrepreneurs would believe.
In addition, there is also the fear of failure, with a quarter (25 per cent) of Britain’s aspiring entrepreneurs stating they were worried about their business failing.
Following a review of its self-employed mortgage criteria, Aldermore has taken the decision to reduce the number of years accounts a self-employed borrower must provide when applying for a residential mortgage – from two years’ to one – taking into consideration profit retained within the business when assessing affordability.
These changes will provide applicants with additional flexibility and support, assisting them to purchase a new home or remortgage their existing one.
Charles Haresnape, Aldermore’s group managing director, Mortgages, says, ‘Taking the step to become self-employed is a brave and bold decision and we love the fact that in the UK more and more people are doing so. However, we know that whilst it can open the door to many amazing opportunities, it can be a risk, with uncertainty and financial instability from start up.
‘We want to make things easier for aspiring entrepreneurs by trying to ensure some security when it comes to home-buying. Almost a third (30 per cent) of self-employed home owners believe the mortgage application process was biased against them, while almost two thirds (63 per cent) of those who have experienced difficulty securing a mortgage said it was because it was difficult to find a provider who understands individual business owners.
‘All too often self-employed borrowers do not fit the ‘norm’ for many lenders and it can be a real challenge for self-employed to receive the financial support they need to buy a home. This is why we are working to simplify the process of applying for a mortgage. Aldermore has a human approach to lending, and out specialist advisers consider each case on an individual basis.’