Being self-employed has definite benefits and drawbacks. Owning your own business or working for yourself can sound like a dream come true, but is it really? It’s all up to you and how you prepare yourself and your blossoming business for success.
The positive side to working from home is that you can set your own hours. The down side is that you work from home and set your own hours. It’s very easy to deviate from the hours you plan on working when you are your own boss. Good ideas can come to you in the middle of the night, while cooking dinner or even playing with your children. When you work at home, you’re almost always at work. Think about it. Is that what you really want?
Most self-employed small business owners and freelancers tend to not deviate from their schedules. In other words they are workaholics. They don’t know the meaning of an eight-hour day. In fact, if they don’t work a 12 or 13-hour day they feel like a slacker. At least that’s how I feel.
It’s very easy to overwork when you freelance or are otherwise self-employed. In 2009, the Gallup poll found that 49 percent of self-employed Americans work more than 44 hours a week compared to 39 percent of the general workforce who log 40 hours a week. Meanwhile, a 2013 Gallup poll discovered that nearly three in 10 workers worldwide consider themselves to be self-employed. This accounts for 29 percent of the global workforce, or 18 percent of all adults. Unfortunately, 18 percent of those self-employed also rated their lives as “thriving” compared to the 25 percent of the overall population and 31 percent of those employed full-time for an employer said they considered their lifestyle to be thriving.
Still, data suggest self-employment can affect overall happiness. A 2011 study conducted by The Institute for the Study of Labor (IZA) in Bonn, Germany found individuals who decided to become self-employed improved their level of job satisfaction. A 2014 Pew Report also revealed that 32 percent of those self-employed said they were working because they wanted to versus the 50 percent of individuals working for an employer who said they had to work because of financial reasons.
Meanwhile, only 38 percent of self-employed reported they were working because they needed the money. The report claimed that those who are self-employed were more likely to value high income over job security.
There are other factors to consider when going into business for yourself. For example, you’ll no longer have the IT department at your beck and call in case your email stops working or your spreadsheet freezes. How good are you with computer problem-solving hardware and software issues? Do you have a budget for repair and service should you need it? Do you even have the computer equipment you’ll need to get the job done well?
When you first transition to working for yourself, you’re likely also building up your clientele. This means making money might also take some time, which adds to the stress of paying your bills. After all, you need to eat. You are armed with your share of good ideas, great even, and the intuition and fortitude to succeed. The challenge is transforming all this into a sustainable business model that allows you to provide a tangible service others will pay for, and pay well at that.
Sure, every new business has to start somewhere, and that usually entails enduring a fair share of birth pains. But just how much can you stomach? Do you have backup plans in case the new clients you were expecting don’t come through, or take a little longer to? You might need a part-time job to supplement any revenue you do receive until you can gain momentum and your new business sets sail.
Perhaps you already have one or two potential clients ready to sign on, but you still need to build a portfolio for business development. If you do a good job, word of mouth can travel fast, so you have to be prepared to be able to take on the workload. But just as quickly your clients can decide they need to insource your services and you’re left high and dry with mounting expenses but no income. You can never have too many eggs in your freelancing basket, so always be looking for new clients to court.
Here are some more things to consider if you are looking to transition into self-employment:
- Be prepared for workflow to be unpredictable. In other words, you might be getting paid for 50 hours one week and only 10 hours another week.
- Building up your business is can be a slow process, so you have to be patient and willing to put in the effort to build your client base.
- Manage your time accordingly. It can be very easy to spend your time either working too much or procrastinating. Put yourself on a schedule and stick to it.
- Develop a website, logo, and business cards. Where ever you go, don’t be shy. Be open to talking to strangers and networking because you never know who might need your services. This is why you should always have your cell phone and business cards with you.
- Set money aside for tax purposes because you no longer have an employer to take care of this for you. Be sure to save all receipts so that you can write off necessary business expenses at the end of the year or at each quarter.
- Talk to a financial advisor about a retirement plan. If you don’t already have an IRA to house a 401(k) rollover from a previous employer, start one.
- Do your research and find the best health insurance plan that fits your personal and family’s needs.
- Ask for job referrals from current clients. If you do your best and always “under-promise and over-deliver,” you’ll likely get referrals without even needing to ask. Remember, word of mouth spreads fast.
- Utilize social media to virally market your services and your brand.
- Keep track of your invoicing and stay on top of client payments who are slow to pay. Some freelancer’s bill at the end of the month while other bill bi-monthly or even wait until the services are complete. Determine which route works best for you and your own personal finances.
- Do your homework and know what you’re getting yourself into when going into business for yourself. There are many benefits to working for solid companies as well as deciding to be your own boss. For the latter, just realize the many added responsibilities you’ll take on. Ask other freelancers how they manage the pros and the cons.
The Bottom Line
There’s nothing and no one stopping you from realizing your dream except you. For good or bad, just remember the adage, “Be careful of what you wish for because you might just get it.”