Being self-employed rocks. In many ways, it is the very essence of the American dream. It means being able to apply yourself and build something spectacular on the foundation of hard work, a strong worth ethic and your dreams.
As amazing as owning your own business can be — and it really is an amazing experience — before quitting your 9-to-5, there are a few things you need to plan for. The realities of the challenges are just as inescapable as the benefits.
The self-employment transition involves going from being an employee to learning how to manage it all alone. You are now taking on the responsibility of a business. To develop these new skills, you may need training. There are online options for those that may not have the interest in sitting in a classroom — many of which are affordable. Some people are great self-starters and may be able to learn as they go.
Whatever route you choose, making sure you have a way to gain the new skills you need to grow is important to being successful. Look for resources at your local library, networking groups or online at sites like Lynda.com
Not everyone has a strong support system, but as a business owner, you will need a great support system to help you get through. Work-life balance is challenging to achieve and even more so for the self-employed. Your hours will be longer, you will have fewer days off, especially in the early stages, and you and you alone will be responsible for it all. It is a lot to handle.
In addition, your financial responsibilities will increase as you look to support your business as well as pay your bills, and everyone in your life will need to be prepared to make sacrifices in order for you to succeed. This could mean spending less time with your family, less money to go out with friends or paying for extended child care. Take the time to speak with your family and friends before you make the leap to help prepare them for the adjustment. In doing so, you may also find a great support system in them. Those closest to you may also be willing to lend a hand, allowing you to outsource simple tasks early on.
This leads me to one of the largest if not the most difficult challenge of becoming self-employed: your finances.
A lot of new business owners and freelancers quit because of the financial challenges and headaches of being self-employed. In the early stages, you will find yourself spending a lot of money while seeing little to no return. Your paychecks may be unpredictable, you may find yourself in debt, and the costs of benefits such as medical and dental insurance (necessary for anyone with a family to support) start to weigh on you.
How do you make it work? Consider waiting to make the leap until you have a nest egg. You may also need to take a part-time job or take clients you don’t love to pay the bills. Keep your eye on the end goal, which is the freedom of being self-employed.
I also highly recommend sites like Due, Mint and Quickbooks to handle your finances. With them, you have everything you need to bill clients, keep track of finances and do your taxes.
Make plans, and do your research beforehand. For example: will you need to rent office space, or can you save money by working from home? What are the tools that you will need to remain productive, and how much will it cost to get the business up and running?
In business, the unexpected should always be expected, but having an idea of what to expect will make the transition a lot simpler for you.
Peter Daisyme is the co-founder of Palo Alto, California-based Hosting Inc, a hosting company specializing in helping businesses with hosting their website for free, for life.
BusinessCollective, launched in partnership with Citi, is a virtual mentorship program powered by North America’s most ambitious young thought leaders, entrepreneurs, executives and small business owners.