This is a guest post from Julian, who writes a blog called Frugaal, covering all kinds of ways to address bad spending habits.
While today’s post is not exactly encouraging of self-employment, I agree with it in the sense that working for yourself is not a decision to be made lightly, especially if you’re responsible for more than just your own well-being. You need a plan B, and probably C and D as well, and you need a well thought-out strategy for every aspect of your new adventure.
Moving over from employment to self-employment is something a lot of people might consider or have considered in the past. With ever advancing telecommunications, a growing wealth of information about how to make the transition, and a plethora of free online resources that we can learn new skills from, it’s unsurprising that, when combined with the onset of redundancies from the global economic downturn, there has been a rise in the number of people who are self-employed.
But the jump to self-employment is a big one that can come with a large amount of risk and the need for careful decision-making. Below are a few – but by no means all – of the ‘do’s and don’ts’ to consider when becoming self-employed.
Carry out your research and weigh up the decision thoroughly. This is a vague and somewhat obvious point to make, but its inclusion is justified on the basis that moving from employment to self-employment is a big – life-changing in fact – decision for an individual to make.
Think about your work space. Could you really cope with working from the backroom of your house all alone? Would you not get distracted by the absence of a boss roaming around? Will you really be able to cope without your colleagues (a source of companionship that you might have taken for granted)?
Make sure you’re prepared for the tough months, financially and personally. There will be months where the work dries up and there will be times where you might feel isolated and in need of some assistance. Make sure you’ve factored these considerations in and that you’re prepared for them. This might mean having an emergency fund and someone you can turn to, for example.
Consult with the people you know and, of course, your family. Ask your friends and colleagues their honest opinion about whether or not they feel it’s a good idea, and make sure you’re family are fully aware of the potential financial implications of such a decision.
Have a backup plan. Even if it’s not a fully comprehensive one, make sure you’re at least fairly comfortable with the contingency plan you will most likely be taking if your journey towards self employment doesn’t quite go as planned.
Be overly optimistic. You might have heard about a friend of a friend who left his job to work for himself and is now earning four times as much and loves every minute of his life. But don’t assume it will all be fun and games for you too. Sure, it might be, and you don’t want to go in with an entirely negative attitude. But make sure you sprinkle a dose of pessimism over the whole decision-making process as well just to keep things in check.
Lie to yourself. Don’t brush over in your mind the fact that you will, for example, have to do a lot of tasks you’ve never done before, don’t know much about, and might not feel overly confident about doing either. You need to really sit down and think about what will be required of you when you go self-employed, and whether you’re going to be up to those new challenges.
Take shortcuts that could come back to bite you. Don’t try and dodge any accounting or legal procedures to save on money in the short-term that could lead to complications further down the line.
Be too proud to ask for help. There are going to be occasions – probably many – where you will need to ask for the advice and help of others, and that includes those outside of the profession in which you work. The key is to not be afraid of doing this. In fact, the more open you are to asking for help and listening to other people’s advice, the more successful you’re likely to be.
Beat yourself up if it doesn’t work out. Most start-up businesses fail, and there’s a reason why that is: because turning self-employed and setting up your own businesses isn’t at all easy. So if it doesn’t go as planned, make sure you stay positive, because you’re not alone, and there’s never any shame in giving something a go.
Readers: have you or are you self-employed? Are you considering making the transition? What would you add to this list?