Being self-employed can be a wonderful experience. You are free to create your business model in a way that seems suitable and productive to you. Punching in is at your own discretion. Creative aspects and branding choices are yours to make. You are not limited by the expectations of management, but there are challenges that arise which can limit your success if you do not properly plan ahead to avoid them.
1. Staying Motivated
Transitioning over from working for a company to being self-employed is always a challenge in terms of staying motivated. Many factors can deter you from productivity such as;
- Change of Leadership – Working for a boss keeps you on your toes. A format was already laid out for you, avoiding job loss was a must, and you wanted to climb the ladder. Now you are the boss, and you must cater to your own level of expectations in the same way.
- Billable and Non-Billable Tasks – It’s easier when there are dollars tied to your tasks, but it is a lot more difficult to complete the mundane day-to-day tasks.
- Tasks You Don’t Enjoy – As a self-employed professional, now suddenly you have to take care of all the details. Let’s face it, sometimes you just don’t have the knowledge or experience, much less the desire to complete those tasks. A great way to handle these types of tasks is to connect with professionals that you can outsource overbearing work to.
To avoid these deterrents, make sure that you are setting yourself up for success by creating goals at regular intervals and be aware to complete them. Remind yourself of all the benefits of being self-employed, compared to past positions and working for another business. It is even recommended to have someone close to you (friend or family) to check in with you from time-to-time about your goals. Sometimes, the road starts a little rocky, but persistence and planning pays off!
2. Self Taught Financial Management
Most often, self-employed professionals have little-to-no experience managing finances and so it becomes a major hurdle at some point down-the-line. Setting yourself up financially from the beginning makes a huge impact on the success of your business. Many people look to financial institutions like ours, to procure funding in the form of start-up loans, no-doc loans and so on. However, once they obtain the funds, they have no form of management to wisely distribute the funding.
Here are some aspects that are often overlooked when self-employed professionals are setting up their financial structure:
- Underestimating Expenses – Fortunately, approximately 40% of home-based businesses require less than $5000 to start (businesses such as; resume writers, personal stylists, childrens’ parties, cupcake bakeries, etc.). The obstacle arises when small costs are overlooked, such as childcare, insurance, gas, dry cleaning, etc. Make sure to outline any and all possible expenses as a result of your new business.
- Keeping an Eye on Taxes – Make sure that you have a good idea of how much self-employed taxes you may need to pay at the end of the year, along with your regular income taxes. We suggest a periodical review of your taxes throughout the year to stay on top of everything. Setting aside tax payments is necessary to avoid under-withholding penalties.
- Getting Assistance – As your business grows, you may want to consider a lawyer to keep everything in order. Calling your insurance to ensure that you have the right type of coverage is also very important. Both of these things will help to cover yourself in case of any unforeseen circumstances.
The key is consistent planning, reevaluation and execution. Just as you keep up with our blog for information on business planning and financial advice, make sure you are consistently taking a 10,000 foot view of your business practices to evaluate if everything is working towards your goals. The road to a successful self-employed business may throw some curveballs, but with dedication you will knock it out of the park!