Yahoo Finance What to consider before going self-employed
The freelancer economy has grown in the last few years, with more people wanting the flexibility of being their own boss. From deciding your own hours to avoiding the hassles of corporate office life, being self-employed comes with many benefits.
But it can take careful planning to make it work, especially if you’re new to freelance life.
So what should you consider before taking the leap?
Assess the demand for your services
Natalie Trice, a career coach and mentor, says going freelance or self-employed offers a lot in terms of flexibility and potential for growth — both personally and financially.
However, it’s important to think about what you’re bringing to the market as a small business.
“First up, assess your skills and expertise to determine if there's a market demand for your services,” she says.
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“Consider whether you have a unique selling point that sets you apart from the competition. Whether you are an accountant, graphic designer, PR or stylist, there will be others out there doing something similar, so work out your offerings and research your target market and potential clients. Going deep to understand their needs will help you tailor your services to meet their demands.”
Prepare for an irregular income
It can take time to generate a regular, solid income when you’re newly self-employed, so it can be helpful to have some savings to fall back on.
It’s also important to get into the mindset of earning less, especially at the start of your self-employment journey.
Before you go solo, it can help to have clients lined up — which can help take the edge off the anxiety.
“At the start, freelancing often involves irregular income and this is something you may have to get used to in the self-employed world, there is no bank deposit on the last Friday of the month and a play slip,” says Trice.
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“I would totally suggest having a financial cushion in place to cover your expenses during leaner months. Calculate your start-up costs and ongoing expenses to ensure you're financially prepared, get a business bank account and keep your figures up-to-date.”
Think about what you want from your career
Before you hand in your notice, think about your motivations for going self-employed as this can help you stay on track and focused. It can help to write a list about what you have as an employee and what you want as a self-employed worker.
“Is it that you want the freedom to do the school run and see your kids more or is travel important for you?” asks Trice. “Self-employment is not for the faint-hearted — so be clear about your reasons for this life-changing decision.”
Prepare for lots of admin
As a self-employed individual, you'll need to handle administrative tasks such as invoicing, bookkeeping, marketing, social media and taxes.
“These responsibilities can be time-consuming and take away from your core work and make your days longer,” says Trice. “So again, think about why you are doing this and if you are up to the task of doing it all until you can afford support and a team.”
Prepare for a lack of benefits
It can be a risk to make a move into the freelance world, especially as you may lose the benefits you’d receive as an employee.
Della Judd, a coach, author and business consultant, says: “You will need to carefully consider what you might be giving up — and it’s not just the monthly salary.
“You might lose sick pay, enhanced maternity or paternity pay, pensions and holiday. Other benefits such as health care, travel loans, pensions, insurance and discount benefits may also be lost.”
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Trice also advises taking into account any training and professional development opportunities you get as an employee which help you enhance your skills.
“As a freelancer, you'll need to proactively invest in your own learning and development, so if you are set on going your own way, maybe make the most of the resources available to you right now as they won’t be there once you leave your job.”
Consider what — or who — you might miss
And it’s not just about missing out on annual leave and sick pay. Karen Boyd, a career and mental fitness coach at Miabo Coaching, says she struggled with the lack of social interaction when she went self-employed.
“One surprising element which I struggled with the most was not having a team and colleagues to interact with every day,” she says.
“You might find yourself missing casual chats and bouncing ideas off each other. Colleagues can offer emotional support, so when you’re self-employed, it can be challenging to manage the stress and self-doubt that often accompany the entrepreneurial journey.”
Be realistic about what you can earn
Judd says it’s important to be realistic about what you need to earn and what you can earn.
“Bills need to be paid and at the moment, those bills are often rising,” she says. “It might be true that you can choose your hours and your clients, but depending on your sector and the type of clients you have, you might find yourself working longer hours.
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“Ensure that you have a good idea of what you can earn and what you need to earn — realistically — and ensure that you have savings to tide you over for at least six months at the start.”
Think about what you’ll gain by being self-employed
While it’s important to be realistic about what being self-employed means, you should also consider what you’ll gain.
It might sound all doom and gloom, but there are substantial benefits to going solo. And for many, the hard work comes with no regrets.
“Going self-employed and being your own boss feels exciting and offers an opportunity to do work which you are passionate about whilst giving autonomy and flexibility,” says Boyd.
“You can work when you are at your best — maybe you aren’t a morning person — you can take holidays when you wish and choose projects which align with your values, strengths, top skills and interests.
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“You are also able to bring variety into your work which will keep you engaged and motivated — and build on your skills and experience.”
Overall, going self-employed and making it work can be a massive confidence boost. “If you get it right, then the rewards of being your own boss can be immense,” says Judd.
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