For many, loss of job satisfaction can lead to a fork in the road: Look for another job, or becoming self-employed. This article covers important things to know in preparation for becoming your own boss.
Your reasons for becoming self-employed can follow any number and combination of themes: You want independence with your finances or to better them; want more control of your time; take on a new challenge, learn new skills or deploy the ones you have better; you may want more money and better work conditions; you may have been retrenched, feel unfulfilled by your current job, or can’t find a job in you area; you may have spotted an opportunity in the market or want to have a greater impact on your community; you may want greater flexibility in your day to see to family responsibilities; more control who you provide business to; you may want to pursue your passion and create greater meaning in your life; or you may not be ready, able, or interested in retiring.
Whatever your reasons for wanting to be self-employed, it’s important to know what they are, as these reasons will influence the kind of business model you create, and serve as motivation as you start and grow your business.
Are you suited to be self-employed?
The next thing to assess is whether you’re cut out to be self-employed. While not everyone can be entrepreneurial greats like Richard Branson or Mark Shuttleworth, there are endless opportunities for individuals to kick-start small businesses and life fulfilling, financially secure lives. Here are some characteristics that will help you figure out whether you’re suited to being self-employed:
Preparing to be self-employed
Before you print your resignation letter and put it on your boss’s desk, there are a few things to get in order on your quest for self-employment. You need to have a plan, so have these ducks in a row before taking any big leaps:
- Increase your savings. A business is going to require capital, often much more than you anticipate. So make sure you start saving. There will be unexpected expenses, months of little or no income, personal bills that need to be paid etc.
- Scaling back on expenses. If you’re leaving a salaried job to pursue self-employment, you’re going to need to reduce your expenses as much as possible. Not only with this help you with saving for your business, but once it’s go-time, there will be less pressure on the business to float your lifestyle. You may need to trade in the fancy car, scale back on luxury spending, skip a holiday or two. Make sure your family is on board with these sacrifices to avoid conflict.
- Can you start part-time? It’s not always necessary to quit your current job in order to become self-employed. Let your employer know of your intentions and nine times out of ten they will support you provided you’re not compromising your productivity, abusing company resources or poaching clients.
- Learn, learn and learn some more. Take the time prior to starting your business to analyse your target market, the demographics of your surrounding community, take courses or self-study to up-skill yourself, write a business plan, and get a mentor if you can.
- Crunch numbers. If you already have a business idea, take the time to carefully figure out your finances. How much capital will you require? What are your (conservative) projections? How long is your sales cycle? What kind of profit margin can you achieve? Will you require a loan?
Finding a business product or service to provide when you’re self-employed
Thanks to globalisation and the Internet, you needn’t always rely on your local community to support your business idea. If you’re passionate about a particular interest, search the Internet for forums or groups with similar shared interests. See if you can set up an e-tail business to tap this interest.
If you have spotted a need in your area that you have the skills and interest to tap, take the time to understand your market, their needs, income, expectations etc. As an example, if you spot a need in your community for a trustworthy and reputable handyman service, you can meet that need by setting up a handyman business that trains and deploys handymen around the community.
At the core of every single business on earth that has ever achieved sustainable success is this philosophy:
Every successful business (1) creates or provides something of value that (2) other people want or need (3) at a price they’re willing to pay, in a way that (4) satisfies the purchaser’s needs and expectations and (5) provides the business with sufficient revenue to make it worthwhile for the owner to continue operating. – Josh Kaufman
IMPLICATIONS OF BEING SELF-EMPLOYED
Also known as ‘the dark side of being self-employed,’ there are a number of implications that can be pushed aside during the excitement of having a business idea and getting it off the ground. Here are the top considerations to put some thought to before starting your own business:
Family considerations for the self-employed
The start-up and growth phases of a business are incredibly demanding. This means much of your time and energy will be devoted to the cause, while family can take a back seat. You may find that being your own boss actually means more work time than if you were an employee, suddenly evenings, weekends and holidays are work-time too, primarily because of the knowledge that your business success is down to you and you alone.
Because of time and financial restraints, you may have to make unpopular sacrifices like annual holidays to the coast, reducing your children’s allowances, relying on your spouse to carry the bulk of living expenses. Even if you’re in a position to still enjoy these things, you may have a hard time switching off and enjoying family time, knowing that there’s always something in the business that needs to be done.
Financial considerations for the self-employed
While a successful business can lead to greater wealth in the future, there will be times where the business presents huge financial uncertainty – you may not be able to draw a salary, it hasn’t reached break-even, a return on investment is years off, and your life will continue to throw financial curve-balls like an unexpected medical expense. You will need to look carefully at if and how you plan to continue medical aid and pension payments, how you will pay loans like your bond, car etc.
Work-life balance for the self-employed
For many new and experienced entrepreneurs, finding a work-life balance can seem like an insurmountable challenge. The line between work and personal time becomes blurred, your sense of success and fulfilment becomes attached to your business success, and you may find it hard to switch off at the end of the day. Here are some tips to help:
- Set a place and schedule. Choose a place to work that allows you to zone in and concentrate. It’s good for this place to have a door. Get up at the same time every morning and have a routine similar to what you’d have at a place of employment. When the work day is done, turn off the computer, close the door, and ‘go home’. Don’t fall into the trap of working in your favourite TV chair, of working all hours of the day, and trying to multi-task business and family.
- Build social contact into your day. Hanging about the house all day will lead to cabin fever and a sense of isolation. Allocate time in the day to leave the ‘office’ to have lunch, pick up the kids, run errands, visit clients, socialise etc.
- Keep some days ‘no work’ days. While it’s a tough decision when you’re business needs you as much as it does in the start-up phase, make sure you have dedicated ‘no-work’ days. Even if it’s just one day a week, you need this time to recharge your batteries and enjoy important personal time.
Isolation of the self-employed
One factor of being self-employed often takes entrepreneurs by surprise – and that’s a sense of isolation. When you’re your own boss, you are at the steering wheel and the weight of the responsibility can make you feel isolated. If your family members are employed, they might not understand what it feels like to experience the challenges, responsibility and demands you do as a business owner.
At first, the idea of working by yourself can seem appealing, moving from a business with numerous employees to being a small business owner can also feel isolating because of lack of social engagement. This is particularly common for entrepreneurs starting a one-man-business from home. While you no longer have to commute to your place of work, you also lose the daily interaction you previously enjoyed with colleagues.
For a boost to your confidence, some much needed entrepreneurial and industry advice, being exposed to potential business, spreading word-of-mouth referrals, and developing yourself as an entrepreneur, network, network, network. Join entrepreneurial organisations, attend industry events, and maintain good relationships in your network.