In many ways, it’s everything it’s cracked up to be. There are, however, aspects of self-employment you should be sure to consider before making the switch. While working for someone else means giving up a lot of independence, it also comes with a host of advantages that are easy to take for granted until they’re gone. Here are some of the things you should think about when striking out on your own.
You’ll spend less on overhead
Working for “the man” can be expensive. Whether you drive or take public transportation, your daily commute probably costs more than you realize. A recent survey found that Americans spend an average of $2,600 per year getting to and from work, and residents of major cities spend significantly more. The expenses don’t stop once you reach the office. A $10 lunch four days a week adds up to more than $2,000 per year—and that’s not counting your daily 3 p.m. Starbucks run. When you work for yourself, you have far more control over those daily costs.
But you’ll spend more on other things
Working for yourself means providing for yourself. As your own boss, you’re responsible for all kinds of things you didn’t have to think about before, from health insurance to office supplies and everything in between. The good news is that you’re no longer limited by what’s best for your employer, and lots of companies cater to entrepreneurs like you. There are great resources available, including bookkeeping software for small businesses, affordable individual dental insurance plans, and even co-working spaces that allow you to reserve a conference room when you need to impress a potential client.
Make it official
As excited as you are to jump right in and start making money, you need to lay some groundwork first. Should your business be a sole proprietorship, a Limited Liability Corporation, or an S-Corp? Do you need an Employer Identification Number? Are you prepared to meet any regulatory or administrative requirements that are relevant to your industry? Are you required to register your business with state or local agencies? Do you need to file a fictitious business name statement? By paying attention to these details now, you’ll save yourself a lot of potential hassle later.
Discipline is key
When you work in an office surrounded by co-workers, there are lots of subtle and not-so-subtle pressures to stay productive. If you miss a team deadline, spend all day on social media, or make a habit of taking three-hour lunches, someone is going to notice. But when you are the boss, the employee, and the co-worker, it’s harder to stay accountable.
There are lots of tips and tricks for how to stay motivated when you work from home. One of the best strategies is to create a schedule, just like you would in a more traditional job. Make a list of tasks and responsibilities, and decide what percentage of time you want to devote to each. Then map out a basic structure that reflects your priorities.
Give yourself enough time on each task to make real progress; the sense of accomplishment will keep you feeling motivated. At the same time, be realistic about how much time you can spend on one thing before you burn out. Last but not least, give yourself breaks throughout the day to step away, and plan to have lunch or coffee with a friend a few times a week so you don’t become a recluse.
Get good at goals
To build a successful business, you need a solid foundation. Your business goals are an important part of that foundation. But how do you set goals that will keep you moving forward? Use the S.M.A.R.T. technique. S.M.A.R.T. goals are:
A badly constructed goal is a recipe for running in circles. Once you cultivate your goal-setting skills, you’ll have mastered an important step in setting yourself up for success.
Set healthy boundaries
For some people, a lack of discipline is less of a concern than a tendency to work too much. One upside to working in an office is that there are natural cues to let you know it’s time to call it a day. When the maintenance crew shuts off the lights in the building, even the most dedicated worker can take a hint.
When you work for yourself, it’s all too easy to lose sight of the line between personal and professional. You can make it a bit easier by creating a dedicated work space in your home. When you’re in that space, you’re on the clock. When you step away, you’re off. Set digital reminders to mark the beginning and end of the work day. Finally, ask friends and family members to gently remind you to stay present if you get distracted by work during personal time.
One of the biggest challenges of working for yourself is the natural ebb and flow of business. In the planning phase, you will probably decide how much income you need in an average week or month to stay afloat. But the reality, especially in the beginning, is that some periods will be busier than others. You may find yourself drowning in work one month and bored to tears the next.
This is a normal cycle for entrepreneurs. Take advantage of slow times by working on your marketing materials or networking with peers. Catch up on some much-needed sleep. And remind yourself that things are bound to pick up again, because in business as in life, the only constant is change.
The leap from being an employee to being your own boss is simultaneously exciting and terrifying. You can help ease the stress by talking to other people who have made the same transition and learning as much as you can about what to expect. But at the end of the day, striking out on your own is an act of faith, and part of the fun is trusting yourself to find your own way forward.
Brought to you by The Guardian Life Insurance Company of America (Guardian), New York, NY. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, investment or medical advice.(exp.01/20)