Self-employment is a challenge, to say the least. There is no one to rely on but yourself and the people you hire. You are ultimately responsible for all of your successes, and all of your failures. This can obviously be exhilarating…and terrifying.
However, self-employment is no small industry. According to recent surveys, 3 in 10 Americans are self-employed or work for people who are self-employed. This is a huge number, and it makes it even more important than those who are self-employed properly care for their business.
Everyone knows that self-employment is different, but there are many ways that this is the case. Here’s an overview of 4 things to remember when you are self-employed.
Outside Assistance Will Be Necessary
One of the first things you have to keep in mind when you are self-employed is that you can’t do everything on your own. There will be legal questions that you have to answer, accounting issues that need to be tackled, and human resource questions that you need to handle properly. Failure to address these issues the right way or trying to take shortcuts will result in dangerous failure and potential legal or accounting problems.
It is vital that you, as a self-employed person, fully understand who you need in your Rolodex to address any problems and preemptively deal with any concerns. It’s also better to make sure that you have these people with you before a crisis, not after. As such, make sure you identify and potentially hire an attorney, accountant, human resources professional, and more.
Furthermore, don’t forget to take advantage of government programs that are specifically built to help small businesses and the self-employed. The Small Business Administration has a variety of these programs, and they can help you find mentors and other free resources that can make the difference between success and failure for you and your business.
Build Your Savings and Adequately Prepare Your Working Capital
One of the greatest challenges for self-employed individuals is starting their business. Far too many underestimate the amount of time it will take for them to turn a profit. As a result, they go bankrupt and are forced to close up shop before their business has really had a chance to take off.
Before starting your business, it is vital that you determine just how much working capital you will need. While there are outside formulas you can use to give you a good idea of how much money you will need ahead of time, you should still ask professionals for their input. No one likes taking out a greater loan than necessary, but this may be the difference between success and failure.
Furthermore, don’t forget to build your personal savings. These savings can get you through the lean times of your business and help to ensure that you are prepared for retirement when that day comes. Indeed, retirement savings are a huge issue for the self-employed, with one recent survey finding that only 1 in 10 self-employed people actually have a retirement plan. This sets the stage for a huge financial issue as people age. Make sure you speak with a professional to assess your options and properly prepare for your retirement.
You May Need Different Financing Options
Self-employment comes with a variety of different challenges – including tax classifications. As a result, the type of loan programs that work for one business may not work for you. As such, you may have to work a little harder than usual to find the appropriate self-employed loans for your business.
As always, make sure that you are speaking with your financial advisor to determine just what you need a loan for and what the appropriate financing options will be, as they should be able to guide you towards the type of loan program that works best for you.
It is possible that your advisor will direct you towards a specific type of loan, known as self-employed loans. These loans come with a variety of potential advantages, including relatively quick completion rates, and presenting you with a variety of providers of the loans to give you the best options. These loans also protect your stake in the business and ensure that you don’t give up any control of your operations.
Set Appropriate Boundaries
This is one of the biggest challenges for self-employed people. Indeed, if you are self-employed, odds are good that you are highly motivated and want to work as hard as possible to ensure your business’s success.
However, you can’t do so at the expense of your health or family life. Doing so will lead to burnout, and that will lead to failure. Yes, your work-life balance may be out of whack sometimes, but that doesn’t mean that you can afford to set real boundaries. Some tips include:
- Take a real vacation, and actually put your phone down!
- Have set hours
- Get comfortable with someone running your business for a few days, and make sure that it is someone that you trust.
The successes and failures of self-employment can be an incredible roller coaster. Fortunately, it is something you can both manage and conquer. Follow these tips, and you will be on your way towards finding self-employment success.