The idea of striking out on your own and becoming your own boss can sound incredibly appealing. You can set your own hours, you have no boss looking over your shoulder, and you’re in complete control of your own success. While working for yourself can be especially satisfying, it’s not for everyone. Understanding the potential drawbacks helps you make sure it’s the right path for you. It takes a unique combination of determination, self-sufficiency, and resourcefulness to make it on your own, but if you’re able to say yes to the following five statements, being your own boss may be worth a shot.
You Have That Entrepreneurial Spirit
When you make the choice to become self-employed, you go from being a small cog in the engine to being the entire engine. You’re starting and running your own business, and the success of that business rests solely on your shoulders. Payroll, supply management, technology, invoicing, and other functions traditionally handled by the company you work for are now part of your daily responsibility. That can turn a traditional eight-hour work day into a 12-hour day – or longer. Many startups require round-the-clock attention to keep moving forward; expect to make that kind of commitment when you jump into the world of self-employment.
You Can Handle the Financial Responsibility
Self-employment comes with some expenses you might not consider before taking the leap. One of those expenses is the cost of setting up shop. If you offer a service without the need for inventory or large equipment, a home office space and a computer might be all you need to get going. For some service businesses, such as accounting, you may need a commercial space where you can comfortably meet with clients and create the image of an established business.
Other potential costs include taxes, insurance, and retirement savings. As an employee of another company, your employer contributes towards payroll taxes and insurance. As a self-employed individual, you don’t get any assistance with those costs, so expect your annual tax bill and other costs to go up. Employers also normally make matching contributions to registered retirement savings plan accounts. When you start your own business, you’re completely responsible for all retirement contributions.
Having a significant savings cushion in place gives you some financial security in case things don’t quite work out as planned. You also have the option to find startup funding to support your business expenses without investing a large amount of your own money.
You’re Passionate About Your Career
There’s a big difference between going to work at a company every day and going to work for yourself. When you work for an established business, you know that, absent a major calamity, your paycheque comes regularly. When you’re self-employed, if you don’t put in the work, you don’t get paid.
That’s why you need to be passionate about your work. If you don’t really enjoy what you do, you could lose your motivation and find it difficult to put forth the effort needed to make the business succeed. If that happens, cash flow starts to dry up. On the flip side, if your passion is on full display, you not only want to continue growing your business and work hard to satisfy your clients, you also reap the benefits of developing a solid professional reputation, potentially leading to further business opportunities down the line.
You’re Willing To Give Up Some Personal Flexibility
While working for yourself does allow you to set your own schedule, be prepared to make some larger-scale sacrifices with your free time. If you’re an accountant, you probably can’t take vacation time during the first four months of the year, for example. Some occupations give you the flexibility to clear your calendar for a day or two, but if you run a brick-and-mortar shop, taking even one day off can be challenging. For some self-employed people, taking a day off means no income for that day. If you’re a freelance writer who gets paid per piece, you can’t make any income on days when you’re not writing. Keep those considerations in mind to make sure they fit with your lifestyle.
You’re OK Spending Long Periods of Time Alone
Self-employment can be immensely satisfying, but some people find the isolation socially unappealing. Working for yourself can mean long hours alone in your home office or in your commercial office space, especially if you haven’t hired any employees yet. That peace and quiet might be one of the reasons some people choose to leave the corporate world in the first place. But extroverts who thrive on social interaction can find that setup less fulfilling. Taking the time to schedule lunch with friends or joining professional organizations may help solve the problem. Since you’re the boss, working for yourself also allows some flexibility to get out for short walks and coffee breaks occasionally to break up the day.
If you decide the self-employed lifestyle is right for you, start off on solid footing by managing your finances wisely and using available tools to make your job easier. The QuickBooks Self-Employed app helps freelancers, contractors, and sole proprietors track and manage business on the go. Download the app today.