Whether you call yourself an entrepreneur, freelancer, self-employed or independent contractor, the fact is that your dream of being your own boss is shared with a growing number of people. According to a recent survey by Freelancers Union and Upwork, 53 million Americans are self-employed. Another study by Intuit predicts that 40% of the U.S. workforce will be freelancing by 2020.
All of those impressive stats and hopes aside, maintaining a self-employed career is no leisurely venture. Despite producing work of high quality, many people find themselves coming up short and unfortunately having to go back to a conventional job.
Self-employment comes with its fair share of hurdles, but as with any other endeavor, failing shouldn’t stop you. As Richard Branson puts it, “The best developer of a leader is failure.”
Though failures will inevitably happen in the pursuit of working for yourself, you can take steps to prepare yourself so that you avoid as many of them as possible. Here are 10 reasons why you could fail.
1. Fear of Failure
Self-employment is the same as starting a new business, with just as many hurdles to clear to keep the doors open. But while some people can use fear of failure as the ultimate motivator, others succumb to the pressure and spend more energy on worrying than on planning for success.
Fear can even kill your career before it starts. So if you find yourself worrying too much, shift your attention to your career’s immediate demands instead of your potential failures. Your odds of success will increase.
2. Falling to the Competition
The pool of talent is growing, especially if you’re a freelancer, which makes some industries extremely competitive and difficult to get your foot in the door. Many freelancers apply to numerous job openings and never hear back. You might produce the same quality of work as some of the top performers out there, but sometimes quality alone won’t be enough. You have to make an effort to stand out.
There are many options for opening doors, including becoming a better salesperson, having better marketing or providing a unique product or service. If you are just starting out, you can even reach out to companies you’re familiar with and offer to do an assignment for free to prove your worth. Don’t forget about building your network too, as satisfied clients make great referral sources.
3. No Business Plan
Surviving in a self-employed career requires more than just applying to job postings. It’s about setting a timeline of goals and finding ways to reach them. Just as with any other business, the best way to ensure success is to create a plan for your business. This will allow you to strategize and understand your objectives. If you have a clear vision of where you want to be, you’ll be able to recognize, tackle and move on from any failures that may occur.
4. Lack of Publicity
Your personal brand is your best marketing tool, and it’s your responsibility to build it up. As you know, there is no sales or marketing department that will promote your work. Though you may want to devote your time exclusively to your specialty, you also need to focus almost as much energy on making yourself known.
A cost-effective way to promote your personal brand is to create a blog or website to showcase your portfolio. Using social media sites like LinkedIn or Facebook can help you promote your product to the world. Remember to take your efforts offline. Attend industry events to build your network, and let your results speak for themselves through word-of-mouth marketing. Also, don’t forget your business cards!
The world of self-employment is no place for procrastinators. In order to seek and secure work, you must be a self-starter. There’s also no boss to delegate tasks to you. So if you’re not finding and doing your own work, you’re going to wash out. And although taking a creative break can be good, if you don’t meet the clients’ needs, they’ll most likely move on to the next person.
Avoid procrastination by addressing the root of why you’re procrastinating. If it’s fear of failure, remember that you’re already failing by avoiding the work. Instead, be successful by actually starting it. If you’ve landed a job that is bigger than your skillset, take some time to broaden your skillset. That will give you the confidence you need to proceed.
6. Poor Prioritizing
Getting used to being your own boss can be tricky. You’re on no one else’s schedule except your own, so it’s understandable that you may first gravitate toward activities that are not essential to work. But this gravitation is why many people fail; they don’t prioritize.
The longer you put off your work, the less energy you’ll have when you need it most, and consequently your work quality will suffer. If you want your work to be sustainable and successful, it’s essential to keep a schedule and put your responsibilities at the top of it.
7. Not Seeking Family/Household Support
Life for the self-employed need not be lonely, but it can feel very solitary at times. That’s why family or household support is worth seeking. It helps maintain your mental well-being, especially in times of crisis. You might not think you need it now, but the romanticism of the lone entrepreneur isn’t worth the possibility of harming your relationships through prolonged absences. If you’ll be working from home, make sure everyone can make the adjustment when it comes to things like personal space and scheduling.
8. Not Understanding What to Charge
For many, determining your worth is a delicate but brutally consequential aspect of your career. It’s not much different than the stress-inducing conversation that precedes asking your boss for a raise. But we all know that if we don’t set a certain bar for ourselves, no one else will.
Recognize what goes into accurately pricing yourself. If you’re new to the game, charging a lower rate than the competition can be a great way to build a client base. If you’re a seasoned pro, then charge like one. If you’ve been working with a company for a reasonable amount of time, you can begin to raise your rates. Also consider the size of the company you are doing work for, as well as the budgets of their individual projects.
9. Being Financially Disorganized
It may be hard to understand at times, but for most self-employed people, having the books in order gets harder the more successful you become. Think about it. It’s easy to keep track of income and expenses when you are just starting out with a few clients. But as things begin to pick up, your accounting becomes something you do late at night when all your real work is done.
This can spell disaster when you stop paying attention to the expenses and costs of doing business. When you don’t have a clear picture of your financial health, you won’t know when you’re in trouble. Don’t let your finances get out of control, even if it means outsourcing the work to an expert.
10. Failing to Pay Quarterly Taxes
Speaking of expenses, many self-employed people overlook the tax situation that comes along with working for yourself. According to the IRS Self-Employed Individuals Tax Center, “As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly.”
If you ignore the quarterly requirement and owe more than $1,000 in taxes at the end of the year, you may face fines and penalties. Though some people opt to pay the penalties come April 15 to hold on to precious revenue, it’s best to pay your estimated quarterly taxes via Form 1040-ES. As good as it may sound to hang on to the money now, it’s a lot more lucrative to not be forced into spending more than you would have had to later.
Starting and maintaining a self-employed career is like owning a business. Though it can afford you many freedoms, you will also face more demands. You will be your own C-suite employee of every stripe. But if you are prepared for what’s to come—including potential hiccups—then your chances of surviving by practicing your true vocation will drastically increase.