So you’re thinking of quitting your job to become your own boss. In other words, you’re seriously considering becoming a freelancer, a small business of one and a microcosm of American capitalism. But while freelancing offers a number of advantages over traditional employment, including both greater freedom and greater responsibility, the luxury of working in your pajamas doesn’t come without a cost.
Self-employed individuals must be more disciplined than their traditionally employed peers, an aspect of freelancing that many people overlook. Before leaving your current job, take the time to review the following checklist. By accomplishing these tasks before you quit, you can boost your odds of succeeding as your own boss.
1. Work on Your Resume
Considering a career change? Even if you’re planning to be your own boss, it’s a good idea to have an updated resume. Get yours in good working order before you leave your current job so you have a complete and polished resume to show potential clients and investors.
2. Do Your Research
Before leaving your job, it’s essential that you research your market for opportunities to connect with customers. This comes from assessing your area’s potential client base, identifying your competitors and determining whether you have something unique to offer to your target demographic.
3. Identify Your Expenses and Create a Budget
Before making any serious plans to exit your current position, it’s a good idea to calculate a budget to determine how long you can survive on your own. Along with rent, utilities, food, clothing, etc., be sure to factor in the costs of health insurance and other benefits provided by your current employer, as you’ll no longer be able to receive these. Also, always account for unexpected emergencies when crafting your budget.
After that, weigh your expenses against your income, such as savings, severance, stock dividends and any other cash coming your way. If you can stay afloat for at least six months while you await profitability, you may be in position to branch out on your own.
4. Save Money for Startup and Living Costs
Once you’ve assessed your living costs, it’s time to start saving up. Along with your living expenses, you will likely need money for startup expenses, including travel fees and setting up shop. You may also want to consider working out of your home until your new business gets off the ground.
5. Identify Potential Partners and Employees
While the idea of going into business for yourself can be attractive, most of us will require some degree of help to start and run our new venture. Before launching your business, consider whether you’ll need a mentor, partners and/or employees.
If you do need help running your company, make sure to find people who are compatible with your personality and goals and can grow with the business. After all, interpersonal conflicts can spell disaster for a new company. If you’re considering hiring employees early on, also be sure to account for expenses like payroll taxes in addition to wages.
6. Determine How You’ll Reach Customers
Before leaving their jobs, aspiring entrepreneurs should take the time to assess their means of finding clients. While trade shows and cold calling were popular in the past, online advertising is now considered an essential component of any marketing strategy. Consider all available options for finding clients, including web marketing, search engine optimization and search engine marketing.
7. Vary Your Income Sources
Want to ensure you stay on your feet during the transition to self-employment? It may be a good idea to diversify your income by taking on part-time or freelance work in your area of interest before leaving your job. Not only will these opportunities pad your wallet, but they may also garner valuable experience in your chosen industry.
8. Register Your Company’s Name
One of the most important steps in starting a business is registering your company’s name with your state. If you plan on using a brand name other than your personal one, you must also file for a “Doing Business As” name. It’s also a good idea to register a trademark for your name to prevent competitors from using it. These steps legally establish your brand, a big step in starting up.
9. Set a Work Schedule
While leaving your job to become your own boss comes with a great deal of freedom, it also requires responsibility and self-discipline. Because you’re a freelancer, friends and family may not believe they have to respect your work hours the way they would if you were in an office. Create a work schedule, and let your loved ones know the hours you will be unavailable.
10. Consider Your Strengths and Weaknesses
When you’re accustomed to working in an office, it can be hard to transition to self-employment. Before leaving your job, take the time to honestly assess your strengths and weaknesses. If you have trouble staying motivated while working alone, you may want to reconsider your decision to freelance.
11. Consider Your Work Habits
Along with assessing their strengths and flaws, prospective freelancers should consider whether their work habits are conducive to self-employment. For example, do you enjoy working on your own? Do you get lonely without other employees around? If you are the kind of person who works best as part of a team, self-employment may not be ideal.
12. Assess Your Creditworthiness
When was the last time you looked at your credit score? Aspiring entrepreneurs with low credit scores may want to take the time to rebuild their credit before quitting their day jobs. Some of the best funding options for new businesses are bank loans, and a poor credit score will definitely hurt your chances of landing one.
13. Identify Holes in Your Ability to Run a Business
There’s more to running a business than exceling in your chosen industry. Before quitting your job to freelance, determine whether you’re prepared to handle basic business functions, such as accounting and IT. If you aren’t very computer-savvy, you may need to hire an accountant or purchase business software like QuickBooks Self-Employed to perform these functions.
14. Assess Your Comfort With Uncertainty
The fact is that few new businesses immediately turn a profit. Before going into business for yourself, take the time to consider how comfortable you are with financial insecurity. If you’re going to suffer sleepless nights worrying about your cash flow, self-employment may not be for you.
15. Set Up a Place of Business
You don’t necessarily need an office from which to run your business. However, as a self-employed person, it’s essential that you stay organized. If you’re working out of your house, set up a home office with plenty of room to store tax records and other documents. Also, keep your financial files organized to avoid unpleasantness with the IRS down the line.
16. Increase Your Web Presence
These days, having an attractive user-friendly website is an essential part of succeeding in business. If you lack the programming expertise to create a website on your own, you may want to consider outsourcing the job to someone with more experience.
Because so many people use social media to communicate nowadays, it’s also important to establish a presence on Facebook, Twitter and other relevant social platforms.
17. Give Your 2 Weeks’ Notice
Although the temptation can be strong to offer your walking papers and, well, walk out the door, it’s important that you give your current job two weeks’ notice. Offering this professional courtesy helps you maintain a good working relationship and prevents you from burning bridges you may want to cross down the line.
Despite the hardships involved, freelancing offers a number of great rewards. Review the above checklist to make sure you’re truly ready to be your own boss. If you’re still unsure about becoming a freelancer, check out our article on managing a side business with a full-time job.