Who’s the Boss?

 Is it you, or someone else? A few questions may lead to an answer.

There comes a time in many people’s careers when they consider self-employment – striking out on their own, being their own boss, and taking charge of their own bottom lines.

Leaving the ‘corporate grind’ to start a new business or sole proprietorship is a transition that works quite well for some, but it isn’t for everyone. I tell my clients thinking about becoming self employed to go ahead and contemplate the future; after all, we’re working toward creating their one best financial™ life together, and that starts with setting goals.

There are a couple of questions to ponder at the start of this conversation, which may help shape those goals:

Who will go with me?

This question will help anyone considering self-employment be able predict what the early months of their new business will look like. The most important aspect of starting any business is knowing how to gain and retain clients, and it takes considerable time to build a client base if you’re starting from zero. Ask yourself which clients or customers may follow you once you’ve left your current firm. Is your reputation strong enough to woo them away from a larger or known outfit? Does the current firm offer incentives to clients that you won’t be able to maintain? Are there restrictions on working with current clients once you’ve left the company? Ensure that there are no non-compete clauses in your contract before even considering a move that will include current clients. The last place you want to be when starting a new business is in lawsuit territory.

How will I be paid?

The first hurdle of self-employment is getting people to hire you; the second is getting paid. The days of a weekly paycheck will be gone, and there may be unpredictable rises and falls in income, especially at the start.

Because of the uncertainty, ‘getting paid’ is also about retaining the assets you have.

The risks associated with start-up and operating costs need to be weighed, as do additional costs. Regardless of your profession, self-employment means you’ve just become a one-man shop.  There are phones, software, and office supplies to buy. You are the sales, marketing, and IT departments and you need to keep the place clean.

 You will be taking out the garbage.

To get started, create a list of needs that will draw on your resources, talent, and time – everything from a web designer to paper towels and tea bags. Note what can be outsourced and what will stay in-house. Can you manage bookkeeping alone, for instance? If billing, collection, and accounting aren’t handled correctly, it’s likely that you will lose money.

I also recommend a six- to 12-month emergency fund to weather fluctuations in income as the business launches. That can be difficult for many people, but it’s recommendation that grew from the reality that most new businesses operate at a loss in their first few months. It’s not just a cushion to cover expenses, but also an added protection for the business itself in its early stages.

The process of going it alone is daunting, and this post is not meant to deter you, but remind you to approach it carefully, as the rewards can be what most people are seeking: flexibility, self-reliance, and creative freedom. These are goals worth setting, and with any goal there must first come a plan.