Finance Globe

U.S. financial and economic topics from several finance writers.
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Is Self Employment Right For You?

You may have considered starting your own business, and if you have, you are probably excited about the prospect of being your own boss. It's the other American dream; self-employment can provide good to excellent income, while you write your own schedule, and make all the decisions involving the operation of your business. But, if you are smartly cautious, you may also be fearful about what the future will hold; being your own boss means that you're the one who makes all the decisions that ultimately determines whether and how well your business succeeds.

While self employment can offer freedom and flexibility, as well as the possibility of doing very well for your financial situation, it's important to take into consideration the reality of self employment. You will no longer have paid vacations, paid health insurance, and paid sick leave. You will be responsible for investing for your own retirement. You won't have the security of always knowing how much your paycheck will be. And last of all, you'll miss out on the social aspects of working for someone else, such as chatting by the water cooler, taking lunch with your co-workers, and the company holiday party; this can make loneliness an issue, especially if you won't have employees of your own. You are truly on your own when you become self-employed. These are a few things to take into consideration, but many will find that the flexibility of self employment is well worth giving up being someone else's employee.

Many have walked down the path of self employment, only to work longer hours, make less money, or suffer more anxiety. Some were never able to make their business profitable, and others realized they couldn't handle the necessary commitment at any price. Working for someone else gives you the freedom to clock out and think nothing more about work until you clock back in the next day. Starting your own business means that you may find yourself thinking about work at all times of the day, and it may begin to feel more like a chain than freedom. On the other hand, self employment can give you ultimate control of your time if you set your business up to eliminate as much stress as possible.

Do you have what it takes to succeed as your own boss? It takes a special kind of someone to start and run a business, that is, a successful business.

You must have courage to step out and either get your feet wet or take the plunge.
Many have only dreamed of becoming self employed, but were too afraid to follow through. That's okay, there can be a lot to be afraid of. Yes, it's true that many new businesses never make money, put their owners in debt, and result in years of wasted time. That can happen due to the business owner's poor planning, too much competition, not enough customers, increased overhead costs, or just plain bad luck. Overcoming that fear of failure is the first big step to starting your own business. You can choose to gradually shift to self-employment by starting part-time or go full speed ahead into becoming your own boss, whatever suits your comfort level.

You have to be ready for a real commitment, especially if you plan on leasing or buying a space for the business.
This commitment will require your time and money. A business space will require insurance, electricity and water, phone and internet service, maintenance and repairs, as well as the staff to run the place. You could receive midnight calls about a smoke detector going off or have to pay for repairs due to vandalism. You will have to deal with employee conflicts, as well as possibly telling someone they no longer have a job working for you. Working from home with no employees will not require nearly as much time and money, but it will still require your commitment to run an efficient, profitable business.

You must have self confidence to effectively run your own business.
You'll be the boss, and you'll make all the decisions. Yes, it's possible that you may make the wrong decision at times, but that's okay; it's all a learning process. You can improve your system, make your business better, and both you and your business will grow from that. Self confidence will help you make the choices and decisions involved in the start up and the day-to-day operations. You definitely want to research all your options before making your business decisions, but once you've made them, don't continuously second guess yourself or you'll end up stressed out and unsure of yourself.

You have to be organized, or be willing to pay someone to be organized for you.
Self-employment requires good record-keeping. You need to keep track of your income and expenses not only for tax purposes, but also to know whether you're business is profitable. Knowing where to cut expenses and when to increase prices will be figured out more easily and accurately with good records. Also, you must keep all your business related paperwork easy to find for future reference, such as licenses, insurance policies, customer invoices, receipts, bank account and credit card statements.

You need to have discipline.
The great thing about working for yourself is that you can take the day off anytime you want. Unfortunately, that can also be the downside for some. It's true that you don't have to work when you don't want to, but if you don't work, you don't make money. I personally knew several individuals who were so proud of their new "self-employed" status that they seemed to be celebrating their new-found freedom by taking mini-vacations all month long. Work a few days, take off a few days... Well, two of them eventually figured out that they should work more days than they take off, and they seem to be doing all right now. The other one, well, let's just say that he did not have the necessary discipline to successfully be his own boss.

Good time-management is a must.
Those who plan on running a business from a storefront may not have much of a problem showing up when they should; if the store's closed when it should be open they will lose customers and money. But someone who plans on working from home may find that they are often tempted to skip work. It's not that those who work from home become lazy and golf all day. It's just that now they can run important errands as needed, play with the kids more often, complete projects around the house, and all those other things they would normally be doing when they got home from a regular job. Now that home responsibilities and work responsibilities are in the same location, it may be harder to separate your time into work and family categories. I'm not saying it's not possible; it's very possible when you can manage your time well. Working from home will be very efficient, flexible, and rewarding, once you figure out your daily routine.

You need to be a determined individual to succeed in your quest for self-employment.
Many successful enterprises were not successful on the first try. The owner's first attempt may have completely flopped, or it may just not have been as successful as they hoped. The determined business owner is not afraid to improve, upgrade, or start all over again. Their original idea may not have worked, but they persisted until they found something that did. Some small businesses seem to do well at first, and then reach a plateau. At this point, some business owners are okay with maintaining the status quo; they don't take their business to the next level out of fear of messing up something that works, even if it only works a little. Determination is what makes you get up and try until you get it right.

You also need to know what you want kind of business you want to run.
Do you want to have an office or store, or do you want to work from home? Do you need employees, or do you want to be a one man (or one woman) show? Are you comfortable with more complicated details involving property, inventory, and employees? Or do you desire the simplicity of working from home by yourself to provide a service? Freedom is likely an important reason you are thinking about starting your own business. It's important to start a business you'll enjoy running, or it will feel more like a prison; being your own boss will not make unpleasant work become enjoyable. You can ensure that you will love working for your new boss, by choosing to start a business that is well suited to your skills, abilities, and personality.
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Wednesday, 12 June 2024

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