All about the challenges of Midlife Finance

Working For Yourself: Things To Consider

If you’re thinking about working for yourself, you’re in good company.

     An increasing number of people have made this jump in recent years. According to a 2011 study done by the Federal Reserve Bank of Atlanta in conjunction with Pennsylvania State University, studying U.S. self-employments levels from 1970-2000, found the number of people registered as self-employed in metropolitan areas increased by nearly 250% between 1969-2006! (The number grew by nearly 100% in non-metro areas during the same period.) The study concluded, “In relative terms, the share of self-employed within the labor force grew from 14% in 1969 to 21% in 2006 in metropolitan counties, and from 11% to 19% in non-metropolitan counties.”

Want to join the trend? There are general resources on the Internet to help you, including a 20-step series to self employment by Bloomberg Business Week, and an intriguing series of articles from E-How. (Do a search, and you’ll find more.)

Before you make your decision, though, be sure to think it over in practical terms. Several of these ideas come from my own decades of experience working for the company I started, Brickworks. (I’ve been doing it since the early 1990s.)

courtesy of Wikipedia

 

*How much do you know about the field you plan on working in? If it’s a bakery, you not only need terrific recipes, but you should have a workable location in mind, as well as usable equipment, and a good idea how much materials are going to cost — as well what you can charge for them. (“What the market will bear.”)

*What are your competitors doing? How much do they charge for the services you’re planning on offeringcan you compete? Find out as much as possible on how they started, what they did to grow their business, and what they’ve got planned for the future. Look for articles, interviews and books — if you’re lucky, they’ve done several versions of all three.

 Another helpful tipFind out more. Where are your competitors getting their products from? (I.e., wholesale sources) What do they use, in terms of location, equipment and employees? (If you can do similar work for less expense, you can also charge less.) Who are their primary customers? Sometimes they’ll generously share this info — most times, they won’t. You can generally figure it out, though, with some patient research.

*Do you have the stamina? Going into business for yourself means sacrifices: less sleep, if need be, to get the job done, plus time and energy away from other interests. Having friends and family to support you helps — but you still must do much, if not all, the work yourself. If you’re lucky, you’ll be able to afford an assistant you can trainbut that may have to wait for a while.

*Can you support yourself financially while the business is starting up? Having a partner who has a steady job — and believes in you — is invaluable. (I cannot thank my husband, the Brick, enough for showing this kind of dedication.)  An account with at least three months’ worth of savings helps keep life going. (It can also double as your emergency fund.)

Taking a part-time job may also help bridge the gap, and stretch your savings. Any ways you can save on materials, as well as expenses like rent, equipment and utilities, will also help. Business loans are helpful — but you also have to pay them back.

*How about starting slow? Continuing to work full-time will keep your bills paid and let you build your savings. It also gives you funds to hire the work you can’t do. You can still start your businessit may just take a little longer. Starting small lets you experiment with possibilities, as well, without committing yourself to a direction that isn’t that successful. Possibilities include a simple website with shopping cart; an Etsy or Ebay online store; a rented booth, instead of a storefront.

Bear in mind: according to Bloomberg, 8 out of 10 businesses fail in the first 18months. Taking it slow and keeping things small may let you work out the bugs before it’s too late.

 *Can you offer more than one service? None of the small business guides I consulted ever brought this up — but it’s invaluable. If demand runs down for one of your items, it’s invariably speeding up for another. Let me illustrate from Brickworks, which focuses on the craft field.

For example:

      *Have book sales in one subject gone down? We offer a variety of titles– plus  kits and embellishments, so customers can make what they want in a range of techniques.

     *What if they’re still not sure how to do it? No worries — I’ll come teach classes, for a fee and my expenses. Even better, I’ll use the books I’ve written, so you get the method explained by the person who wrote it! (I’ll let you buy the books from me, too.)

  After decades of study, teaching and writing, I trained to be a personal property appraiser. My specialty — textiles — led to another hat:: judging competitions at craft conferences and guild shows And that led to even more opportunities: consulting, advising (and providing) antique textiles for period movies (like The Alamo), as well as work as an ‘expert witness’ for divorce proceedings and trials.

I haven’t even mentioned royalties from my books, editing,  income from features and special assignments, or my ‘other’ job: writing on (PF) personal finance and frugal living topics! If I did just one or two of these things, I couldn’t make a living. Doing several — I can.

*Can you protect yourself ? For example: would you be better off as a sole proprieteror should you incorporate?  Should the business be a LLC? Each of these options has legal ramifications. Knowing the laws helps; try Working for Yourself, by Stephen Fishman (shown below). Or check with the SBA, or Small Business Administration. Not only does it provide all sorts of information, but it can also put you in touch with helpful advisors, as well as opportunities for business loans.

 We’ll revisit this subject in an upcoming week, including the pros and cons of self-employment, and how to skew them in your favor. Meanwhile: you’ve got some questions to think about.

3 Responses to Working For Yourself: Things To Consider

  1. I think an important thing that many need to realize is that starting your own business isn’t all fun an games. Many people think that when you have your own business, you can sleep in every morning and don’t have to work that much. This is only true once you completely automate your business or hire someone you can trust to run it for you. And many times, small businesses never get to this point. Owning your own business takes a ton of hard work, sweat and tears. You will be working more (a lot more) than you did as someone else’s employee. But the trade-off will be that it is something that you love so it won’t feel like work. Bottom line is don’t think you will start a business and the rest of your life will be sitting on the beach living the easy life. It’s not even close to that at all. I hope I don’t come off as being negative here, as I have my own business and love every minute of it. But many people think I do nothing all day when I tell them that I have my own business.

  2. Working for your self sound great and feels great; sometimes. The freedom of being your own boss can be offset by the heavy responsibility to bring enough works in, regularly and continuously. The questions you raise are a good check list and I’d like to add one, if I may: ask yourself how can you move away from selling your time to building and selling reputation.

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