All about the challenges of Midlife Finance

Working For Yourself: Pros and Cons

  If you’ve been underemployed, overworked or just plain unemployed, the thought of  opening your own business has an real ring to it. Let’s say you’ve considered the reasons and issues that could affect your new business — something we’ve already discussed in an earlier column post. You’ve thought them over, done some research, and decided — Full Steam Ahead!

     Hold on there, Bucko — you’ve still got some things to consider, before you can successfully start a business. And the easiest way to do it is to think in terms of ‘pros’ — and ‘cons.’

 

 

 

 

 

 

 

 

STARTUP FUNDS & SPACE 

     Unless you’re the exception to the rule, and have managed to attract a serious set of investor angels (or have ample cash of your own), you’re going to need money. Lots of it. Will you have officesor not?

    Pro:  Using your own money, when it’s limited, means you’re more apt to stretch every cent. No fancy digs — instead, your ‘office’ is, more often, a crowded cubbyhole, like the one above. Inventory’s stacked in a nearby bedroom or piled in a garage. You’re not paying anymore for rent than you absolutely have to.You’re not in debt – yet, that is.

    Cons:  Sure, you’re saving a lot of cash by not renting an office or warehouse space. But are you letting that inventory take over your regular living space? (The latter is one thing I dearly regret, after years of being in business. It made my family, especially Husband, more uncomfortable than I ever dreamed.)Perhaps an inexpensive office is better.

     Were you able to get the equipment needed? (Some frugal bargaining may help this, but it’s not easy.) Does your company need a more public image than a basement office, in order to be taken seriously?

  Bonus questions: 

      *If your ‘office’ is unsuitable for clients, do you have a meeting place that can be substituted? (Some use a local Starbucks or Panera for client meetings — or rent space only when a meeting has been called. Either way, you must think about it.)

 *Can you stretch available funds to keep your business going for at least six months?

     *Do you have a working spouse or partner who can — and is willing to– cover everyday expenses, while you get established? Do they have health insurance that also covers you and any children?

If you said ‘yes’ to any of these, score extra points.

EQUIPMENT AND STAFF

     Pros:  Modern equipment in good working condition makes your job easier — so do trained staff members who know what they’re doing. You can take time off, if need be, for vacation, or for an out-of-town business trip, without worrying about the business.

     Once they’re been granted, state incorporation and sales tax licenses can save you all kinds of money, both on equipment and product, by letting you buy wholesale. And they only need be updated quarterly or yearly, depending on your state of residence.

     Cons:  This all costs money, time and energy. Staffers can be the hardest to deal with. Sometimes you can give the employee your best training, not to mention regular paychecks — and after a month, they‘ve decide they don’t like the job, and give notice. (Don’t ask how I know this — I’m still wincing at the memory.)

     Sales tax reports are regularly required by the hosting state, and filed quarterly. (If you don’t, penalties ensue.)There is some movement toward making everyone pay sales tax on online sales, regardless of state. So far, though, this hasn’t happened.

     No staff? That means you do it yourself. And if you have another job or commitment, it may mean working on it late and early until it’s done. (Don’t forget about packing and shipping, either.)

Bonus questions:

  *Do I have enough equipment to help keep the business running, until it earns enough to purchase more?

     *Did I factor in and purchase shipping materials (envelopes, tissue, etc.) and postage, if I’m selling product?

     *Do I have access to temporary help? (College students, retirees and those looking to earn a little extra money, family members) Are they worth training?

*Am I paying them a fair wage? Little extras, like free product and holiday bonuses, are appreciated,  as well.

Give yourself double points if you remembered to register them as independent contractors.

Storage cabinets like this one keep items tidy in limited space

 

ADVERTISING & PROMOTIONS

     Pros:  It’s easy enough to reserve a domain name and open a website promoting your business. Business cards are easy to order, too, as are address labels, promotional ads — and in the case of same, business stationery and sponsorships.

Add a shopping cart, and a subscription in Square.com, and you’re in business.

     Cons:  Easy, yes. Professional, no. This is one area where training and experience pay off, as well as ample funds.. To be most effective, a website should look professional, and be easy to access. Business cards must make the same impression, as should address labels and other itmes.

     Selling product adds another layer of importance. It takes time to photograph items, describe and price them (not too much, or people won’t buy them — not too little, or people will buy them – and you won’t make a profit) and write advertising copy.Also, it’s difficult to find ways to promote and advertise your product if you can’t afford to pay for ads.

     Bonus questions: 

     *Do you know a talented someone who’s willing to spend some of their time making your website good? Can you afford them? OR

     *Can you do this yourself, effectively? OR

     *Can you maintain the site, once your talented person has set it up?

    *Have you chosen products that will appeal to a wide range of customers? Or are you offering a service that is well-nigh irresistible? (Or can you do both?)

     *Have you figured out ways to advertise, without breaking your budget?

     *Have you set up:

*domain purchases (Go Daddy, in our case)

*website and domain hosting  (getting ready to switch to another – probably Bluehost)

                 *and applied for a sales tax license with your state? (This lets you get wholesale rates for inventory and equipment, but also requires you to pay sales tax back for every in-state purchase.)

                 *an application for a credit card-acceptance firm, like Amazon or Square.com?

                 *a shopping cart on your site, to handle processing sales? Is it easy to use?

     Answer yes on any of these questions, and you’re definitely headed in the right direction.

Considering these issues will make the options of working for yourself even clearer.

5 Responses to Working For Yourself: Pros and Cons

  1. Its all about the cash flow – can you generate it, does it come steadily, can you survive the periods when it doesnt flow as well as you would like.
    Being your own boss can be stressful but once you’ve done it – its hard to go back and work for someone else

    • Self-employment is very risky. Imagine you have to manage your investments as well as your daily expenses together. It takes a lots of guts and bloody decisions, I guess confidence is not enough, resources, connections and ability are also vital elements in starting a business. But yeah, if you’ve done it right, everything is worth it.

      • Sometimes, though, the best things in life are worth the risk. Playing it safe rarely gets you anywhere…
        You’re right, though, in that risk may not always pay off. Many new businesses don’t survive the first year — which means you’d better be doing a lot of prep work and serious considerations before you take the jump and commit. Thanks for mentioning this.

  2. These are all very useful things to consider before fully committing to self employment. I think your point that your family was bothered by the inventory in your home is a really valuable insight. What might be ok for you may not be for those who are important to you. Honest dialogue can help with issues like that, with regular revisits of the topic.

  3. Better to think about these things BEFORE you commit, than after. I confess, though, that there are always issues you won’t see coming — being willing to be versatile and adaptive is just as critical as cashflow.

    Thanks so much for ringing in with your take on the subject. Your time and words are much appreciated!

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