Before you make the leap and quit your day job, you need to see if you are ready for such a major decision.
While starting a new business or working as a freelancer is an exciting decision, self-employment isn’t the right choice for everyone. It takes a high level of time, patience, and effort that is vastly different from working for someone else.
If you have decided you want to become your own boss, choose your own hours, and escape the rat race, the following guide will help you get started with an exciting career as a self-employed professional.
There are many reasons why people choose to become a freelancer or start a small business. Before you make the leap and quit your day job, you need to see if you are ready for such a major decision.
Before you can learn how to become self-employed, you need to research the costs. The Small Business Administration (SBA) has a useful startup costs calculator to help business owners determine how much funding they will need. You’ll want to consider things like upfront costs, tax deductions, tax costs, accounting, overhead, and other expenses.
Even when you know how much it costs to start your own business or become a freelancer, there are additional factors to consider in your preparation and regular maintenance of your company. Consider how long it will take to become profitable and what will be your source of funding prior to that time.
Also, plan for your personal living expenses if your business doesn’t end up earning enough to give you a full-time wage right away.
When you become self-employed, you can expect your new career to involve a serious time commitment. A sole proprietorship or small business owner has to manage their own time. There isn’t a boss who can tell you when to show up or how long to work.
Some people struggle with time management and putting in enough effort. Other self-employed individuals have trouble finding free time because they’re working too much. They spend all of their time on the job and feel like they never get a day off.
Determine if you have the time, energy, and desire to start a new company, or if you just want a side gig. If you don’t have enough time to devote to your new business, it will be hard for it to become successful.
As you work with potential clients and build your company, your work can take a toll on your family. The time commitment may make it harder for you to take part in your family’s activities, events, reunions, and vacations.
If you have to take a pay cut to become self-employed, your family may also need to minimize their expenses for a period of time. Because your new career can impact your work-life balance, finances, and family time, it’s important to talk through this decision as a family.
If you want to learn how to become self-employed, you need to start with goal-setting. Whether you run a multinational corporation or work as an independent contractor, your goals help determine where your company and career are headed. Setting clear, achievable objectives helps you plan for success.
To set goals you can achieve, be precise and prioritize them ahead of time. If your goals aren’t clear and understandable, they’ll be much more difficult to reach. Write them down to hold yourself accountable to them, and make sure they’re SMART.
SMART goals are:
Once you decide to pursue self-employment, one of the next steps is to pick the industry you want to work in. You could start a marketing agency, freelance as an event planner, or open a store. If you’re passionate about getting into a field that is seeing rapid growth, you may want to look into owning your own painting business.
Among the top career fields for self-employment, real estate and skilled trades are the most popular industries.
Many industries require technical expertise. For example, if you want to run a web design business, you’ll need to understand concepts like search engine optimizations, coding, e-commerce integration, and usability. If your background is more grounded in management or general business, you may want to consider running a business where you oversee operations but don’t do the trade or technical work of the company. We’ll cover more on this option below.
So, what type of business should you choose?
Now that you know your industry, you’ll want to determine the kind of business you’d like to run as a self-employed worker. Do you want to be a freelancer or gig worker? Would you like to run a franchise or a startup?
There are many ways for someone to learn how to become self-employed, so the right business structure depends on what you want to do and how you’d like to operate. Starting a franchise may require expensive fees and deduct large royalties from your bottom line. Being a gig worker, meanwhile, may run a lower risk in terms of startup costs but often comes with much more competition in the market, making a living wage difficult.
If you need help, some companies (we’re one of them) assist individuals as they begin their journey to becoming self-employed.
Ok, so now you need a business plan...
For your business to become successful, you have to put in long hours and a lot of hard work. You also need to make a business plan. The type of business plan you need depends on the kind of business structure you choose.
For example, a freelancer may need to build a portfolio online and find potential clients using a crowdsourcing sites or job sites. Meanwhile, independent contractors may work with large companies directly, so they may market at industry conventions or through in-person meetings with executives.
To make a good business plan, you should include an executive summary and company description. Create a market analysis with research on your market segment, and plan out your products or services. You should also look at your marketing strategy, the funding you need for the next 3-5 years, and business finances for the future.
There are a few more steps on the legal side of things for becoming self-employed. You’ll need a business license or to form a business entity such as an LLC or sole proprietorship. How you set up your business will affect your responsibility for any liabilities or debts incurred when running it.
You will also need to set up some form of invoicing or accounting system that allows you to get paid.
And you’ll likely need a website and promotional items such as business cards or brochures. On top of all that, other tools — like email, scheduling platforms, and project management dashboards — can help you run your business even more efficiently.
It’s a lot to set up, which makes having someone who can guide you through the process helpful. Some people hire mentors or coaches to lead them, but these individuals can be expensive to work with, especially over the long term. Consider a program with continuous training support, so you’ll have what you need every step of the way as you launch your business.
Do you have what it takes to market yourself as a trustworthy business owner? Even when you hire outside help, you need to know how to promote your company and find potential clients.
Since most of your clients are already on social media, it’s important to learn how to market your company using social platforms. This may be a good time to log into your LinkedIn profile that you haven’t viewed in a while and make sure it’s up-to-date.
That’s just the beginning. As you grow your business, expand to other techniques like advertising, direct mail, search engine marketing, and public relations. Diversifying your promotional efforts increases your chances of building a strong customer base.
Being your own boss is an exciting opportunity for the next phase of your career, but it takes hard work. Hoist is here to make this process smoother. We’re dedicated to helping outstanding professionals attain their goals of self-employment through top-notch training, powerful tools and cutting-edge technology, and expert support.
If you have the dedication to grow your own business, Hoist is the ultimate resource to help you get started. Complete our online application to see if you might be a good fit for the program.