I am sure a lot of you are thinking about becoming your own boss, doing what you love and working your own hours. However, in order for success to happen, there are also lots of things you will need to do, and a few pitfalls to avoid.
Becoming self-employed is very easy in Canada. I remember that, back in 2008, when I tried my hand at being my own boss, it took me less than an hour to create and register my company. But this is the only easy part.
Being and staying self-employed is actually pretty difficult and stressful, particularly at the beginning. 50% of small businesses will fail within 5 years.
Here are a few points to consider before taking the leap:
- Money. Unfortunately, a lot of people become self-employed on a whim and don’t factor in how much money their business, but most importantly, they, will need. Your bills will not disappear when you open your business, but your regular paycheque & benefits will! Depending on what you do, you may need equipment or to rent office space. How are you going to pay for these? Banks are very reluctant to lend money to a starting business. You will probably need a good stash of cash to see you and your venture through.
- Planning. If you fail to plan, you plan to fail. Write a business plan: what are your products/services? Who are you clients? Who is your competition? How much revenue does you your business need to break even? To turn a profit? You will need a plan B as well if things don’t pan out. Plan for your personal life and finances too. You may have to work irregular hours. For example, if you have children, what kind of arrangements will you need? If you work from home, where is the line between work & home?
- Timing. Don’t just drop everything to start your company. Don’t quit your job hastily, or worse, in an unprofessional manner. Rather, do so after you have done your research and figured out your finances. Better, wait until you have a few clients. It is also possible you may have to keep a part-time job until your business can sustain itself and fully pay for your bills.
- The current economy. Don’t underestimate that one. It is a long recovery from the 2008-2009 meltdown. Although things have improved, it is still not what it used to be. It is a possibility your products/services may not be in demand right now.
All these 4 points are inter-related. We have all heard of someone who just quit their job and whose company became an instant success. They are the exceptions, not the norm. My first experience at self-employment was exhilarating but short-lived, due to shortfalls on all the above.
My biggest pitfall was the money. I simply didn’t have enough to weather the inevitable business dry spells and then the economic meltdown. I didn’t have a plan B. I also turned down a part-time job offer when I should have accepted it.
I actually know self-employment suits me. I don’t discard doing it again in the future. However, I learned from my mistakes. At the moment, I still have too much debt and not enough savings to take another leap.