Everyone dreams about working for themselves, but most people don’t know how to take the first steps to making it a reality. Sadly I can’t give you a clear road map of what to do when to make it happen for you, but I definitely can help you get thinking about certain things to lead you on the right path.
1. Figure out what you’re going to do.
Now this may seem a little “duh,” but so many times people don’t know what they’re going to do if they start working for themselves. Look at your hobbies. Are there any things you do daily that you could potentially profit from? Are you a great photographer? Have great social media skills? Know how to knit? Write a list of everything you’re good at and try to see if there are any overlaps. A lot of the time working for yourself turns out to be a mixture of a bunch of different odd jobs. I run my stationery business, have freelance marketing jobs, and do blogging and YouTube for money. Be prepared to do a bunch of different odd jobs.
2. Figure out how much you have to make in order to do it full time
This is where a lot of math comes in. Make a list of all of your life expenses from rent, eating out, to utilities each month. Don’t forget to add in some savings and add 30% for a rough tax estimate. Take that number and multiply it by 12 to see how much you need to earn in one year. If you’re doing freelance graphic design or something you can charge hourly for, take that monthly amount and divide it by 40 hours a week. That’s how much you need to charge for your services per hour. Of course it’s possible you wont’ have clients or work for 40 hours a week, so adjust that hourly rate based on the hours you expect to work.
3. Figure out the legal stuff (file for an LLC, etc)
I cannot stress enough the importance of having an accountant or a financial adviser who works with small businesses. Most regular accountants won’t know all the ins and outs of working for yourself, so be sure to shop around for one who has experience. Our accountant has helped us so much to figure out what we can write off, how to file quarterly taxes, and makes the whole process of dealing with money a lot less stressful.
Even if you’re just doing something small on the side, still consult a professional to make sure you aren’t paying an arm and a leg in taxes.
4. Setup a separate bank account and give yourself seed money
If you want to take working for yourself seriously, you have to start from the very beginning. Open up a business account and give yourself a starting loan. That way you’re able to buy all the materials and supplies you need up front to make sure you’re giving yourself the best chance to be successful. We gave ourselves $500 to get started to buy cutting machines, sticker paper, and envelopes. It felt weird at first, but we wouldn’t have been able to get off the ground if we didn’t set aside money just for the business in the beginning.
5. Research your field. A LOT
Before you up and quit your full time job to start working for yourself, you have to understand the ins and outs of the field you’re getting into. If you want to be a freelance photographer, research when your peak times are so you aren’t struggling to make ends meet during the off season. If you want to get into the sticker making business, look into what software you need and take classes or watch videos to learn it. Look at what other people usually charge for products or services. Read up on what struggles people in those lines of work face. Know exactly what you’re getting yourself into before diving in head first.
Working for myself kind of just happened, and there are so many things I would do differently now. So take my advice before quitting your day job without a plan (and a few backup ones) in place.