Are you really prepared to operate your own business? Self-employment is a very cool experience… there is no denying that. But it is also very busy. It is jam-packed with ups, downs and surprises. It is fulfilling, super tiring, unpredictable and humbling.
Here are 8 truths about self-employment:
1. There Aren't Any Benefits
No life insurance, no health insurance, no 401k, nothing. The fact that you won't have any benefits is something to take into serious consideration when you decide to work for yourself. Will you generate enough income to pay for an individual health insurance plan? It can be a pretty sizable cost. Not everyone who is self-employed is fortunate enough to be in a relationship with someone who can take them onto their insurance plan if they don't work for a company that offers it.
2. You May Not Be Taken Seriously
Fortunately, my father has been self employed for over 20 years so there is a lot of understanding and support within my immediate family. However, I do get questioned a lot by others. Whenever I go back to New England for a visit, I get asked if I actually work… without fail. I get asked if I sit on the beach all day with my laptop, if my fiance pays for everything, and how many hours I actually put in… without fail.
“Oh yea… rough life,” they say.
I live on an island and work for myself, so people have a hard time believing that I'm not just catching a tan all day. So far from the truth. But at the end of the day, there is no need to prove myself to others so long as I know that I am happy and successful with my work.
People may also have a hard time understanding why you are working on a weekend, or why you can't just “take some time off” to go out for a lunch break or something. Sure, schedules can be somewhat flexible but there are plenty of times that you just can't swing it. It can be challenging for people to understand that while you are sitting at a desk at your house, it is still REAL work.
3. No Such Thing As Paid Vacations Or Holidays
“Must be nice to be able to work from anywhere in the world!” Totally is. But in exchange, my travels are punctuated by frequent email checks, unexpected hours logged and missed opportunities. My laptop goes with me on all trips and there is always the concern about wifi options.
Typical office jobs tend to come with at least 2 weeks of paid vacation time and a handful of holidays. There is no worry about not getting paid; you're on salary! But, the unfortunate truth about self-employment is that if you don't put in the time, you don't get paid. Any time that you do take off will be completely on you financially speaking. You want to take a whole day off? Your paycheck will reflect it.
4. You WILL Experience Extreme Highs and Lows
There will be months when projects are flowing in, and there will be months when your work is much slower. At the beginning of your journey you may feel super confident in your decision to become self-employed, and a few months later you may question your decision. You may land a promising long-term client only to find out that funds are more limited than expected and tasks are not enough to fill your day. You may have to make the tough choice of severing working relationships due to the fact that they can't meet your rate, they are not pleasant to work with, or you are simply not enjoying the work you do for them. You may bust your butt doing a project for a client that suddenly disappears without paying you.
The fact of the matter is that this kind of work takes guts and a hard shell. I will not lie by telling you it is easy. They don't say blood, sweat and tears for nothing! All that matters is that it is worth it to you.
5. It's a Chase…
…in so many ways. Not making enough money? Not getting enough hours? It's your responsibility to apply for more freelance jobs – and to not get discouraged! You will apply for so many jobs before you even hear back from someone, let alone get hired.
Is your client delayed with payment? You need to come up with a payment policy and unfortunately, follow up with them at times. You are not their first priority… the task is. So they can sometimes forget that they owe you. You can avoid running into payment issues by working solely through outsourcing websites, but they unfortunately take a pretty sizable cut. Upwork currently takes 20% of both fixed and hourly projects.
The chase definitely requires you to be driven and determined!
6. You Will Lose Before You Win
Success does not happen overnight. It just doesn't. You can't expect to pick up a couple of contract jobs and suddenly be the next big thing, rolling in the dough and wondering why you didn't do it sooner. There are millions of skilled people out there that offer the same services as you; it's a competition, it's survival of the fittest, it's all about who can sell themselves the best and provide the best final product. It is extremely uncommon to pick up freelance work and get paid your worth from the start. You will lose before you will win.
PATIENCE and DRIVE are key here.
7. Tax Time Is No Fun
My father did my taxes for me until I went full-time with my freelance work, so I didn't really grasp all that goes into it until recently. Taxes for your own business are far different from filing with your employer, and you don't get as much back.. if anything at all. The days of getting a couple thousand back are over, and the days of owing are upon you. The best thing you can do for yourself is to keep a really detailed sheet of write-offs; office supplies, business phone, travel expenses for work, etc. This will lower the amount you owe exponentially. It would also behoove you to take care of taxes on a quarterly basis rather than waiting to do it at the end of the year.
I would HIGHLY recommend hiring an accountant that is familiar with the self-employment dos and don'ts. It will save you a lot of time, money and mistakes.
8. It's Incredibly Rewarding
This may sound like a giant complaint, but I promise you it isn't! Taking the self-employment leap is scary and exciting. There are so many things to take into consideration before committing, so it is important to be aware of what comes with the job. As long as you can find a comfortable balance with all of these self-employment truths, you will succeed!
When you find the trust in yourself to make your own way professionally, and you actually DO, it is so rewarding. Completing projects, locking down big clients, receiving accolades upon a job well-done and being told by friends and family that they are impressed by you… it is all so worth it.