It’s probably going to be one of the hardest decisions you make in your life. After all, going from that guaranteed 9-5 income and leaping into the unknown certainly isn’t for the fainthearted.
However, many people do it. Even when the chips are down, and the economy is struggling, self-employment has become a viable route for millions.
Of course, before you take the plunge there are some challenging questions you need to ask yourself. Let’s now take a look at some of these in-detail.
Do you have a financial safety net?
First and foremost, very few businesses have sufficient profits in the early days. It means, from a personal perspective, you need to ensure that you have sufficient funds to survive on.
The amount of this “buffer” will vary between experts. As a general rule of thumb, at least six months’ worth of expenses is recommended, with some suggesting that this should be increased to as much as a full calendar year.
You’re not only guaranteeing your immediate personal situation, but this buffer can also do no-end of favours to your business. For example, instead of frantically trying to make fast and easy profits, you buy yourself time to make long-term decisions that will hold your company in better stead.
Do you understand your true costs?
A lot of people have a very simplistic view of their costs. They’ll factor in things like office rental, equipment and staff salaries but there are other, more hidden, expenses that need to be considered.
For example, marketing is often an overlooked cost. If you’re not actively promoting your business then you’re not going to get any customers!
You should also factor in things like accountancy and legal fees. These are both vital for any business but can be surprisingly expensive, especially in the early days. Then, you may have various insurance fees, or even the cost of gaining an accreditation in your industry, to contend with.
As you can see, the list can go on – but you need to account for everything.
Do you have a realistic view of the market?
One of the most common mistakes people make is to vastly underestimate their competition. Just because you have a great product or service, it doesn’t mean that people are going to flock to your door.
You need to have a realistic view of the market and be aware of the other businesses that are out there. What are they doing well? What could you do better?
You should also have an understanding of your target market. Who are you selling to? What do they want?
Do you understand that your destiny is in your own hands?
By this final question, we’re referring to pensions and annual leave that many of us take for granted in the world of employment.
As a self-employed individual, you’re responsible for your own destiny. This includes saving for your retirement and taking time off when you need it.
Of course, this doesn’t mean that you can’t have a pension or take annual leave. It just means that you need to be proactive about it and make sure that you’re putting the right provisions in place.