5 Advice You Should Read If You Want To Become Your Own BossMake the transition a smoother one.
Making a leap from a full-time job to freelancing may seem ideal for you right now. Perhaps you want that unlimited vacation option, or you simply want to be able to travel the world while earning an income to sustain your lifestyle. Or, maybe you’re like me – someone who works best at sporadic hours of the day (or night), and the idea of working for someone else just doesn’t sit so well with you.
Change is exciting – and I’d like to personally congratulate you for even considering becoming your own boss. This will be one exciting adventure for you! Yet, change can also be scary. Much more so for certain people because of various commitments, conditions, or situations in their lives. The scariest part of this all is taking that leap. If you’re thinking about becoming your own boss this year, here are 4 pieces of advice you should consider to be financially prepared for both the transition and lifestyle.
1. Have your rainy day savings in check.
Honestly, you can never go wrong with having an emergency fund in place which will cover 3-6 months of your living expenses. As much as we can prepare ourselves with a solid business plan and project pipeline, you never really know when a storm will hit.
Some examples of situations-gone-wrong are:
- Late paychecks or unpaid invoices
- You make expensive mistakes along the way: not pricing your services right, clients demand for more work than verbally agreed.
- Empty project pipelines because of inexperience in planning for and securing deals and projects.
Jane (not her real name) experienced this situation just a couple of months into her journey of becoming her own boss. Without rainy day savings in check, she suddenly found herself with a string of unpaid invoices, unresponsive clients, and an amount in her bank that’s quickly approaching to zero. Kicked out of her rental flat in New York City, she was left in one of those situations that a lot of freelancers find themselves thinking of but are often never thought of as something that could potentially ever happen. Fortunately for her, she was able to find a support network that helped her ease into the more difficult days to come.
As a freelancer, your income will inevitably depend on several factors. Some of which depends on whether or not your client decides to pay you on time or at all. Therefore, it’s always good to have a couple of months worth of living expenses in your bank that you would never touch unless that unfortunate situation arises and calls for you to do so.
2. Plan Your Budget
Because your lifestyle is much more spontaneous as a freelancer, some plans should come in place to ensure that you don’t end up spending more than you can or should.
Detail out all the expenses you will need to pay for on a monthly basis. Some examples are:
- Home necessities
If you have dependents, their expenses should be taken into account as well.
Knowing how much you need each month to keep yourself going is critical to keep you aware of how much you will need to make to cover these expenses.
3. Build and test the idea first.
The worst mistake you can ever make is to quit your full-time job the second you think of a brilliant freelance service or business idea. Ideas stand for nothing but a form of motivation – and it should motivate you to test the idea, not delude you into thinking it will definitely work out.
Building a side hustle requires a significant amount of time in building connections and a large-enough client arsenal, and it doesn’t happen overnight. Telling yourself you’ll start networking after you quit your job and work on your idea doesn’t work either – it takes time and effort into building and nurturing authentic relationships. It also takes a lot of time for people within these circles of network to appreciate your craft before they even decide to engage you to work on it.
4. Keep track of income and expenses
I use Expensify to keep track of all my personal expenses on a monthly basis. If you’re just starting out, Google Spreadsheets is one of my favorite options. Start keeping track by noting down all your expenses and income on the spreadsheets. You may need to take out a certain percentage to pay for taxes as well – 30% is a common recommendation and may be slightly over what you’ll actually have to pay for depending on where you live, but it’s always better to have a surplus than a shortage.
Overall, becoming your own boss is the first step to being in total control of your life’s directions. Where your side gig or freelance gig takes you will be your decision and responsibility. It is becoming increasingly common for side gigs or freelance services to have a website, and although that might sound like an intimidating task to do, it really isn’t. I’ve put together a guide to help beginners like yourself to get started with building your own website. It’s completely free and comes in three different languages: English, Mandarin Chinese (Simplified), and Thai. Pick the one that’s most suitable for you.
Free guide to building your own website + tools you need to run your online business successfully:
In this guide, I’ve put together simplified steps that take you through starting your website on the most reliable web hosting company around, as well as the digital tools you need for your online business to operate. Click here to download the guide.
Please leave any questions you have in the comments section below, or email me here.
Cherie Tan (@cherietanjy) helps entrepreneurs build better online businesses. She is also an advocate for more accessible, quality education around the world. In 2017, Cherie spoke about Education Technology (#edtech) implementation at Frontiers and Innovations in Technology, Manila.