So, have you ever dreamt of being your own boss? Most of us probably have. We think about the flexibility and freedom it offers. We wonder how much more income we would retain if we simply contracted out our services. We imagine what it would be like to be our own boss. That picture of three-day weeks and extended vacations starts to look pretty compelling. But how realistic is it? And what are the downsides that need to be considered and managed to make you successful?
Keep the Coffers Full
One of the biggest challenges the self-employed face is developing a stream of regular income. Some transitions can be quite smooth. An example is Jeff, who left his employer to contract directly with a former client. He is getting paid to do the same work by the same people, minus the middleman. From his perspective this is a good move in the short term and will allow him to form his own consulting firm in the longer term. He could very well transition from being an employee to being an employer. The risk is that, as an independent contractor, he is easy to write out of a budget. If the project is cancelled, his contract is cancelled. My advice to Jeff would be to start looking for the next source of income now.
A contrasting example is Ruth, who has been working as an independent consultant for the past three years. Her business has been thriving - she was building up her client base and striving to meet needs in a growth economy. She is now finding that as her clients deal with cost constraints, their penny pinching is putting a pinch on her pocketbook. She finds herself in a position of having to learn and use a new skill set - business development. It takes time and endless energy to keep the pipeline of work flowing. My advice to her is, get business development busy and look for alternate channels of work to get her through this rough patch.
If you want to thrive in self-employment you need to be prepared to sell yourself every day. If you are someone who thrives on doing the work, but the thought of having to sell it doesn't interest or motivate you (and may even terrify you), being self-employed may not be a viable option. When the economy is good it is often easy to pick up contracts based on an existing network. When the economy is in recession, a lot more people are fighting for more limited resources. You need to be up for the challenge.
When you work for a company, others provide structure and direction. No matter how independent and initiating you are, it always helps to have deadlines looming. As Christine Keeling, a successful serial entrepreneur who runs Blueshoe Rewards, says "no one is kicking your butt to do things." She has this advice for those starting out:
- Build a plan.
- Set priorities and stick to them.
- Ruthlessly manage your time.
- Get serious about managing your finances - remember you are tying your family's livelihood to your good idea.
Develop a Support System
Just because you are working for yourself doesn't mean you should be an island. Look for help and support everywhere. Christine points to the benefits of joining a support group for entrepreneurs, like Strategic Coach in Toronto. These groups often have speakers or resources to help you in areas that are new to you, whether it is building a business plan or marketing your services. You might want to find a mentor or even start your own networking group. My advice is to get all the support you can, wherever you can.
There is a lot of risk in going solo. There is also plenty of reward, as Christine points out. "When you are starting out, you are operating without a net. You have to like being on a roller coaster. But, at the end of the day, your successes are your own. And that's the best feeling in the world."
Dr. Rebecca Schalm, who has a Ph.D in Industrial/Organizational Psychology is Human Resources columnist with Troy Media Corporation and a practice leader with RHR International Company, a company that offers psychology related services for organizations worldwide.