During tough economic times many working professionals have unintentionally joined the ranks of the unemployed. Living without a steady paycheck can obviously be devastating both financially and emotionally. However, motivated individuals find that a lay off is the perfect opportunity to jump-start a new career as their own boss.
Fluctuations in the economy are definitely making entrepreneurs out of some people who weren’t self-employed just a few months ago. The fact is, job seeker’s have to find creative ways to make a living. The most important thing is not to get caught in a pit of despair, but to take stock on what you really want both now and in the future.
Taking swift action is critical. If you can find a way to turn your passion into a money-making venture then you are half-way there to being self-employed. After all, how many of us go to work every day because we have to? How many of us like our jobs? Wouldn’t we all rather work in a business climate we love? Perhaps self-employment is an option.
While taking stock of what you want in a career as your own boss it’s important to create strategy for both the short and long term. Where will your self-employed career be in 3 months? Where should it be in 6 months? Also, it is important to document some of your long-term goals. These can be broad; however, they need to be attainable – even if only in small increments. For example, a long-term goal could be to turn a profit in a certain time period.
It’s also important to face the facts and not take a big detour from your career objectives. At some point you may need to pull the plug on your entrepreneurial venture and you have to know when to anticipate that time.
That being said – don’t be afraid of failure. Most new small businesses do fail within five years. According to the Small Business Administration two-thirds of new business ventures survive for two years, but after four years only 44 percent survive. Be aware of the most common hurdles small businesses face and understand why they fail. As your own boss you are taking on responsibility for the entire operation so you have to be proactively aware of potential problems.
It’s important to have a clear understanding of the financial and operational functions of your business so you can adapt to change as necessary. Avoid pitfalls that will over-extend your company by taking on too much debt. It’s also essential to prepare for unexpected changes in the business climate.
Too many employers were caught off guard by the current economic climate and weren’t prepared to weather the storm. While your venture may not be affected by changing financial markets, you could be more directly affected by the change in electrical rates or unforeseen event for example. If you live in an area potentially affected by hurricanes or earthquakes you must be prepared for a disaster situation. Most businesses that survive for more than five years proactively plan for these unforeseen events.
The self-employed individual must also have a firm grasp of any liabilities they have; day-in and day-out. The structure of a business defines the liability assumed by the business owner. If you don’t incorporate or structure your business properly, then your venture is assumed to be a sole proprietorship.
This is not a recommended business structure for anyone operating a business with big dollars at stake. In many states where a business is under a sole proprietorship, the owner’s assets are tied in with the assets of the business. Potential legal problems can arise in any kind of business; even for the self-employed Internet worker.
This is why it is important to seek legal advice and follow up with your attorney at least twice a year. Try to find a lawyer who will work with you – maybe only 4 hours a year. While legal help is expensive it is well worth it. An attorney can advise you of the proper business structure and even take care of the incorporation process if needed.
For assistance in making the transition to becoming self-employed, please contact us? We are staffed with a team of experienced professionals who can help.