I’ve been self-employed now for over six years. A Forbes.com article notes that, “According to research by Economic Modeling Specialists International, the number of people who primarily work on their own has swelled by 1.3 million since 2001 to 10.6 million, a 14% increase.”
But let me assure you, while working for myself and being my own boss might sound like fun, it’s been no easy task. It’s taken a lot of long hours, hard work, perseverance, and discipline; and even then, the rewards have been minimal to this point. However, along this rough road of self-employment, I’ve learned a few critical bits of information I wish I’d know before I started my adventure.
Benefits may be lacking
According to Bankrate.com, “Benefits combined are worth about 30 percent of your total compensation package, according to the U.S. Department of Labor. They cost employers an average of $8.81 per hour worked in December 2008.”
It provides the following example: “Suppose you’re offered an annual salary of $50,000. Your benefits package would theoretically be worth more than $15,000, so your total compensation would be valued at roughly $65,000.”
When I ventured into my own self-employed career, I quickly realized just how many great employer-sponsored benefits disappeared. From more obvious employer-sponsored options such as health care and retirement, to smaller yet still important items like an employee meal plan, transportation benefits, and bonus and reward programs promptly disappeared. Finding a way to provide such benefits – and covering the associated cost – was now up to me.
Long-range planning is crucial
As BusinessInsider.com notes, “But before you quit your job to launch the next Facebook, it’s important to keep in mind that the success rate for first-time entrepreneurs is only 12 percent, according to an infographic by Funders and Founders, which connects startups with funders.”
This is why it’s so important not only to look at the short-term aspects of moving into the self-employed or small business owner role – things like startup funds, overhead/inventory costs, and initial profit and expense projections – but the longer-term aspects as well. Developing a budget, an income forecast, backup funding and income plans, as well as financial and career goals not just for that first year, but for multiple years, can help protect against the unknowns and unexpected situations that can arise when running your own show.
Organization, motivation, and work ethic are key
For many of the self-employed, there may not be regular weekends and vacations, at least not without doing some work. Those regular 9-5 work hours might disappear, only to be replaced by 7-7, or 7-12 and 3-9, or some other odd combination of hours that might far exceed the standard 8-hour work day and expand the five-day work week.
This is where being organized, having the work ethic to push yourself hard, and finding the motivation to continue in the face of adversity can prove to be some of your most valuable tools in not only becoming but staying self-employed. Understanding yourself, your ability to self-manage, and your ability to change and adapt in an even-changing business world can be some of the most crucial elements to succeeding in such a career change.
More From This Contributor:
Building a Revenue Producing Blog
I Won’t Be Waiting to Take Social Security
Preparing to Publish My First E-book
The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Calculations have not been verified by a professional. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.