What you must understand is that moving away from ?traditional? employment entails changing your mentality. You need to make the transition from paycheck thinking and embrace profit thinking. This is perhaps may the hardest thing to do for those used to and brought up in a ?safety? mindset. Before you decide to start working for yourself, you must realize that a few months in the beginning can be very tough if you have not planned for the transition properly. Below are some of the painful aspects of moving to self-employment from employment and ways to cope with them.
Moving From A Job Culture to Self Employment
1.You should have enough money to cover your expenses in the near future. Get into the habit of keeping a close eye on your accounts. Petty expenses can run from a few hundred to a few thousand dollars, and you will run into trouble if you don't account for every penny.
2.Constantly keeping track of correspondence and communications, vendors and customers in addition to managing your business (which is your sole responsibility), can run you crazy. Add to this the frustration of weak sales and cash flow. The only way out, if you can't afford an assistant, is to slog it out, burning the midnight oil and getting up early the next morning. You will have to repeat this for the next few months. This may be tough, but you need to know exactly how things will be going in, especially at the beginning.
3.Resisting the desire to accept each order takes great determination. You want to make as much money as possible, but you shouldn't overextend yourself, or make a deal that will be detrimental to your business in the long run. Have the strength to scrutinize every deal that comes your way, then decide if it is actually worth taking.
4.Seeing your cash flow be unpredictable can unnerve you initially. Try to keep your cool and don't panic. Before you start your work at home business, you must have two things in place so you can ease the financial pressure. Number one: the lowest possible monthly bills; Number two: A viable contingency plan.
5.Legal matters and taxation are two areas for which you should hire an expert unless you are very experienced. These things often change without notice, and you will need professional representation.
6.You need to maintain separate accounts for personal and business transactions. Do not mix the two. If you do, you will make a mess of your finances. If you must borrow from your personal account, transfer the money instead of just spending it outright.
7.Protect yourself when it comes to business transactions. This is just common sense. It is harder to do when dealing with friends or family, but you must do it. If you have to, negotiate payment terms. But keep in mind that business is business and keep all transactions professional and make the terms clear. Set some limitations when dealing with your customers, whoever they are.
Many people start businesses simply to create jobs for themselves. Self-employment offers many benefits, not the least of which is the opportunity to develop basic business trade skills, while getting paid for work you love to do. Self-employment is everything some owners want, while others use it as a stepping stone to build sustainable, stand-alone businesses.
What's the difference between self-employment and being in business? Here are some signs that you are self-employed.
1. You are the business. When customers think of your business they think of you, and they usually count on you to be one delivering the goods.
2. You might be tied to a roller coaster, feast and famine schedule. You work long hours while contracts last and you're unemployed when they end. You are at the beck and call of your customers and dare not turn down any jobs because you never know when they might stop coming in.
3. Your paycheque is tied to the amount of hours you personally spend serving customers. When you stop, the revenue stops; when you get tired the business stops.
4. You spend all or most of your time working in the business, with no energy left over to work on the business.
5. You likely don't have financial systems in place, probably do your own bookkeeping, and treat your accountant to the occasional shoebox bulging with receipts. You fly by the seat of your pants for the entire year before finding out if you've earned a profit.
Here are a few indicators that a business owner is moving beyond self-employment and on to building a business.
1. The business is separate from the owner. Customers don't necessarily expect the owner to be on the front line. The business takes on more of a team approach, involving people who share the owner's vision, mission and values.
2. The team will necessitate human resource responsibilities, systems and processes. Jobs have written descriptions and are staffed by the right people, instead of the other way around. The owner's job shifts from the front line to leading the team.
3. Although the owner will probably still work a considerable number of hours, his paycheque is not limited to the number of billable hours worked.
4. While the owner might still choose to work in the business, more time is invested in designing systems for efficiency and growth.
5. The business has proper accounting and financial controls, with regular monthly financial statements and methods for tracking the flow of all monies in and out of the business.
The transition from self-employment to business doesn't happen by accident. It is brought about when the owner consciously decides to invest in building the systems that form the backbone of the business. Once the infrastructure is in place the owner will be positioned to reduce her work hours, or possibly even sell the business and move on to other pursuits.
Both Tony Jacowski & Dan Boudreau are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Tony Jacowski has sinced written about articles on various topics from University, Six Sigma and Information Technology. Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution's Six Sigma Online offers online and certification classes for lean six sigm. Tony Jacowski's top article generates over 90500 views. to your Favourites.
Dan Boudreau has sinced written about articles on various topics from Business Plan, Franchise and Partnerships. Dan Boudreau makes achievable, fast and fun. Want to learn more about how to do your own business plan? Subscribe to the RiskBuster Newsletter and instan. Dan Boudreau's top article generates over 2900 views. to your Favourites.