Things to think about before becoming your own boss.

 

What makes people want to go Freelance or start their own business?

For me it’s the possibility of my job ending so I need to look at something else.  I look at my experiences in my work, what skills I have obtained and what I am interested in.

For some, they think it’s a good career move.  I think only a small percentage regret it and that is the case if you read a survey done by MoneySupermarket.

Others make the move because they are frustrated with their work environment – be it the boss; the daily commute (all that traffic); stress or working hours. Some, I think, would find it fits in with their home life easier.

There are significant upsides to working for yourself, being your own boss is the most enticing one to many people, along with it comes the ability to set your own hours and only taking on the projects you want to. Like everything in life though, there are drawbacks; a fractured work schedule, inconsistent income, trying to find work to fill these gaps, and a lack of any previous company benefits. Below are some solutions I have used to turn these drawbacks into developing a stable income from my freelancing.

Solutions:

  1. Be committed to working some hours daily (work out a structure which will suit you – fits around family or commitments so it maybe that you don’t work weekends or a weekday such as school runs; Drs or dental appointments;
  2. have a separate place in the house where you can work undisturbed. Make sure your friends know that although you may be at home you still have working hours to do and not endless ‘social breaks’. It does not mean you can’t see your friends or do things during the day – you may work better in the evenings but you have to be disciplined.
  3. Depending on the work you have, you can still have a good work/social environment. It may help to keep a diary or log of hours you do or want to do and then you can work free time into that.

Financial worries –

  1. You should really have worked out what you can afford to live on and before going freelance have enough money set aside to pay for about 6 months’ worth of bills. This then takes the pressure off you to get income in immediately to pay bills but can instead concentrate on growing the business.
  2. Put clear stated terms on your invoices and don’t be afraid to chase non- paying clients even resorting to small claims courts.
  3. Talk to your bank about a business account & terms.
  4. Remember, that you still have to pay tax & NI contributions so for every £100 you earn put £30 into another account – preferably a savings account where it will earn a little bit for you as well as pay the tax man at the end of your financial year. Don’t dip into it for other reasons, think that you wouldn’t have seen it anyway if you were employed  You can have other savings accounts for things like holidays; bills etc.

Finding work-

  1. networking & growing contacts is immensely important. Join local business forums; nurture contacts; attend events; have a website (there are free website builders out there, such as WordPress. Or better yet, farm it out to an aspiring developer; we all have that one friend who’s suspiciously good with computers) and advertise either in local magazines; shop windows; Facebook and other media. Don’t forget that there are freelance broker websites out there such as Fiverr or Freelancer that can top up your work load.

Lack of Benefits – No company pension –Until the working pension scheme, a lot of companies didn’t offer their employees a pension but working for yourself, means you have to do something for your later years. Seek advice from your bank or a financial advisor as there are many options.

The last, and most important thing on setting up your business. Insurances & Expenses – don’t forget the various insurances you may need depending on what you do.  Public liability; personal insurance; income protection to cover if you can’t work; check your house insurance if you work from home to see if your business is covered & your car insurance too; professional indemnity and so the list goes on.  Oh & don’t forget the tax & NI contributions!!

These all add to the expenses which are mainly hidden but need to be taken into account when working out what you will charge.

Useful sites:

As well as offering insurancies, some sites also give an insight to what to look out for such as:

MoneySupermarket.com

Simplybusiness.co.uk

(remember there are other insurance companies and independent brokers too.

HMRC.gov.uk

Local business groups.

08/2018

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