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.
Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution’s Six Sigma Online offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.