The “Start Being Self-Employed Now” Guide

by Neal Frankle, CFP ®

Being self-employed isn’t just a dream. You’re reading this because you want to work for yourself, and believe me, you can make it happen. I don’t need to convince you. I do want to congratulate you though. Working for yourself is a wonderful way to live. I absolutely love it and I recommend it to everyone I care about.

The way I see it, almost everyone has the risks of being self-employed anyway. If you work for someone and they don’t being self employedlike your job performance, you get fired. Or if the economy slumps, you get fired. The same thing happens with self-employed people. Your clients and customers will dump you if you don’t do a good job for them. But you actually have more control if you are self-employed.

That being the case, why not go out there and get your own gig going? Take your idea and start a business and do something with them. Since you already agree, let’s get into the “Start Being Self-Employed Now” Guide.

A. Question Yourself

Here is a list of 12 questions to ask yourself before you become self-employed:

1. Are you a self-starter? If you’re the kind of person who needs someone looking over your shoulder, stay at your job. Being self-employed isn’t for you.

2. Are you willing to work hard? You’ll have to work much harder than you currently do. And you’re probably going to make a lot less money – at least in the beginning. Are you really ready for that?

3. Do you love doing an excellent job just for its own sake? Do you look for opportunities to improve everything around you? Do you love solving problems? If not, rethink this decision. Being self-employed means putting your clients and customers before yourself. You have to be client-focused. Are you in it for you or them?

4. Can you take criticism? Do you have a thick skin, or do you take things personally? Are you resilient or easily depressed? Are you willing to do it wrong and make mistakes? Having your own shop means hearing “no” many times. You must be willing to undertake that environment.

5. Are you a leader? Do you have a history of successfully leading others?

6. Are you a planner? Do you always have a “Plan B”? (Or do you just “wing it”?)

7. Do you have a positive outlook?

8. Are you willing to ask for the sale? Are you able to look a client straight in the eye and tell her that your product and service is the best thing since sliced bread, explain why and then ask for her business?

9. Do you know how much it costs to start your business and (more important) do you have the cash you’ll need?

10. Do you have a business plan? Do you know how much equipment you’ll need? How much business insurance you’ll have to get?

11. Do you know why you’ll succeed?

12. Do you have a marketing plan?

If you answered “no” to any of the questions 1 through 7, you may need to rethink your decision. I know you want to start being self-employed, but you may be better suited to work for someone else. There is nothing wrong with that. And if you answered “no” to any question 8 through 12, pull out your calendar right now and schedule time to do what you have to do to turn that “no” into a “yes.” You simply need to do some more research and/or hire someone to create your business plan. (Don’t worry; you can still launch your business quickly. (Read “How to Be in Business for Yourself in Six Months.”)

If you answered “yes” to the 12 questions above, you should already be in business. If not, the only reason you aren’t is because you are afraid. Don’t get me wrong. I know what that’s like. I spent two years “thinking” about launching my business before I did it in 1993. In reality, I wasn’t thinking at all. I was just afraid.

The best resource I know of to overcome fear is a little book by Dale Carnegie called How to Stop Worrying and Start Living. This book has helped millions of people and it’s helped me too. A basic strategy to help overcome fear is to simply accept the worst possible outcome and then try to improve on it. In my case, the worst possible thing that could happen was that my business would fail. The result would be I’d have to go back to work for someone. Since that was the situation I was already in, I basically had nothing to lose. Having this understanding helped me start my business with a great frame of mind.

B. Get (and Stay) Small

Your business will flourish over time if you can profitably provide a service or product that people are willing to pay for. The time to make sure you have a profitable product that people will pay for is when your business is small and your expenses are low. You don’t want to discover that nobody wants your products and services after you sink every dime you had into it…right?

I started my business on a folding table in a spare room at the house. You should be able to do something similar. If you have a home, a computer and cell phone, you should find a way to launch just about any service business there is. If you are trying to launch a manufacturing business, that may be another story. In that case, you may need to partner up with an existing manufacturer in order to reduce your risk.

The lower your expense, the lower your risk. And the lower your risk, the easier it will be for you start being self-employed successfully.

C. Watch Your Clock

Don’t make the mistake I made of waiting. Circumstances will never be perfect. At some point, you’re going to have to show faith. If you’ve done your homework and you have a business plan, enough working capital, a marketing strategy and sales skills, you’re going to have to go for it. (You do need a plan, but understand that you can’t plan for every contingency. You can’t foresee everything. It’s impossible. Understand who your clients are and what their needs are. Understand how you’re going to solve those needs and add value for the clients. Know how you’re going to get in front of your clients, what it will cost to do so and how much money you need to stay afloat until the cash comes pouring in. Once you have that, just get out there.

And you can launch your business even if you are a student. You can start a weekend business. Look for opportunities. They are all around you. You might even consider buying an existing business. Just don’t wait. Don’t accept excuses.

D. The Right Business for You

You should not focus on things you love, contrary to conventional wisdom. I know this is counterintuitive but hear me out. You will be more successful if you do something really well, help lots of people and then make money. Believe me, if you do all this, you’ll fall in love with what you do. If you talk to most successful entrepreneurs, they will tell you that they fell in love with their work because they were successful. Building a business is a beautiful thing. I don’t care if it’s making pancakes or Picassos. Business is art. You take a blank canvass and what emerges is 100% a result of your efforts and creativity. What difference does the product make? Not much. Find a solid business that you have a competitive edge in and put your heart and soul into it. You will fall in love.

I love being a financial advisor because I like to help people. When I see the results of what I do for my clients, I love my job even more. Find something you are really outstanding at and something that others need. Believe me, if you are able to do something for others and make a good living doing it, you’ll fall in love with your work.

Here are some good questions you can ask yourself in order to zero in on what business you should launch.

  • What are you really good at?
  • Why are you better at it than others?
  • How will what you do help your clients?
  • How will it be better than what is already available?
  • Who is your ideal client? Why? How are you going to reach them?
  • What are the minimum requirements for you to start your business?

If you still need great business ideas, go talk to business people you trust and respect. Ask them what opportunities they see. Looking for another tip? Go to businesses you are attracted to and interview the business owner. Ask what support services they need.

If you need more training, don’t go back to school for four years to get a degree. Get the specific skills you need by going to a private career college and getting the training you need quickly.

Answer these questions and remember what kind of person you are. Be positive. You have integrity and you are committed to excellence. You will succeed and your clients will thank you for being in business. You will have the independence and the freedom you want, and as a result you’ll make a bigger difference in the world. You won’t do it perfectly and you won’t please everyone, but you’ll be able to express yourself.

What tips do you have for someone who wants to become self-employed?

 

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{ 7 comments… read them below or add one }

Jessica Bosari February 15, 2011 at 6:44 AM

Wow, just awesome! I would only add that if you can “quit” through a lay-off where you can collect unemployment until you are up and running…DO IT! It’s a nice cushion to help you along until things start to run smoothly. I’d say estimate two years until you are living comfortably with the income.

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Ronald R. Dodge, Jr. February 6, 2011 at 6:32 PM

I know what I want to do for my own business, but I still have to continue working on 2 things, our current debt situation (Still technically way behind other households relative to my own age to other households with the HOH in the same age group as I’m in, but did knock this down by $11,000 last year), and building up more cash capital (Technically ahead of other households for the HOHs in my same age group). These 2 items more or less goes hand in hand with each other in many respects. As for our long-term networth value, we are about average at the time being, but we been moving that up with greater momentum, and we need to keep it going.

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Neal@Wealth Pilgrim February 5, 2011 at 5:55 PM

@Sam. Thanks man.
@Car Coach, I agree. You don’t have to show up slick. Clients really appreciate you showing up for the real person you are. Demonstrate your frugality and it will help them see how much you respect money…yours and theirs.

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Sam February 5, 2011 at 1:46 PM

Excellent though process to go through. Have retweeted. Always a good idea to really think things through b/c it’s easier said than done!

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Jessica07 February 4, 2011 at 12:55 PM

Great list. I have never regretted my decision to start my own business. I make more money working part-time from home than working full-time in town (that’s after insurance and taxes, as well). :)

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krantcents February 3, 2011 at 2:23 PM

Will you make more money that you would have made in the corporate job? I am referring to net of self employment costs such as self employment taxes, health insurance, general insurance, and other self employment costs. If not, the risk and reward is out of balance.

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Nunzio Bruno February 3, 2011 at 4:46 AM

Great list! I really think the questions that you ask your readers to ask themselves are really important. When you are breaking out on your own it’s def important to have clear visions and mission, it’s soo easy to get sidetracked. Keeping tabs on time gets crucial as well – especially if you are working from home. Trying to balance those little distractions with actionable income related activities can be a little intense in the beginning. Developing good habits early is imperative! I’m still working on developing good habits for me and http://www.financiallydigital.com

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