Self-employment is becoming more popular than ever. Freelancing currently makes up about 35% of workers in the U.S. Additionally, more than 7 out of 10 small business owners say they’d rather focus on growing their business than going back to a traditional form of employment.
But, just because self-employment is popular, it doesn’t mean it’s easy. In fact, it can be quite scary to branch off on your own to follow your dream or build off of an existing business. The responsibilities solely fall on your shoulder, and if you can’t make it work, you risk not being able to pay the bills.
If you’re tempted to dive into the world of self-employment, there are plenty of benefits. You get to be your own boss, set flexible hours, decide exactly how you want your business to be run, and you don’t have to answer to anyone else. It’s great for people who are tired of their traditional job, people with unique skills, or those who want to try something new. For example, self-employment is often a great option for new moms or stay-at-home parents.
But, there are also challenges you’ll undoubtedly have to face. The more aware you are of those challenges ahead of time, the easier it will be to face them and overcome them.
Paying Yourself What You’re Worth
When you’re just starting out with self-employment, one of the biggest challenges you’ll face is knowing how much to charge people for your services. You can create your own policies that can help to determine your costs, and use a time card calculator to clock your hours. That can be helpful if you’re charging an hourly rate to your clients.
Unfortunately, it’s not always as simple as working a set number of hours. Your pricing should be less about income and more about the quality of life you want to have. You could have 50 clients at one time and be completely burnt out, or you could have a handful of clients, be well-rested, and make more money.
Don’t set your pricing so low that you have to take on more than you can chew just to stay afloat. Consider what your services are worth. How much time and detail are you putting into what you do? What would you pay for your services? Developing pricing strategies that answer those questions is an honest way to know how much you should be charging.
If you burn yourself out because you’re not charging enough, your self-employment will fizzle out quickly because that’s not a sustainable way to live. Set boundaries for working hours and for how much work you can reasonably take on. The best clients are usually willing to pay a little bit more, so go for those big fish and don’t underestimate how much you’re worth.
Facing Personal Challenges
When you decide to take the plunge into self-employment, you should anticipate that it will be stressful – at least for the first few years. First, you’ll have to devote nearly all of your time and attention to making your “business” work. That can impact your relationships and even your mental and physical health.
You might also not be an instant success. Your first few years will undoubtedly consist of building a client base and getting consistent work. It takes time to build up that kind of loyalty from people, and at times you might feel as though you’re failing. That can take a huge toll on your self-esteem.
It’s important to build your confidence by doing things like talking positively about yourself, banning negative self-talk, and staying focused on your goals. Building confidence will help you to stick with it and can provide you with the motivation you need to make your self-employed career a success.
Planning for the Future
Once you get a large client base and it seems as though your business is taking off the ground, the last thing you’ll probably want to think of right away is what you’re going to do when you retire. Self-employed workers often face the challenge of not having a retirement fund. Not only that, but many don’t even have an “emergency” fund for the future in case something were to happen.
It’s hugely important to save for retirement when you’re not working for a business that will do it for you.
As an individual, you can contribute to an IRA with the income you make. Self-employed individuals also currently get social security benefits. While the amount given by social security usually not enough to cover living expenses, it can help when your self-employed business is slow.
Planning ahead as much as possible will help you to stay secure for the rest of your life. Hopefully, you can continue to do what you’re doing for many years to come, but everyone needs to retire at some point.
Have you been thinking about becoming self-employed? The best thing to do is to weigh out the pros and cons. If you believe the advantages of self-employment outweigh the risks, you could be the dreamer the world is looking to with the next big idea.
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