The Risks Involved with becoming self Employed
The idea of being an entrepreneur has been romanticized fordecades. It appeals to the American ideal of self-reliance. It speaks of freedom. The idea is that when one is self-employed s/he has more control over schedule, income and work accepted or performed. While there is a bit of truth to this, the realities and potential pitfalls are often overlooked by the newly “free” worker.
When a person strikes out to open a business they are often skilledand/or passionate about what they do. Take a carpenter, for example. He may have worked in the trade for a decade or more and be very good with the tools of his trade. What he has never considered, however, is the business of being a carpenter. But, with strong skills and pocket full of excitement, he strikes out on his own.
What he didn’t realize is the time he will have to spend nowdoing marketing, estimates, meeting with clients; much less the legal, insurance and accounting issues that must be addressed. Somewhere in the midst of all of that he’ll have to find time to actually do carpentry work too.
Without a firm and realistic understanding of these “extra”duties and responsibilities failure is just around the corner.
Marketing is something that takes a great deal of time inthe first year or two. This involves networking, social media and producing marketing literature. With most start-ups, capital is tight so a new business owner will have to get creative. A simple ad in the phone book won’t get it done.
Meeting with clients, prospects and doing estimates is also something that takes a great deal of time, especially in the beginning. At some point one may decide to hire a salesperson but, again, that requires capital. Most new entrepreneurs simply don’t have the extra capital to hire someone in the beginning. Not to mention the accounting, payroll and legal issues that come with having employees.
Insurance is a must-have for any business in this sue-happyworld. In construction trades, it is in the form of liabilityinsurance to protect yourself from structural issues and unforeseen problems. But with any business, protection is necessary. Having the right insurance type and amount is absolutely vital.
Accounting issues will come up. The only people that truly enjoy all the things that come with doing the necessary accounting and tax work that come with a small business, are accountants. Find a good one. That last thing a new business owner needs is trouble with the IRS. An accountant will tell you how much to keep out for this or that, when to pay estimated tax and ultimately help you with deductable business expenses at the end of the year.
Now some will talk about the risk of failure and the folly in turning ones back on a “steady” job. The reality is that the job where youhired on, worked for 30 years and retired are no more. Companies close, move, merge and shift workforce all the time. The illusion of job security at a given company is just that…an illusion. The only security that can be created today is by the individual.
As you’re preparing to strike out on your own read. Read about running a business from folks who have done it successfully. Read books on marketing, networking, entrepreneurship, as well as books specifically about your trade. Sticking with the above example, there are many books available on running a construction business.
The first couple of years as an entrepreneur can be stressful and scary. Vacation time will be slight and hours will be long. Therewill be times of insecurity and fear. There will also be times of great peace and flat out joy at doing what you most want to do; and doing it for yourself.
Knowing the risks can minimize the fear and insecurity. But first, you have to start the adventure.
