If you’re seriously considering starting your own business, congrats! Being self-employed can be tremendously rewarding, and the freedom and flexibility it offers can’t be beat. That said, self-employment is also hard work! It takes discipline and the ability to stand up for yourself. It’s really not for the faint of heart at all. If you think you’re up to the challenge, read on to see what you need to do to get started.
First, keep your day job. Most people who enter the world of self-employment don’t make a profit for the first year or two. Unless you have a partner that can and is willing to financially support you both or at least 12 months living expenses in the bank, don’t even think about quitting your job.
Next, sit down and write out a business plan. It should include what you want to do, why you think it’s a needed service, and how you intend to promote and grow it. Why do you want to create this business? What will you offer? These are all important questions. You also need to include financial projects, and do some market analysis to show there is a need/demand for what you want to offer. This will help you set clear goals and give you a bigger picture of what you’re getting in to. Also, if you plan to approach a bank, investor or the Small Business Association to ask for funding, your business plan will be a must.
If your school has an alumni association, use it to your advantage and network. Connect with other alumni at your school, such as online-engineering.case.edu that are also self-employed, especially ones in the same field you want to go into. Their insights can be invaluable.
The next thing to do is calculate your expenses. Taxes will be your biggest, since not only are self-employed people responsible for paying taxes on their income and their entire Social Security tax (employers usually pay half), but they are also hit with a self-employment tax. It’s crucial to set aside money each month so that you won’t be surprised with a huge tax bill in April. Once your business gets going and is generating regular income, set up quarterly payments to make it even easier. A good rule of thumb is to set aside 40% of every payment you receive from clients.
Finally, don’t get discouraged. It takes time to build up a reputation and clientele, and marketing isn’t always fun. But keep at it and it will pay off!