What is the new economy? For at least the next two and a half years, it’s not going to be “business as usual.” President Barack Obama’s economic outlook doesn’t favor big business, and that has both its positive and negative repercussions. Companies are sitting on more money now than ever before, but no one wants to hire anyone because they don’t know what’s in store from a tax perspective. For those of us who run micro-small businesses, it’s getting easier to find freelance work, although you can’t expect to get the same pay and benefits that you would with one of the big boys – at least not in my experience. Nevertheless, you can succeed as a freelance “whatever” if you enact good business practices ahead of time.
Budget Your Money
Without a budget, you’re going to hit Starbucks every day for a $2 coffee and a $2 pastry. Without a budget, you’re going to eat almost every meal out. Without a budget, your money’s going to be gone before the bills come due. When starting out, it’s important to keep costs low. If independence is not your primary motivator, then you really don’t need to be working for yourself. That’s why it’s good practice to cut costs to the absolute necessities. Don’t take on any new expenses or added luxuries until you see discretionary income in your budget.
Know Exactly How Much You Need to Gross for Survival
While planning towards your escape, take into account your gross income, or the money you make before taxes. Factor in your salary as well as the money you make on the side. Once you have a number, divide by how many days you plan to work in a month. (Anywhere from 22 to 30. Better be awfully sure of yourself if you plan on working less than that.)
Keep Your Overhead Low
If you can provide a service that people will pay for, that’s the best option when starting your own business. A writing business was my choice, and while I’ll admit that I’m not the best at what I do, I am able to find enough work to keep the boat afloat without having to answer to some jackass boss. I don’t work any harder than I did before – in fact, there’s a lot less free time than there was before – but every day is a blessing knowing that one man doesn’t have the power to make or break your life. And that brings us to the next point:
Focus on Clients, Not Money
Build them up steadily. Try to add more each month you’re in business. With any luck, you’ll keep all of them. But it’s important to understand that your clients aren’t the boss of you. You want to impress them. You want them to be satisfied. But you must have the confidence in yourself to realize that some clients just aren’t worth the trouble. That’s why it is important to know which ones are the most valuable. Who earns you the most money for the least trouble? Stick with them and ease your pursuit of more demanding clients. It is advisable to calculate your hourly fee per client, and add to or cut away based on those figures.
Know Your Tax Situation and Stay on Top of It
The benefits of working for yourself far outweigh the drawbacks, but if there ever was a downside, it would be the tax situation. What you pay largely depends on how your business is set up – a sole proprietorship, a partnership, a corporation – and unlike with your current job, you have to remember to set aside a portion of every single payment that you receive for tax purposes. The quarterly filing schedule that you have to stick to in lieu of the annual that most are used to can sneak up on you, and be very unpleasant if you haven’t made the right accommodations.
The importance of getting and staying organized may not sound like a whole lot of fun, and truthfully, some days are hard to get through. But the unending joy that comes from setting your own hours and controlling your destiny is a burden worth bearing. Just remember that work is still work any way you slice it, and if you’re not prepared to expend the time and effort it takes to succeed, you’re going to be just as unhappy as you would be working that dead end job.
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