Now at the ripe age of 28 I feel like I’ve been through a good amount of life experiences (I know still have many to come) but nothing could have prepared me for the last year of entrepreneurship except doing it. As with any of life’s adventures you only get better if you are optimistic about the experience’s and look back with pure honesty. Some months were amazing while others were quite scary and proved to test my strength to keep pushing on as my own boss. I think everyone who’s attempted to branch of on their own, consulting or even sales for commission can relate to the ebb and flows that comes with the game. Anyone who values having some skin in the game or wants the thrill of driving their own financial destiny most likely will give entrepreneurship a go I feel. I strongly believe that growing up with a business owner as a father was part of the seed that drove me into wanting this ideology among other forces. Needless to say, I learned a lot from my first year (started in February 2014) completely independent consulting without any other source of income (from an employee – 1099 status). As life throws everyone different experiences, I don’t know what it would/will bring for you (entrepreneurs) but here is what I experienced….
I am speaking mainly for those who are folding into a sole proprietorship as I do not have the same knowledge regarding an LLC. Personally, starting a business I was much more organized the first month then once my leads started coming in it was a different story. If you are like me you most likely will start focusing on what/whom is paying you & helping your business grow (the clients). If you get too sucked into the work involved which is perfectly natural and what you should be doing your first couple months you may forget about the tax man. Remember you live in a country where government loves to stick it’s hand out – this doesn’t exclude you or your business. I preferred to focus on getting more business versus saving money so I didn’t necessarily put the 25% away each month like some do. Instead, I kept track of all my expenses and invoices and would make an appointment with my accountant around the quarterly payment terms. We would hash it out in about 20 minutes and I would send my estimated IRS tax payment periodically. This enabled me to have a better pulse on my income and felt good to know I wasn’t going to be in the hole at the end of the year.
Have a Minimum
Hmm…I learned this the hard way. I will say however, I learned it a couple years prior to being a sole proprietor. If you don’t set your minimum for taking on a client or hours involved per engagement you may be unprofitable. Depending on what business you run you have hard costs and expenses so don’t just say yes to a client before you truly understand your minimum worth to operate. I consulted years ago and took on one of my first clients for a couple hundred bucks a month. At the time it seemed great and I loved the thought of being wholly accountable. After two months of spending countless hours I realized the hard costs were essentially at a break even point with software, gas, etc. Not only that but the $400 I was invoicing each month came out to be about 40 hours (seriously). This is not much more than minimum wage – with much more headache and responsibility. I set a minimum for my work last year and it has been worth its weight in gold. Most clients will engage higher because they trust my work and want more results. Either way, have your minimum and don’t bend the rules eventually you will have enough work that your “minimum” won’t even get brought up again.
It’s Like A Chinese Bamboo Tree
Going out on your own is a big risk but it is an experience unlike that of being an employee. Some months are amazing with you busy and pulling in more profit than you could ever working for a steady paycheck but on the flipside you also need to have emotional intelligence with finances and money in general. You must be willing to put away your profits and at the same time not over-react when the demand declines, sales are not closing and your phones aren’t ringing. It isn’t for the faint of heart. If you run your own gig you will often be left with the feeling of “wouldn’t it be easier just to work for someone else?” The answer is yes. Definitely. You could just clock in, do you job and not try to wear multiple hats (very stressful at times). But my simple theory and way of looking at running your own venture is to take the Chinese bamboo Tree. This is a tree that needs constant fertilization, nurturing and seeding and guess what the first year nothing happens. However, with patience, care and determination on the fifth year this tree will exceed it’s growth to 90 feet within 6 weeks. Being entrepreneur you must keep your long term vision, stay persistent and envision your future. Don’t get caught up in the short term struggles that are incorporated in the lifestyle until you get that break.
Balance Of Finances
Something that can’t be taught is what happens when you go into business for yourself is how you react the first time you make a larger chunk of money than you are used to. Whether it be landing a high-level client, creating a new service line or just getting busy enough to where you triple your past salary as an employee. When you are not working for yourself, unless strictly commission or not salaried typically you know when you are getting paid and for how much. This is in fact extremely easy to schedule life, expenses and other future aspects. I think it is important for anyone going into business for themselves to take a hard look in the mirror with their spending habits and mentality. I had a client pay upfront six months advance – something to be honest I didn’t think would happen. Nevertheless, it was the largest sum of money I had received in one day ($18,000). My initial reaction was to go spend a couple hundred on the spot but I am glad I held back. You see in fact I used the money to blanket myself and re-invest in my own business and by the time the client had finished their contract I had already several other clients to transition into. Be smart with your money. It comes and goes. Don’t be too extreme one way or the other as well. Don’t get too attached to saving without re-investing where it matters, this will prohibit growth. At the same time when you make your first chunk don’t get fancy with it because life will is all about throwing curve balls.
It’s business Not Personal
This is for anyone who is branching out into a niche that may be tight knit or in the arena of what they were already doing for a former company. Chances are (not just me, very common) if you leave your prior employer to use your skill set you will be watched closely from the former company. For obvious reasons you need to understand the ramifications of what you will be doing and have thick skin. If you were good at your skill or had good relationships within your industry you will be faced will be solicited by clients for sure. My advice is to be considerate of the prior employer and do your best not to step on any toes. However, don’t hold back utilizing your skill set – you have a craft that you learned, you own that – not a prior employer. I personally have never gone after nor would I pouch existing clients but you cannot control what clients do. It is best to at minimum to know that if you are staying in your industry to expect some calls, emails and (hopefully not) potentially a threat from an existing employer if they feel the need to. This was probably the least desirable facet of my year of departing as I valued highly many of my prior relationships and sometimes the cutthroat environment business can be rough.
Launching into your own venture you will have to find the right people to help you at a very quick rate. This is extremely challenging – or at least it was for me. In digital marketing the people with the talent or experience are probably either insanely busy or very expensive. If you are like me n the beginning you will end up wasting money on hiring contractor and actually going back and doing the work better yourself. I believe it is the process any business goes through. Starting out, as long as you remain confident in your abilities and keep your eye on who performs at your level or better you are making progress. Eventually, you will build a network of contractors or referrals you trust and the painful process becomes much easier. For instance, I went through three developers before I found my partner in WordPress and now I don’t have to think twice about doing a new web development project without him. Once you do identify who the keepers are don’t make the mistake of thinking they are replace-able. They aren’t. You need them. Treat them as equal partners and make sure you set your clients expectations right to work with them too. Having to go back or the anxiety of whom to hire/doing it all yourself is too much. Be smart with who you interact with and offer them incentives to continue the relationship.