Sunday, June 6, 2010

Reader's Question: Becoming Self Employed

I'm sick of the rat race and working for "the man". I could care less about being wealthy, but would love the freedom of working for myself. Question is...how the heck do you manage to do it? Do I just start a blog, get the readers and go from there? I have no college education, which isn't as important nowadays as some people think. I have no trade, per say. I can work hard and do a good job. If you show me how to do something, I do it. And usually after a while I'm doing it better and more efficient than the other workers. How does this translate into a work from home/own my own business scenario? I'm not a salesman. I don't have any particularly amazing skills or talents to draw from. I play a little guitar, but I'm not a musician. I can fill a sketch book with some decent sketches, but I'm no artist. I know the basics of html, but I'm no computer guru. Do you make money off your blog or site? How exactly does that work? How do you get advertisers? I thought I'd take a stab in the dark and ask someone who's opinion I've really came to admire in the past year. Any word of advice would be greatly appreciated. Oh, and keep up the good work! J

I think a lot of people are feeling just like J. I've felt like J. After many years of being self employed (after having some pretty crap jobs like everyone else), here's what I have learned:

#1--You need to be as debt free as possible before you strike out on your own. If you have a $100,000 job and a $100,000 lifestyle, transitioning over to self employment will be exponentially more difficult because you will NEED to earn $100,000 immediately. Most self employment gigs take a while to build up to that level. So if you are deep in debt, take six jobs and get your debts paid off NOW. Resource: Dave Ramsey
#2--Blogs, most blogs anyway, do not make much money. This blog makes maybe $100 a month through Google Adsense (note to readers, feel free to click through the ads on the site which will give me an extra fraction of a cent). So this is basically a hobby for me. There is potential to monetize the site more but my regular business takes up much of my time and it generates a good steady income which I kind of like. Resource: Read this article.
#3--If you are self employed you are three things: a salesperson, a business person, and a person who provides X (your actual business whether you are a writer, widget builder, carpet installer, etc). You need to be well educated and practice all three of these things. I am not a salesperson by nature either, but it was still a skill I needed to develop. When your business has grown to the point that you can afford to hire a salesperson to sell your services/products and a business adviser/tax accountant/lawyer then you can slack off in these areas a bit.
#4--You don't have to be the best at anything (although it helps) but you do have to have a reason that people will pay you for what you do. I was in Chicago last week and there were quite a few people who would go down into the subway tubes, put out a bucket, and start singing or playing their instruments. They all made some money from this endeavour and I am guessing the ones who were good made more. So you don't have to be Mariah Carey to start a singing career. Just start!
#5--If you don't know where to start, solve someone's problem. Years ago when websites were new, I worked in an office and told the boss, hey you need a website. At the time I got some website design software and was playing around with it and found that I could put something up that resembled a website. I told the guy that if he gave me $200 I could set him up a nice website. I was in no way a website designer but I did see a problem (his business didn't have a domain name, website, or any idea how to do such things) and I offered to fix it for him (with a small fee for myself). By today's standards that site was a train wreck but it fixed his problem and he was quite happy with it (and has since hired real web designers to improve the site). I no longer do websites (CSS, Drupal...ayayay) but at the time, I took the opportunity to develop some basic skills that I could sell. Since then, this little jaunt into self employment has spring boarded me into a business that works with government contracts, critical infrastructure, occasionally the medical field, etc. It is just like selling your first skill/product to someone but on a larger scale (note, you develop the ability to sell your services/product to bigger and bigger players the more you practice).
#6--I would say "do what you love" but sometimes these things don't pay the bills. So, do what you like that can earn you an income. Or take what you love and figure out a way to monetize it.
#7--You have to just start. So many people say "I wish I was self employed like you". But that is as far as they get. They don't even actually try to be self employed. If you walk next door and offer to mow the neighbor's yard for $25 and he says yes, ta da...you are self employed. It takes balls to start such an endeavour (what will people think of me, what if I am not good enough, what if I fail) but if you let all of this stop you, you will never be self employed. Do something, anything (legal and ethical of course), that will allow you to sell your skills/services the first time and you will probably be hooked. Even making $10 is a start. Then you analyze the sale and figure out how to do it again in a better way so that you can earn more money.
#8--Employees are a pain in the ass. I've had employees and while most were great, some weren't and the overall deal with employees is that they are expensive and needy and there is a whole lot of laws governing their existence. I don't have the time or patience for that. So now all of my employees are contractors like I am. They work hard, pay their own taxes, and are really quite dependable.
#9--If you are self employed, you need to be good (continual study in your field is a must and you don't directly get paid for this although it will pay off in the success of your business), you need to be dependable, a self starter, produce an excellent product, meet your deadlines...and all the other stuff that you are supposed to be as an employee. When you are doing business for yourself, you can't slide in some of these areas like you would be able to do as an employee, however.
#10--Pay your taxes in full and on time! Most new business owners forget this part until the IRS is knocking on their door. You won't have an employer to do this for you so take 25% of every dime you earn and put it aside to pay your taxes. Don't touch it for emergencies, don't touch it for the vacation you have planned...it belongs to the IRS and they will make sure they get it.
#11--You are now financially responsible for yourself. You won't have an employer to pay your taxes (see #10), pay your medical insurance, set up your 401k, give you sick leave, et al. You need to plan these things into the prices that you charge, you need to be responsible for setting up these things and maintaining/paying them in a timely fashion, and you need to make contingency plans should something bad like and illness or a car wreck, happen to you.
#12--I am a fan of multiple streams of income. Working at one job for one client would bore me to death (it would also irk the IRS since it would kind of counter the fact that you are your own business and not an employee). Which is why my business has many clients and many ongoing projects. I may pick up a client for one short term project and never see them again or I may keep one client for years and do lots of projects for them. I also make a bit from this website, do some freelance writing which brings in some money, had rental properties which I have since gotten out of..in short, the more sources of income you have, the more secure you are.
#13--Read this guy's books. I read the original 'How to Be Invisible' book some years ago and it seemed to cover self employment in about one paragraph and it was crystal clear about the entire process. Now I see he has another book about skipping college and going into business for yourself which, while I haven't read it yet, probably does an excellent job of covering the topic based on his last book.
#14--Random stuff: take some gigs on CraigsList, have a garage sale, eBay stuff, offer to trade your skill for a friend's skill, go downtown and sing on a street corner, challenge yourself to do something that you have always wanted to do but were too afraid "of what others would think"...once you start doing things to break out of the little box you have been wedged into, you will a) find stuff that you like to do better than other stuff, b) enjoy the fact that you can earn your own income without a boss, c) develop your salesmanship skills, and d) learn to take risks which is what business is all about.
#15--Start small. Don't spend more than $500 to get your new venture off the ground. Some of your ideas are going to crash and burn and I would rather than happen with your monthly spending money than have you risk your entire 401k.

The bottom line is that everyone is good at something. I hope J will take his natural skills, brush up on them a bit, then monetize the Hell out of them and make some cash. Developing his business from there will be the easy part, getting started is often the most difficult.

Here's some more blogs/websites from people who have decided to be self employed. Notice how they have a blog but they earn their income from doing other things like writing e-books, giving conferences, etc.

2 comments:

  1. You have once again gone above and beyond answering a reader's question. This post is going to be a reference point for me the next few days. Keep up the good work!

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  2. Thanks for mentioning my e-book,, "SKIP COLLEGE: Go into business for yourself."

    If you contact me, I will send you a free copy. May also post a reference to this article on my blog.

    JJL@canary islands press.com (no spaces)
    http://blog.invisible-privacy.com

    ReplyDelete