Here's What They Don't Tell You About Being Self-Employed
May 12 2023, Published 8:05 a.m. ET
Between “The Great Resignation” and repeated tech layoffs, the surge in entrepreneurship is louder than ever. In fact, the US Bureau of Labor Statistics reports that almost 10 million Americans are now self-employed.
Working for yourself may sound like a harmonic symphony of freedom and independence - and don’t get me wrong, that’s definitely the soundtrack playing in the background - but there are four hard truths about self-employment you should consider before you dive in.
1. You're literally solely responsible for your financial well-being.
You’ll now be solely responsible for generating a consistent income. This means you have to find the work, do the work, and get paid accordingly. Having a financial plan in place before you give your two-week notice can relieve the pressure of having to immediately replace your job salary.
Health benefits can also be a concerning topic. Unfortunately, if you don’t have access to healthcare coverage through a spouse or other resource, you may find yourself uninsured and physically (and mentally) vulnerable. Searching around on The Healthcare Marketplace can help you budget for your healthcare costs in advance.
Taxes. Ick! You’re familiar with FICA and the other governmental entities that take a piece of your paychecks. Sadly, self-employment doesn’t make you exempt from these obligations. Get familiar with the IRS’ rules and regulations, especially those concerning quarterly tax payments, as well as those of the state in which your business is based. It’s not as complicated as it sounds, but knowledge is power so be as informed as you can. It's also a good idea to get a head start on finding help via a CPA or tax professional you trust so that you can plan ahead.
2. You carry the whole load of business operations, management, and support.
As an entrepreneur, no one will be “feeding” you work anymore, so you’ll have to go find it. You may need to adjust your approach and find new ways to stay motivated. Being clear on the mission and core values of your business can help you stay focused on your goals.
You’re now the CEO, Marketing Manager, IT support, HR Specialist, and the entire labor force. That may sound terrifying but it’s all about your perspective. It’s a terrific opportunity to embrace the freedom to make your business 100% uniquely yours.
A 9-5 job allows us to slice our days into semi-equal pieces and plan accordingly. Self-employment is a little different. Ok, a LOT different. The freedom to work when you want is what you signed up for, but retraining your brain to maintain a productive schedule can be challenging. Focusing on what works for you and what you need to be effective instead of following a dictated schedule is a magical move.
3. Isolation is real and you might feel alone... a lot.
Self-employment can be very lonely for many people. You’re doing all “the things” with minimal human interaction, as opposed to working in a communal environment. The sounds of isolation can be deafening. But you can quiet the noise by making time to get outside, taking breaks to meet friends, and maintaining a healthy social life.
Going out on your own also means you’ll likely forfeit access to professional mentorship opportunities. As the Boss, you’ll want to intentionally seek out people who are doing what you’re doing. Find other entrepreneurs who can give you some real-world insight.
Networking is gold! The internet is an endless resource of networking support for the self-employed. Finding like-minded entrepreneurs to expand your network is easier than you think. Just search around for networking groups, social events, and entrepreneur support spaces to engage in.
4. There's a high risk of failure.
Kevin Hart said “Success isn’t supposed to happen, no matter how hard you work.” The unfortunate truth is, most entrepreneurs don’t end up in Forbes Magazine. And there’s no 100% guaranteed plan for success. But doing your research and not rushing to the self-employment line can put you in a better starting position.
Some people felt that Thomas Edison failed 1000 times when attempting to invent the lightbulb. Edison simply believed he’d discovered 1000 ways that didn’t work. This was not failure. And it didn’t deter him from pursuing his vision. Having this mindset as an entrepreneur can help you positively navigate the struggles.
There are some fantastic benefits that come with being self-employed. It's also important to carefully consider the challenges that come with entrepreneurship because we all want our businesses to be successful!
Mark Twain said, “To succeed in life, you need two things: ignorance and confidence,” and I believe this to be true. We need the confidence to make moves others are scared to make, but enough ignorance to continue learning as we go.