But how do you know when, or even if, it is right for you to make the move to self-employment?
There are a number of reasons people decide to start their own business. It might be that you are tired of ‘working for the man/woman’ and want to make a go of it yourself. Perhaps you have a great idea that you are never going to realise if you stay in your current job. Maybe you just want to do the job you love in your own way. The list of reasons why is a long one.
When you ask those who have decided to strike out on their own, there is usually a trigger point that sees them actually make the break. It may be intense dissatisfaction with a current role, a burning desire to start their own thing that they can no longer contain. It may be a situation forced upon them like a redundancy, or a role that is not compatible with family life. They then find themselves forced to make a decision.
Of course being your own boss sounds amazing. Freedom to do your own thing, unlimited earning potential, working from home in your pyjamas if you choose… so much potential!
But what is the reality? The reality is, it’s not for everyone.
The reality is uncertain income. Gone are the days of a nice monthly pay being deposited into your bank account. You have to ride out those weeks, even months where there is no money coming in. And when it does, it is almost never in regular amounts. You might be dealing with customers who don’t pay on time or if you work on large projects it may be a long time before you get paid for the job. Once you get used to it, it is not so bad but it certainly means some stressful moments.
The reality is that problems with cash flow can be huge. It is often the deal breaker for most small businesses that do not make it past the two year mark (and even for some more established businesses).
The reality is having to fill more roles yourself than the one you thought you would – accounting, admin and marketing to list a few. For many small business owners, you are everything and everyone in the business. You are the technician for whatever your business offers, but you are also the marketing department, the accounting department and the administration assistant. What you thought would give you all this free time can sometimes see you working more hours than you ever did.
The reality is you need to keep yourself motivated which can be difficult if you are working solo as many have to do to start with. You are also your own motivator. It is amazing what you will get done when a boss is watching over your shoulder, but when it is just you it is easy to think ok I will get to work after I finish doing this or that. Next thing you are running around like a crazy person to catch up.
And the pyjamas. Great to start with but really, they are just another set of clothes and while more comfortable than a suit or steel cap boots, you will probably still get sick of them.
But if you can deal with these uncomfortable bits, running your own business can be one of the most rewarding things you will ever do. It becomes a lifestyle rather than a job and your have the option to take it as far as you want to.
So how do you take that first step? Lily Andrew from Lima Accounting and Consulting recommends before you start, ask yourself if it is really something you are passionate about. “If the answer is yes, success is usually forthcoming”.
Then comes the planning.
“All accountants would agree that small businesses fail to plan, and failing to plan means the business may fail. It is imperative that you prepare your profit and loss, balance sheet and cash flow budgets for three years. If that doesn’t appeal to you, then you are not ready for business”, says Lily. “If you are not sure how to prepare budgets then your accountant is the best person to help. Hopefully the accountant will delegate the majority of the budget process to you, and then you can take ownership.”
As part of the planning and setup stage there are a few steps that you need to make sure you take care of like registrations and taxation set ups. The Australian Government has a great checklist to help you make sure you have covered all of the basic steps.
What makes a successful business really comes down to the individual. For some it means making their fortune but for someone else it might mean making just enough money while having the flexibility to spend more time on other parts of life, for example spending more time with family, or travelling the world. The great thing about having your own business is that it can be your choice how much time and effort you put into it. That is the beauty of it – it is your choice.
Running your own business can be equal parts of exhilaration, self-satisfaction and despair. If you can handle all of these together, being your own boss can be one of the most worthwhile things you ever do.