Accounting & Finance
Danger: Underestimating how long it takes to be paid! The sometimes hidden peril of self-employment!
We all dreamed of it on those days when the boss never seemed to stop nit picking, when we had to travel on weekends, when we were bored, over-worked, sick but company culture or your boss (see above) insisted you came in.
The wonderful freedom of being self-employed!
We all dreamed of it on those days when the boss never seemed to stop nit picking, when we had to travel on weekends, when we were bored, over-worked, sick but company culture or your boss (see above) insisted you came in. You dreamed of the day when you could, politely of course, tell her, him or them that , sad and all as you were about it, the time had come for you to start out on your own!
These dreams rarely occurred when you collected your pay packet, when you checked your bank statement and your salary had magically appeared, regular as clockwork, when you were sick but still got paid and when you jetted off on holiday, safe in the knowledge that your salary would still magically appear.
They also never occurred when you or your child were sick and you needed to take time off to look after them or yourselves! The dreams were also pretty scarce when you needed surgery to repair whatever and were so grateful that you had (employer paid) health insurance to cover you having it in a private hospital, when you wanted it.
These however, are the real thoughts, not dreams, you need to have before you embark on your own business, especially if you are providing a service, where it takes a long time to build up a practice.
Before you leave the safety of employment, you need to be very clear on how much you need to live on, every month; month after month. You then need to ensure that you have, I believe, at least 12 months of living expenses saved, before you leave the safety of regular pay packets!
You may choose not to have health insurance or to take holidays for the first year but make sure you consciously make those decisions, together with your significant other.
Underestimating how long it may take for your business to pay you, may mean that your dream is short-lived and before you know it, you are back looking for the regular pay packet again!
Be aware that all I have talked about is your personal living expenses…..I haven’t even considered the business expenses!
