Already Self-employed? Avoid These 7 Mistakes
If you’re self-employed, there’s no doubt your to-do list is a mile long. But what about what not to do?
It’s hard to learn from mistakes until you make them. But we want to save you the trouble with a list of seven prevalent self-employment mistakes.
Use this checklist to examine how you’re working and how you’ve set up your business, plus spot areas of improvement. There’s an old saying: “forewarned is forearmed.” What follows is your self-employment secret weapon.
IGNORE YOUR FINANCES (ESPECIALLY TAXES)
The financial side of your business can be the most challenging part. That’s why it’s best to be proactive about your finances, even while your earnings or revenue are low.
Start by hiring an accountant to help ensure you’ve covered all your bases. You can also get input on how you should set up your business, whether as an LLC or an S-corp. Plus, an accountant can guide you through deductions you’ll want to track, like mileage, business expenses, even office rent and utilities.
You can also get a better understanding of your tax liability, which will change depending on your business. If you sell products, for example, you may have to pay state sales tax, depending on where your business is located.
If you’re already working for yourself and you haven’t done these things, don’t panic. Do, however, act quickly. Not understanding your finances and your taxes can become a costly (and unnecessary) burden.
Starting and running a business is exhilarating. Yet it’s also challenging and can sometimes be lonely. You’re likely working long hours and juggling a number of responsibilities (more on that in a moment). And if you work from home, it’s easy to become a disheveled hermit crab!
The trick is to make sure you’re getting out, talking to people and taking care of yourself. Schedule an occasional coffee or lunch date with a friend, family member or colleague. Attend a networking event once a month to meet new people and spread the word about your business. Take a walk or head to the gym to clear your head and manage your stress. Something else to consider—depending on the specifics of your business and your budget—is to get a desk or office in a coworking space. Not only will you have a dedicated workspace that’s outside of your home, but you’ll also have a chance to mingle with other entrepreneurs to build your network and provide a needed boost of creative energy.
As you start your own business, you’ll likely find that it’s easy to work a lot, especially if you work from home and can effortlessly switch from your living room to office.
Working long hours is often a natural part of being an entrepreneur, but be cognizant of work-life balance. Do what you can to establish a schedule and get into a routine. Again, this is especially helpful if you work from home, but is also useful no matter where you work.
If you find yourself pulling too many late nights in a row, don’t hesitate to take a step back and assess how you’re working and what improvements you can make. Another tip? Don’t hesitate to schedule breaks. Maybe you’re so excited by your work and business that you find you’re working seven days a week. It’s great that you love what you do so much, but see if you can scale back to six days a week (or five). Because while you feel exhilarated now, that grind will likely catch up with you. It could also make it more difficult for you to enjoy time with your family, friends and favorite hobbies. Self-care is often overlooked by entrepreneurs, but it’s important. Taking care of yourself is one of the most effective ways to keep your business running smoothly and on a path to success.
DO IT ALL
When you start your business, it’s natural that you’ll have to wear a lot of hats. But be wary of trying to do too much, especially as your business grows. Instead, assess your skills and strengths to find out what you should focus on. Then, look at ways you can delegate or even outsource other responsibilities—hiring an accountant, for example, or partnering with a marketing firm. If you find yourself overwhelmed by the administrative side of your business, consider hiring a virtual assistant, which can be a helpful and more cost-efficient way to fill that gap until you’re ready to bring on an office or business manager.
Keep this in mind, too: there’s no shame in admitting you’re not cut out for a particular role or task. It will be much better for your business (and you) in the long run if you can play to your strengths and find other ways to fill gaps in your operations.
FORGO LEGAL ADVICE
Lawyers aren’t cheap. And as you’re starting out in your business, you’ve likely found a variety of other ways to spend your start-up capital. If your business includes working with other companies (and especially if it involves contracts), you’ll want to invest some time and money into securing legal expertise. Just as an accountant can walk you through your financial and tax obligations, a lawyer (especially one who specializes in working with entrepreneurs and start-ups) can help ensure that your business is properly structured and that you have documents like contracts, proposals and scopes of work that are correctly written to protect you and your business. In the early days of your company, you don’t necessarily need to keep a lawyer on retainer. But at least consider an initial session with one to validate that your business is on the right path. Then, should you need further legal counsel down the road, you’ll already have someone to call.
IGNORE BASIC MARKETING PRINCIPLES
It’s easy to overlook marketing, especially in the early days of your self-employment. After all, you’re busy doing the work. Why should you spend time and money talking about what you do, especially if you’re coming into the self-employment world with a strong network of referrals?
Keep this in mind: the best person to promote your business is you. And you want to make it clear that you’re open for business, as well as the products or services you provide. That’s why it’s ideal to at least cover the basics: set up a website, create a logo, print business cards and set up a couple of social media channels.
You’ll probably soon find that keeping up with your marketing is an entirely different challenge. And as we mentioned earlier in the post, it might be worthwhile to consider outsourcing to a marketing agency or individual marketing consultant. The important thing, however, is to do what you can to help potential clients find your business. You might also want to make networking events a regular part of your schedule, especially as you’re building your pipeline. Get out there, tell your story and put a face to your business. You’ll find that you’ll likely reap the return on that valuable investment for years to come.
Undercharging for work is more common than you might think, especially for people in the early days of self-employment. If you’ve switched career paths, for example, you may think that you need to build up your skills, so you’ll cut your prices while that happens. Or perhaps you sign on the dotted line for a seemingly lucrative piece of work, only to crunch the numbers later and realize the deal isn’t as sweet as you thought.
As you launch your business, be sure to do ample research on what to charge for your products or services. You can typically find helpful information with a Google search, but it also doesn’t hurt to reach out to a few peers in your area to get their input. You don’t want to overcharge, but you also want to ensure that your business is viable and you’re able to support yourself. Then, as your business grows, you can look for opportunities to gradually raise your price, especially if your business is a service-based model. The goal over time is to work smarter, not harder, and a significant part of that is doing less work for more money (yes, it’s possible!)
Here’s one additional tip: it’s OK to make mistakes. You’ll likely make several of them, especially as you’re launching your business. Use those missteps as learning opportunities so that you can improve your business and how you work.
And if you find yourself wishing you could turn back time to make sure you’ve covered all of your self-employment bases, we can help. Register for Kauffman FastTrac, a free, self-paced online course that walks you through the process of starting a business. Even if your company is up and running, it doesn’t hurt to review topics like setting realistic financial goals or defining your brand and marketing to ensure your business is set up for long-term success.