The Great 'working for yourself... revisited' Hunt

goldtop · 15 January 2014 at 4:58PM

I took voluntary redundancy as my new role would have meant longer hours , etc. Having worked in finance all my life I took the last of my exams and set up as a bookkeeper.

Although I networked like mad it still took 6 months to get my first bit of work and now things are finally getting there. Luckily I have the redundancy money to cover me and I now need less of it to cover my bills (mainly because of my mortgage) but it will probably be another 6 months before I am on an even keel.

It is still the best thing I have ever done and I would not go back to working for someone else but don't expect it all to happen at once.

Ami-Rose · 15 January 2014 at 6:29PM

I've toyed with self-employment on and off for about 4 years now and I'm finally taking the plunge come April. Up to now I've always had a 'real' job at the same time that at least covered minimum expenses and the self-employment brought in a little extra on the side.

One thing I'd say to anyone not planning to use an accountant is update your accounts weekly! Keep on top of it because when it comes to tax return time there will be things you've forgotten - that time you bought a drink while waiting for a train, or when you didn't have any 'business' cash on you and had to borrow from your 'personal' purse. (Both experiences from this week that are going into the accounts!) It's not half as scary if you do it regularly.

Another tip is to network right from the start. I officially 'launched' my current business at a networking meeting and it's been (nearly) my sole source of work the last 3 months. I'm even having to consider taking on staff to cope with all the work I'm getting! (Hence going full-self-employed in April)

I also agree with Pennywise about clients, having just 'fired' one for the first time. You go into business to reduce stress, not increase it. No paycheck is big enough to pay for a heart attack, so if they're sending you on your way to one - ditch them!

And finally, be realistic. Do all your research, know there's a market for what you do and plan the business inside out before you take the plunge. That way on scary days where income is low and bills are high you have the reassurance that you're doing it right and all you need is time!

pennypinchUK · 16 January 2014 at 2:06AM

I've been self employed for 10 years now, and haven't regretted chucking in my "proper" job for one second. In fact, I'm utterly unemployable now, as it's clear within 2 minutes to everyone who meets me that I'm so used to making my own decisions, planning my own time and taking my own calculated risks that I simply could not take work instructions from anyone else ever again.

Just to highlight that reality, about 3 years ago I landed myself a nice little earner doing long term consultancy for a company. While I was able to organise my time and work to my own directions I was also required to attend their offices every Friday. Couldn't do it. Every Friday, by 11am or so, I was silently screaming at the ridiculous office politics, having to be nice to people whose only qualification for their jobs was that they'd been there a long time and being told what to do by people who were vastly less experienced in my specialist field. I cancelled the contract with a huge sigh of relief.

A few pointers:
1. Accept that at least 40% of your time you won't be doing the task you set up in business to do - you'll be putting yourself about, selling your services for your next assignment.

2. Get an accountant. Any half decent accountant will pay for themselves in lower taxes. If you've a simple operation find a one-man-band. No need for even a High Street company - way too expensive for little or no extra return.

3. Have somewhere (a separate room, rented office, etc.) to do your work. Don't even try to run your business from the living room table. Way too much distraction.

4. Lay down the law with your friends and family that you are at home WORKING. You are not available for people dropping in for an impromptu coffee and chat. You are not available to run errands or do collections and deliveries. You are not available to entertain the children, unless it's planned as a proper day off.

5. Find a balance between work and downtime. Many home workers can't help just popping in to their office at all times of day and night to fiddle around with little tasks, or can't stop themselves from working on a big project when they should be focussing on family time.

6. Be honest with yourself. Why did you start self employment? It was the only option as you couldn't find a job? Or you want the flexibility? Or you want to earn the money and reap all the benefits, rather than just what an employer is willing to give you in wages? Remember your reasons, and stick to them. Or you might as well return to be a wage slave again.

7. Be honest with yourself - again. Do you really have a business? A proper, realistic, achievable and tangible business that has a chance of succeeding? Or is your idea so marginal that you don't realistically have a chance of making it work financially?

8. Be honest with yourself - yet again. Are you really cut out for working for yourself? Are you motivated to do whatever is necessary to succeed? Are you self-driven to ignore the many, many distractions you'll experience when you're not leaving the house to go to an office?

9. Only start your own business if you've (say) 6 months of funds - better 12 months - to pay all your bills AND fund your business. The last thing you should do is start out in business using scared money - i.e., money you can ill afford to lose or take risks with. Other businesses can smell scared money a mile off. They'll either ignore you or fleece you. Either way, using scared money weakens your decision making, makes it obvious that you're fresh meat for the vultures to pounce on and slows you down, when you should be making logical, rational, sound business decisions.

10. Reward yourself. Set targets, and give yourself a treat when you hit them, whether they're financial objectives or completed tasks, whatever.

11. Especially at the beginning, only incur a business expense when you absolutely need it. Do you really need a flashy car? Or a new van with fancy screen writing? Only incur an expense when the loss of revenue of not having something is greater than the new assets purchase price.

Self employment is the best thing I ever did in my working life. But it's not for everyone. I never recommend it to anyone. If it's right for you, and you can honestly answer the pointers above, you'll know. You won't need anyone else to push you in to it.

If you still need someone to convince you, don't do it. Go and get a job instead.

Chomeur · 16 January 2014 at 9:27AM

KatyI wrote: »

if it doesn't work you can always go back to working for someone else.

I have to say I disagree with that. After setting out a long time ago to pursue a business idea, I have tried on a number of occasions to go back to working for someone else only to hit zero interviews and be told that employers were looking for people with recent experience. I know of someone else in a similar situation.

But it's OK, money never became as tight as feared. If you don't have an employer you have so much flexibility to do things when they are cheap and take advantage of deals that you have more time to find online. The freedom is wonderful.

merit_mark_2 · 16 January 2014 at 5:18PM

Gave up chasing full time employment soon after taking redundancy in the early 00s. Having cleared the mortgage (and being single) I've lived off income from two or three lodgers since. No drop in 'what matters' standard of living - a cheaper car, cheaper meals out, holidays etc. but having just as much fun on a third of my previous income. Cutting outgoings by a third was relatively easy - the next third took a while to achieve (MSE helped a lot) but it can be done. Lodgers replace the social side of not having collegues at work too - I can take holidays when the flights are cheapest not when my employer says I can etc.Only downside - still only have the same number of weekends as wage slave friends. But hey, I have loads of time to follow up Martin's tips, get out on the bike, work on the house, plan that next trip etc.

PlutoinCapricorn · 16 January 2014 at 6:58PM

I would advise anyone thinking of becoming solely self employed to learn what applies to all people who work for themselves and what applies to a particular sector only.

For example, someone who trades under their own name and gets consultancy assignments here and there can probably manage without a special bank account and can prepare their own tax returns. Someone who is buying and selling on a large scale or handles cash may need a business bank account and help with the tax returns.

I have seen a few posts from people who tried it then went back to PAYE jobs: it might not have been necessary to discover the hard way that it was not for them if they had done research in advance.

seems8 · 16 January 2014 at 9:34PM

Hi all, it's very interesting for me as I am actually in the process of going freelance myself after years of boring office jobs... I am not familiar with the British system so I hope you don't mind if I ask you a few questions:

- Does registering as self-employed affects your right to JSA? I am requesting it at the moment since my earnings from my freelance activity don't even cover my grocery shopping, but I am planning to register as soon as possible.

- I have been told I should keep all my receipts as it's possible to deduct ALL expenses when I do my tax returns… is that true? Or it just applies to purchases/expenses related to the freelance activity?

Thanks everyone and good luck to us :-)

nickbearman · 17 January 2014 at 9:23AM

Thank you everyone for your comments - particularly pennypinchUK - that was a comprehensive list which I will go through with a fine tooth-comb at some point! It's great to hear other's experiences, as I have recently made the decision to become self-employed, although have yet to make the job - my current employment hasn't finished yet and there's no reason to terminate it early!

seems8 - I think you can only deduct expenses related to to your freelance work, but the interpretation of this is fairly generous. The HMRC site has a lot of useful information and I would recommend having a look through it when you have some time spare.

I have a related question to the JSA one - has anyone claimed JSA (and/or other benefits) in the first phase of starting up your business? My intention is to start freelance small and find a P/T job in my current area while I do this.

Raggie · 17 January 2014 at 12:59PM

you do sometimes miss the security net of someone else's money..

Being employed if your sick, or wish to take leave you not counting up in you head what its costing in lost revenue..

Your then faced with the challenge of the work growing and the orders/contracts coming in and needing staff.. so do you or don't you.. do you really want that extra revenue along with the challenges of employing someone..

or the opposite of being so busy doing the job in hand you forget about chasing the next one and one day you wake up and its all done..no work in so you got to go get some...

personally I love it.. I love the option of telling people I'm self employed.. un-employed (to annoy the wife.. lol).. or semi-retired.. (that annoys them down the pub...lol)..

The main thing working for yourself gives you.. is choice...

Rags

Ree2 · 17 January 2014 at 7:13PM

I left my job as a teacher 13 years ago and have never regretted a minute of it. There are some great pointers in the preceding posts- here are some things I would add:

-Chose something that you love to do. (The work itself-not the admin and marketing!!)

-If at all possible, work part time at a salaried job to transition yourself, because it takes time to build up your business/practice.

-Put 1/3 of all money you earn into a savings account because it's not yours-it's the taxman's. If your actual bill is lower-a bonus. Since you won't have paid holidays or a pension, save/make plans for those.

-Find a tax accountant who specialises in self-employment/small businesses/your field. I chose an independent person (not a big company) who lives nearby, and pay £150 to have my taxes done. She knows exactly what I can and can't claim.

-I have a full practice, 75% of which are personal referrals. Look after your clients/customers, work ethically and generously, and it will repay you many times.

Finally, during the past few years of recession and jobs losses I have given thanks for the fact that I am self-employed, because while I lost a few clients, it was very unlikely that I would lose them all at once. So I never suffered the fear and anxiety that many of my employed friends did.

Go for it!

The Great 'working for yourself... revisited' Hunt

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