Congrats on becoming self-employed. After all, you are now a boss who gets to decide everything from the daily workload to which clients and customers you accept. Essentially, you’re in charge, and it’s a beautiful feeling! Millions of people feel the same way because almost 15% of the UK’s workforce, or five million people, are in the same bracket.
However, before you pat yourself on the back, there are challenges facing you in the not-too-distant future. And, if you don’t react properly, you could find your new business out of business. That’s the initial problem – here are four more to consider.
Long Working Hours
Although you became self-employed to transform your lifestyle, it might not happen in the way you imagine. As the leader, you’ll have to work countless hours to get the business off the ground, and then that might not be enough. As a result, your balance between life and work will take a hit, which is rough when you have a young family.
The key is to explain how short-term pain will lead to long-term gain to get everyone on board. Of course, you should take holidays and have time off to make time for your loved ones and yourself. Burnout is very real when you set your own hours and those hours have a tendency to fly by…
Putting A Team In Place
There are many reasons why SMEs and startups fail, from a lack of resources to the failure to price correctly. However, the most common reason for self-employed people to return to office life is that they don’t have the right team in place. 23% of organisations fall foul of this rule, which is why it’s essential to identify the holes in your skillset. That way, you can hire the people who plug the gaps to complement your working style perfectly.
Bare in mind, those gaps aren’t necessarily there and you may find yourself in a situation where your skillset is very good but you simply do not have time to do everything yourself. This is when you can start looking for freelancers to cover some of that work. I specifically mention this as working with freelancers can be difficult and to get the most out of such services it helps to have a technically understanding of what you need done.
Depending on your setup, your liability might be incredibly high. Mistakes are inevitable, so the idea of providing service could scare you to death. But, there are two tools at your disposal. The first is insurance. With the proper kind of liability insurance, you’ll have cover should the worst happen. Learn more by following the link.
Alternatively, you can switch from a sole trader to a limited enterprise. By doing this, you add an extra layer of protection to your company as the formation separates your personal and corporate assets. Therefore, any commercial errors can’t result liability beyond the legal entity itself. Forming a LTD is quite straight forward, especially in the UK and you can do it yourself from the official government website, however, you can also use a company formation service that adds extra services, like registered address for your business and services addresses for you as director.
No Safety Net
The Coronavirus pandemic has highlighted how important it is to have a safety net in place. After all, if a health crisis can cause the world’s economy to shut for months, putting people in lockdown and rescinding basic freedoms, anything can happen. There are no excuses – you require an emergency fund. As a rule, it should cover you for anywhere between three to six months in case of loss of earnings. Plus, it’s a good backup for when times are tough and you need to dip into it. Remember that self-employment is usually feast or famine.
What issues do you foresee on your journey to financial and work freedom? Let us know in the comments.