Becoming Self-Employed: Overcoming the Fears
Have you ever thought about becoming self-employed, only to be stopped in your tracks by fear of the unknown? Jana at Daily Money Shot recently posted about exactly that: the self-employment fear factor. She listed several specific fears related to becoming self-employed.
I’ve been strictly self-employed in the past, and am currently self-employed in addition to having a regular job, so I thought I’d respond in a little bit of detail to her post.
Major areas of concern
Jana mentioned 5 major areas of concern: taxes, insurance, retirement, finding work/clients, and inconsistent income.
Those are great areas to be concerned about, because they all have a huge impact on whether or not you’ll succeed in the self-employed world.
I would add maintaining motivation to that list, and I’d argue that the first three have just as big an impact in the world of regular jobs too.
Getting past the fears
While I was the type to just jump right in when it came to becoming self-employed, I certainly should have been afraid enough of some of the items above to think about them in more detail — especially the finding work/getting clients part.
If you’re thinking of becoming self-employed and you’ve got some fears, that’s actually a good thing.
It means you’ll weigh the pros and cons, and be more likely to prepare adequately before taking the plunge. So getting past the fears really means doing your homework, and then seeing if becoming self-employed is really a good fit for your personality and life.
Talk to others who’ve done the same thing — both those who are successful and those who haven’t done so well. Research the things you’re afraid of to get more information.
Let’s take retirement as an example. Becoming self-employed doesn’t mean giving up the idea of retiring someday, or worse, cashing out a 401k to fund your venture.
If you do a little research, you’ll discover that so long as you meet the requirements, you’ll be able to contribute to an IRA, and you can consider setting up solo 401k too. You can also invest outside of typical retirement vehicles if those aren’t enough, and just earmark that money as being for retirement. The important thing is to plan for retirement just like you would if you worked for an employer.
In any case, there are trade-offs to becoming self-employed. Yes, you’ll have more freedom to work on what you want to work on. You’ll likely also have more work to do each day, especially at first. You’ll also be responsible for many of the things an employer would normally take care of for you — but you won’t have to count on someone else. You’ll be able to count on yourself, and who can you trust more than you?
Not everyone wants to work for themselves, and not everyone should. There’s nothing wrong with being an employee. There are risks and rewards to both self-employment and a regular job. In either case, you’re responsible for your own success.