Starting your own business as a self-employed worker can be exciting and stressful. It’s also something that many millennials are doing to bring in a healthy income through the use of technology. Planning ahead is important to achieve your business dreams. So, let’s have a look at some of the things you should be asking yourself before you jump into self-employed position:
Are You Ready For Self-Employment?
The first thing you need ot know before taking the leap is a good idea of what you are going to be doing. Are you going to freelance with your existing accountancy skills? Are you starting a business in the gas industry or maybe in garden services? Or are you an up and coming influencer?
The most obvious benefit of becoming a self-employed person is the fact, you are your own boss. You can start and finish your day whatever time you want, and manage it how you feel is right. If you want to be successful with self-employment you need ot be motivated and self-disciplined.
What Does It Cost?
The costs of becoming self-employed can vary significantly, some of the most common costs include:
- Equipment
- Renting a private workspace
- Stock
- Banking
- Insurance
- Accountancy
- Outsourcing
- Hiring Staff
Should You Be Using Your Savings?
Using your savings to start may seem like a great idea, and be the cheapest option, however, if you use your rainy-day fund it could leave you a little bit stuck in the future. Some of the pros and cons of using your savings include:
-Pros
- You can use your savings as your budget
- You can draw the finds as and when you need them
- You can top them back up
- You won’t pay interest for using your own funds
-Cons
- You may leave yourself short of cash if you need to use them for personal reasons as well as business.
- You may never be able to top it back up
Other ways you can fund your business include:
- Business current account with overdraft
- Business credit card
- Business loan
- Government funding
- Investors
If You Fail, Will It Impact Your Personal Finances?
It is important to remain optimistic and plan to achieve your goals, however, you also need to be aware that sometimes things can go wrong, especially in your first year. When you are self-employed your personal finances can often be affected, if you do become overwhelmed with debt while you are self-employed some of your options include:
- Liquidate your business- doesn’t affect personal finances
- File for bankruptcy – You can only do this if you are sole-trading. This can impact your personal finances.
On the other hand, if your personal finances suffer, it can sometimes affect your business. If you have any of the following it could impact your self-employed business:
- IVA
- CCJ
- Bankruptcy
If you are already in a bad financial situation when you decide to go into a self-employed position you might want to seek financial advice before you take the leap.
Do you have any other tips that could help? Please share them in the comments below.
