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Considerations for Becoming Self-Employed - Home based Basics
By Ronda L. Claire
Kankakee, Ill. (Sunday, March 7, 1999) -- Entrepreneurship is a funny, scary, exciting word. It implies a sense of being on one's own, creating a path of successes and failures, both of which to learn much from and accomplish even more in the future.
Starting a business, actually "doing it" is as scary as it can be fun. One minute you're an employee, the next minute the boss you answer to is YOU. That can be tough, too. The flexibility that is now yours can be a godsend or a curse. The rigid schedule of getting up at 6:00 am, rushing through morning routines and catching the 7:10 to work are now non-existent.
You get up, have a leisurely breakfast, read the morning paper, stare out the window, watch the neighborhood kids at play...hey, what's wrong with this picture?
With Entrepreneurship it's simple - no work, no pay. We must design a routine and apply it, stick with it, learn time management like never before and, to quote a pen pal, "get organized or fail."
Being self-employed is a dream for some who just cannot bring themselves to take the risk. It is a dream for others who go at it full-force and for many of us being self-employed is just a way of life that we, broke or not at times, will not change for any tempting reason (ok, we'll think about it but that's it!)
So being self-employed is in our blood - it is our life, our child, our dream made into reality. But what should we know before we begin our adventure on the rocky road?
What should a business owner or prospect take into consideration before actually starting up? Take a pen and pad (or a pencil if you think you'll be changing a lot!) and draft some answers to the following questions. This may also help if you are trying to decide what kind of business you should get involved in.
Set up an unofficial 'Board of Directors' for your business, people you can go to for advice - an attorney, accountant, insurance agent, mentor, bank contact (a loan officer, an investment broker), a realtor, a collections agent...
Inquire as to whether retainers will be necessary and allow for them. Possibly some of your 'board members' will agree to allow intermittent questions without charge.
Many skills can be developed with practice, knowledge can be enhanced with education. Check with a community college on business class offerings. Business Management, Marketing and Techniques of Salesmanship are some good starters. If there is a Small Business Development Center (SBDC) nearby there may be short-term courses and one day/half day seminars of interest to you.
Set up a work schedule that you can be comfortable with, but which allows enough 'regular business hours' to be able to deal with clients at times convenient to them.
Determine the number of hours per week that you will or can put into your business, depending on your choice to be full- or part- time and if you have an outside job. Choose days off - break them into a weekend day and a week day, two weekdays at opposite ends of the week, two weekdays together or the entire weekend. Or a morning one day, afternoon another day and evening a third day, (unless all your evenings are mandatory "off") plus a weekend day.
Set up a routine. As soon as you enter your office/work area you will...start the coffeemaker and check voice mail and faxes; retrieve e-mail messages and download for later responses, etc.
Pick one hour or so during a non-creative time of day during which you will return telephone calls, work on correspondence (mail, fax, e-mail) and generally organize administrative duties.
Keep a log (no, I do not; yes, I promise to start:) of your workday, especially at the beginning to determine the length of time it takes to complete a project and the details included. I once worked for a CPA and we kept work logs in quarter-hour increments. Across the sheet were several columns: Work Code or Client # (or name), time started, file name, time stopped, quarter hours. At the end of each workday, which could be 14 hours long, the quarter hours had to match the number of hours worked. This may be more meticulous than you feel you need, but then again it may be a good idea, in case the business fails and records are needed to answer to the IRS.
List fixed expenses such as heating, electricity, telephone, online services, etc. and an idea of supplies needed each month. Ask utility companies if payment plans can be established to keep monthly amounts equal (there is an annual catch up but it is not usually a budget breaker.)
Decide how much you would like to earn in your first year. Set an earnings goal and divide hours working per week into it and determine how much per hour you must sell or produce to make a profit.
Keep financial records on paper and on the computer. Yes, double work, but if you have my luck with an accounting program you'll be glad you did. In December one year the program decided it would keep all of my information its secret and refused to open. Luckily I'd printed out invoice reports up to November and for some reason kept notes on December's earnings.
Many programs are available for accounting and record keeping. I have tried two or three and my favorite is a little $5.00 program I found at K-Mart one year. I don't like the invoice (so I deleted my information in the program and played with WordPerfect until we came up with a customized invoice I could tolerate) but the program keeps the information I need. It does not have payroll taxes, or state information, or a balance sheet or other complicated features, but I don't need much of that yet. I have no employees and the one or two I occasionally need are hired as independent contractors.
Whether from a family member or a professional be careful when borrowing money. Put as much of your own in as possible. Buy equipment and start up supplies if you can and get that major expense out of the way.
Allow for repayments of all monies borrowed each month. as much as possible as soon as possible, then your business really will be 100% yours!
About The Author
Ronda L. Claire, is owner of Starlight Creations, Kankakee, Illinois. Ronda has been a home-based business owner since 1994, and established and published a newsletter for home-based (and otherwise) self-employed people since 1998. She has loved to write since childhood and has worked as a print reporter and correspondent for weekly and daily newspapers. Ronda loves being home-based in business and sharing her experiences with others who are or wish to be for their education and encouragement.
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