I can remember it like it was yesterday… I opened my eyes. The summer sun was streaming through the bedroom windows onto the yellow walls. The clock face read 8 o’clock. I blinked.
OMG, I am sooooo late! Then I remembered … I was retired.
My thoughtful husband had turned off the alarm before leaving the house, and I had nowhere I had to be. Nothing I had to do.
As I sat on the balcony watching the birds and drinking my tea, I had the distinct feeling that I had landed in a brand new city without a roadmap.
For years I had worked for a Fortune 100 company, traveling the world for my job. I always knew exactly where I had to be, what I had to do, and by when.
This was completely new.
I had taken early retirement when the company I worked for was going through a merger. I didn’t want to work for someone else, but I had never worked for myself before.
And the lessons I was about to learn were invaluable.
So You Want to Be Your Own Boss
In my previous blog post, I suggested you answer nine questions before deciding what you want to do to earn extra money. If you didn’t see the post, it’s called Nine Questions You Need to Answer When Life Dictates You Need More Cash.
If you answered the questions honestly, it probably took you quite some time. And if you are reading this post, you probably decided you want to work for yourself.
Great. There are lots of advantages to being your own boss – and there are a lot of challenges.
The first thing to consider is …
There is No One to Blame
When you work for yourself, you are the only one in charge of your success or failure.
And it is critical that you understand this, especially if you’ve been an employee for a number of years.
There is no one looking over your shoulder, telling you what to do or not to do, by when or with whom.
Equally, there is no one to blame if you lose a sale, your equipment blows up, your client vanishes before they pay your invoice, or a business partner doesn’t perform.
It’s all you.
This takes some getting used to if you’ve been working in corporate America.
Lesson 1 – If you don’t do it, hire it, or follow up, it won’t get done; and even then, it still might not get done.
I learned this lesson the hard way. I was buying an investment property. A real estate coach had recommended a specific loan officer, and we decided to work with her. Time was ticking away and the loan still hadn’t come through. At the last possible minute, the loan docs were yanked from her pile and sent to audit. We were new to that company and they wanted to do a final check. We lost the deal and our $2,000 deposit.
No amount of ranting or finger pointing would have made a bit of difference or got our money back.
Sometimes things just don’t work out, despite your best efforts. Best to determine what went wrong, fix it and move on.
The second thing to consider is …
There is No Safety Net
While it can be liberating at first to set your own schedule, determine your own workload, work where you want and with whom, it can also be exhausting.
If you are self-motivated and used to doing a great job, you may find the drive to succeed in your new venture has you working from early morning to late in the evening, with few if any breaks.
That, coupled with the need to earn a certain amount of money, can blind you to the effects of working non-stop without proper exercise, nutrition, sleep and relaxation.
Before you know it, you’re flat on your back, unable to work, looking at no income for several weeks, and thinking “This isn’t how it was supposed to be”.
There is no safety net when you work for yourself. You work, you get paid. You don’t work, you don’t get paid, regardless of the reason.
Lesson 2 – Pace yourself and get help when needed.
Another lesson learned. Several years ago I started a company, more by accident than by design. I partnered with a couple of people in a venture where I would do all the operations. I started in May, doing presentations, talking to clients, providing all the services, doing the support and the education – while I continued to coach on the side. By July I was wiped out. I hired someone to help me, but it wasn’t enough. I needed a technology infrastructure to work with or I wouldn’t be able to grow or have a life. That’s when I got smart and begged my tech-savvy husband to quit his job and join me. That was 12 years ago. Smartest decision I ever made.
The last thing to consider is …
Focus on Income Producing Activities
When you’re your own boss, it’s easy to get side-tracked in busy work. After all, if you don’t get your receipts together, your bookkeeper will have nothing to do when she shows up for her one hour a week. If you don’t set up your filing system, you won’t be able to find anything.
While some of this work is important, it doesn’t pay the bills.
There are two good rules of thumb to follow when you are just starting out:
First, you need to spend at least 50% of your time in marketing, 30% in delivery and support, and 20% in planning.
Marketing activities will bring you the clients you need to serve in order to earn money.
Delivery will allow you to bill for your products or services.
Planning will help you market and deliver more effectively with fewer support issues.
Cleaning your desk, setting up your file system, and reading your friends’ posts on Facebook are not income producing activities.
Second, determine how much money per hour you want to earn, and hire out everything that earns less than that amount.
For example, an average month has 21 days or 168 normal working hours. if you want to earn $5,000 per month initially, divide that amount by 168 and that gives you approximately $30 per hour. You can find any number of clerical people to help with filing, bookkeeping, data entry etc. for less than $30 per hour.
Every time you send out your own invoice or clean your own office, remember you are sacrificing that $30 per hour.
Lesson 3 – Give up what you have to to keep that focus.
There have been times over the years when I thought I couldn’t afford to get help. Most notably for things that felt selfish - like house cleaning or grocery shopping. After all, I was super-woman. I SHOULD be able to do it all.
What I learned is that saving the cost of a cleaning service isn’t a saving at all.
You see, I firmly believe that the only time I should be on my knees is in prayer – or picking up some cat’s headless offering. So scrubbing bath tubs is not on my list of things I want to do.
But my pride said either I hire it out or I do it, and if money was tight, well … you get the picture.
Which meant that on cleaning days I was not only tired, but pretty ratty as well.
It took an entire morning or more to clean all the things a service could do in 2 hours. That was 4 – 5 hours when I wasn’t marketing, delivering or planning. And by the time I got to those income producing activities I was worn out and certainly not performing at my best.
That meant the total cost was not $150 but $150 plus another $150 for not performing in the afternoon.
I finally got smart and cut back on a few things to pay a service – money that was made back by focusing on income producing activities.
And yes, I did kick myself for not doing it sooner.
If you are starting a new business, comment below and let me know what it is. What are your particular challenges? I’d love to hear from you.
And if you have stories, I’d love to hear those too.
Wishing you success,
PS If you got value from this post please like it and share it with a friend.
PPS Join us on Friday when Sue Thompson will talk about money issues when things change.