More people are turning to self-employment to achieve their financial and career goals. Following are some interesting statistics:
- The fastest-growing category of new jobs is gig work – self-employment, contract, part-time, temp work, and freelance.
- At least 90% of Americans are open to the idea of self-employment or gig work.
- Job satisfaction among self-employed workers is high, with 80 percent reporting in September 2018 they are either very satisfied or somewhat satisfied with their work.
- A majority of the American workforce is expected to be freelance by 2027.
Why are so many people choosing to work for themselves? Many reasons can drive this decision. Some people don’t feel fulfilled, or content, employed by someone else. Others are tired of job hunting with no offers. Many job seekers believe they are experiencing ageism – discrimination in hiring practices due to age – and decide to leave the job search behind. Regardless of the reason for pursuing your own business, there are important factors to take into account. Here are three:
- Risk tolerance
- Financial considerations
People who tolerate risk well are comfortable with ambiguity, take a rational approach to decision-making, and embrace challenges.
Starting a business carries risk.
For some, taking risks is unnatural. Our brains are wired to protect us, so when we consider doing something we believe is risky, our brains instantly try to shield us from harm through self-doubt and thoughts to talk us out of taking risks. Risk implies one can’t be 100 percent certain of the outcome; the potential for both failure and reward exists. You might not be completely comfortable taking a risk because comfort feels safer.
Questions to ask yourself:
- Do I trust God to provide?
- How tolerant am I of risk?
- Do I believe I can figure things out?
- Do I have support?
- Am I comfortable with uncertain pay dates?
Tip: Create pro and con lists for working for yourself. Do the pros or cons motivate or deter you?
Consider why you want to work for yourself. Some people naturally prefer self-employment. Here are common reasons why:
- They value autonomy.
- They want schedule flexibility.
- They believe people frequently misunderstand them.
- They prefer working on projects or tasks they want to work on.
- They want to make the decisions affecting them.
- They have big ideas and are frustrated when they are shot down.
- They struggle to stay motivated by other people’s missions.
- They believe a lid is placed on their potential.
- They have low interest in team work and collaboration, preferring to work independently.
- They sense a pull to something greater.
Reflect on the following:
- Your motivation – Who are you passionate to help? Your purpose attracts different people.
- Your personality – Are you funny, serious, vulnerable, conscientious? Let your personality shine in all you do.
- Your story – In what industry did you work? Target the same struggling people.
- Your background – What elements of your backstory can you share? Your faith, industry, and where you grew up are part of your story the right people will relate to.
- Your network – Who knows you by name, engages with you online, or lives near you? What are the needs within your network?
- Your values – What kind of impact do you want to have? Working with people with similar values often seems right.
- Your unique contribution – What do you do best that others need most? Your unique gifting are differentiators.
If you want to set up a business, start a dedicated savings fund, if at all possible. The US Small Business Association estimates most small businesses cost $3,000 to start. Start small, estimate expected costs, and conservatively project your cash flow. It’s also a good idea to save three months of expenses, if married, and six months if single, before quitting your job, if you are currently employed.
Crowdfunding is also an option through Kickstarter or GoFundMe. Campaigns with videos including your purpose and passion will do better than without a video. Keep the campaign to a month. Longer campaigns don’t do as well.
Networking for angel investors is another option for cash-strapped startups. Make sure you have a compelling “why” to help people connect with your mission and vision.
Another important consideration when starting a business are your tax obligations. You are responsible for paying taxes if your net income from your business is $400 or more. The taxes you pay, and how you pay them, depend on how you set up your business, so you’ll want to speak with a knowledgeable tax accountant.
Some business owners receive an unpleasant surprise at tax time when they discover they haven’t set aside cash to pay their tax bill, or have set aside an insufficient amount. You are responsible for saving for your tax bill, since taxes are not automatically deducted as they were when you were an employee.
To cover your federal taxes, saving 30 percent of your business income is a good rule of thumb. According to John Hewitt, founder of Liberty Tax Service, you should set aside 30-40 percent of what you earn to cover both federal and state taxes. Be sure to research and consult a tax accountant.
If you’re weighing self-employment, other considerations you should keep in mind are healthcare and retirement savings options.
Above all, bring your ambitions to God in prayer. “For nothing will be impossible with God.” (Luke 1:37 ESV) Ultimately, He made you and knows if entrepreneurship is the path for you!
This post was written by Kristin Sherry. Kristin is a member of the Crossroads Career Board of Directors. She is the best selling author of YouMap & Your Team Loves Mondays…Right? She joined our board in 2019 and lives with her husband and 4 kids in North Carolina.
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Great advice as I plan on being in this space consistently soon!