How much would you give up starting your own business?
March 26, 2009 12:49 PM   Subscribe

How much would you give up starting your own business?

Part of this is a philosophical question, too, so my question may never see the light of day. Posted under anonymous because I am a bit embarrassed at the steps I am willing to take to try to launch this (see below).

In the last few months, I walked away from a fulltime job as a writer (2 years) and launched my own freelance writing business.

I know how to write material for my market, and how to do it well. In addition, I saved enough $ to last about 5 months with no projects. Also, I read forums and talked to several freelance writers, and thought I would be prepared for every possible scenario.

This hasn’t correlated to success in a small business. One month was spent chasing projects and prospective clients. This month has been spent chasing down the clients for pay (and some of these clients still owe me a lot of $).

Although I have several thousand dollars coming to me from the first few months of business, at this moment I have 2 months of savings left. Plus, I live in a major metropolis (NYC), and to be honest, until now I have been an idiot with money (not much savings, small retirement, etc.). If I am honest with the money that will come in – it equals ¾ of previous salary on a month by month basis.

I do see success in the long run, because I am learning what to do and not to do from experience; for example, I have more clients and I know who to talk to ASAP if the $ doesn’t appear in my hands (although I am still chasing it down, ugh). I have a vision, though, of eventually not only having a business, but having opportunities that I would not have in a work place, determining my schedule, and a freedom to work anywhere in the world. In the next few months, though, that probably means either using a credit card and/or cashing out what little retirement $ I had (I am 40 years old, by the way). I’ve also gone without health insurance the last few months.

What lengths would you go to try to succeed? A year of this?

I am also looking to hear from other people who have done the same. Did you launch a business that barely took off/went negative in the beginning but went well after a given amount of time? Or one that failed? What criteria did you use to assess the success of your business, and whether to fold or continue onwards? Were there things that you think you could have done to improve the probability of success?

If you have any ideas as to where I could look to for ideas or a good perspective (books/blogs), please share.

Thanks…I plan to give this a go, but I wonder if there are other perspectives I should think about it (I am afraid of throwing all rationality out the window, and at the end of this still having no money and will need to go back to a fulltime job).
posted by anonymous to Work & Money (7 answers total) 7 users marked this as a favorite
Instead of giving up health insurance and all that, why don't you give up living in NY? Do you really need to be in the city for any reason? Networking? Could you not sublet your place immediately and move somewhere like...Ohio? North Carolina?

I wouldn't call what I do a "business", but I've been translating from home for a few years now, and I'd say it's pretty sweet when I think about it -- I have absolute flexibility about my work hours, and hell, I don't even work too much. But I live in Berlin, where rent is like 300-400 a month. As a writer, you should have basically zero costs except, you know, living...and in most places in the world, living is ultimately pretty cheap.

Whatever you do, you absolutely must save up for taxes. You do not have as much money as you think you do. I wish someone had impressed this fact on me when I started, because my first real tax bill gave me a concussion.

I'm not sure if any of this really answers your question, so feel free to flag it.
posted by creasy boy at 1:01 PM on March 26, 2009 [1 favorite]

I have started and run several failed businesses. I currently have 2 businesses that I run part-time in addition to a PT corporate gig that I do solely for the benefits package. All together I put in about 60 hour weeks but I currently have 3 income streams. And I currently make 50% more than I would if I did only 1 thing FT(traditionally).

To answer your question:
I would go to any length to pursue an entreprenuerial dream, but in doing so, I would not forego my responsibility to my wife and children.

At one point in the past I was giving a service business a go and while I had some regular clientele, I could not seem to drum up new business no matter what angle I tried. I delivered newspapers and pizza for 6 months to stay on top of bills while I kept pursuing new business and maintaining existing business. End result: I made it through the dry patch and sold that business so that i could move on to a new project (12 years ago). The new owner has improved on my model and now has a virtual monopoly on that service within a 3 city metro area.

I have also started different projects that went south, that were black then red, were red then black.

My criteria for continuing projects are:
-Do I still enjoy the work or like the idea that the project entails
-Does this project provide an income stream that pays me for my time (and intangibles)
-Have I had the time to take my wife on a date this week/month and have I spent at least a few hours of time with each of my kids this week.

If a project doesn't allow me to meet that criteria, I review the strategy, decide what i can outsource to get there, or package the busienss for sale, or let it die if necessary.

In the last few years, I've played it smarter and realized I can do one thing great, and live and die by that success, or I can do several things good and balance the economic ups and downs.

Plenty of financial gurus say "Multiple Income Streams" are a good thing. Usually they are talking real estate and investing, but it works for providing goods or services and consulting too.

Honestly, one of my income streams HAS taken a big hit in the last 6 months. This is the one most tied to financial market fluctuations. Currently that project is active, but I put less time into it and focus on the other two, which have returned at least as much, if not more income to supplement the other loss.

Heck, I have about 4 hours a week that are not scheduled up right now (yes I budget/schedule my time) I'm thinking of a 4th project that might just fit that timeframe.

Bets of luck to you, keep plugging away at the writing gig, but there's no reason you can't branch out by either outsourcing some of that work (sales, writing, whatever) or pursuing some other side-project to supplement your primary income.

(No real thoughts on where you live except that NY is expensive, and I second creasy boy in stating that you should be very concerned with your tax situation. If you haven't already - speak to a good CPA and start documenting the heck out of your expenses) I have recommended a good Taxes for Small Business course in another answer.
posted by emjay at 1:48 PM on March 26, 2009

I would give it 12-18 months total.

I would also reconsider where you live. You may need to move to the outer boroughs or to NJ in order to make this work.

You may also want to consider taking on part-time work either for extra cash or for the benefits.
posted by charlesv at 2:09 PM on March 26, 2009

I have my own business in a niche that involves a lot of writing. I haven't had a full-time job since the 1980s (I'm 48). A "normal" job is as appealing as jail, so I'm willing to go to great lengths to stay self-employed. These days I insist on having health insurance because it protects my assets, but I went for years without it.

I agree with other commenters who suggest finding a way to live more cheaply, because then you'll be less likely to get desperate and stuck with bad clients. I think it helps to view frugal living as an adventure and something to be proud of. That way, you can embrace it as part of the new self-sufficient lifestyle that your business brings.

I went through some very lean years. While I'd like to think that they were due to bad market conditions, they were really the result of my own lack of focus and failure to believe in myself. I also apparently had to try about 9 trillion business ideas before I hit on the one that was going to work.

In recent years my goals have firmed up and I've been able to market myself a lot more effectively. If marketing is a huge barrier to you, you might want to make sure you're in the right niche and aiming for goals that really set you on fire. My focus was sharpened by "Getting to the Core of Your Business," a free workbook from Heart of Business. I also got a huge boost from Overcoming Underearning by Barbara Stanny. It made me determined to overcome some beliefs that were holding me back.

Your problems getting paid suggest you need to find better clients. To do this, you could charge more. If you position yourself as "affordable," you'll get people who treat you as a commodity and haggle over every penny. If you raise your rates, those people go bother other "affordable" writers and you get the professional clients who are used to working with contractors and who pay on time. (Of course, your marketing has to support the message that you're worth a lot, which can mean shelling out for a professional site design, etc.)

As others mentioned, make sure you're setting aside money for taxes. When a client pays me, I put 30% of their payment into an interest-bearing ING account. I use that account to pay taxes.
posted by PatoPata at 4:25 PM on March 26, 2009

everything, but remember friends/family are important.
posted by nam3d at 5:19 PM on March 26, 2009

I started out as a freelance writer, then marketing communications consultant, then marketing consultant...then marketing consulting company owner and so on. My business has evolved over the past 12 years. Now, in fact, I run a blog on surviving and thriving as a consultant and, unexpectedly, part of my business involves coaching consultants.

It sounds to me as though you aren't getting money upfront or along the way or using the right tactics and legal procedures to get paid after. You need to get some business and legal systems in place. It also sounds as though you are not pursuing new business in a strategic way. You need to get a marketing system in place.

By viewing your business as a business with systems and procedures, you'll be able to gain that freedom to call your own shots and you'll truly own a business. But, until you do that, the business owns you and you really just have a job...and perhaps a big headache.

I'm a bit conservative, so I encourage you to pick up a part-time job while you get these things in place. (Preferably somewhere with flexible hours and benefits.) If you're less conservative, you might just devote a few full-time weeks to gettting all this stuff in place while you try to find some new clients. But do put the plans and systems in place. Otherwise, you're going to be signing on for chaos.
posted by acoutu at 8:48 PM on March 26, 2009

Seconding getting some part-time job. That way you KNOW you have x comig in weekly, it would relieve some stress.

Don't use a credit card to float yourself - if possible get a small loan/line of credit from the bank, or friends or family. Credit card rates are way too high and if you can't pay one month, your credit rate will be dinged, that's not worth it.

Other than moving out of the city, could you cut expenses elsewhere? Eat out less, change to a cheaper gym, quit smoking, etc?

Also seconding saving money for taxes. I think there are banks out there that give higher itnerest than ING, research it and get the highest interest you can.

I think you just have to work as hard as you can - as you said, you;ve already learnt a lot. The amount of time you dedicate to you is kind of up to you, though I would say minimum a year since you're serious.

Some people claim you can make good money from blogs, if it attracts the right advertisers and enough readers. I can;t advise you on this as I don't know much about it, but it may be worth looking into.
posted by Penelope at 10:04 AM on March 27, 2009

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