how do you make the jump to self employment?
June 5, 2016 10:55 AM   Subscribe

I want to get to a point in my life where I'm my own boss. I don't know how to do this.

I worked, what I would consider, my dream job in an academia environment for the past eight years. I was laid off due to budget cuts in April. Great news is, I've found a new job at a marketing agency. Really it's a wonderful place, with wonderful people and a great atmosphere. Unfortunately, I don't feel comfortable. I'm sure this is mostly just because it's a new environment for me. I'm also a contractor (with no end date or promises of permanent hire), so I feel like I'm on the outside looking in. I also don't know anyone, and I'm a bit shy. I have benefits through the company I'm contracted through, and the pay is more then I was making at the academia job.

Really, it's been an eye opening experience that I don't really want to be a cog in the wheel of things. I'm a web designer/developer.. and then some. I have quite a few skills.. what I don't know is how I should translate that into a business of my own. I know I should market myself to small businesses.. and I know offering to build websites or improve websites of local businesses is the way to obtain my first clients..

But is it realistic to expect to make the same amount of money as a freelancer/self employed person? Or am I dreaming?

Here's some might-be-relevant facts:
I am single
I have no children/dependents
I have no major assets, I'm not a homeowner.
My only debt is 40k in student loans.
At the time of this post I have less then $3000 to my name.
I have no financial support from family or friends.
posted by INFJ to Work & Money (13 answers total) 7 users marked this as a favorite
I know I should market myself to small businesses.. and I know offering to build websites or improve websites of local businesses is the way to obtain my first clients..

Not necessarily. Small businesses can be kind of flaky and the payout may be modest. You might try independently contracting/consulting with deep-pocketed, larger clients who need extra hands during surge periods so you could charge a higher hourly rate. If I were you, I'd pick an industry (health care, financial, tech -- these all pay rather well) and create a niche.

With 3000 in savings and your debt, I can't urge you enough to save up at least one year of living expenses before embarking in self-employment. It's a lot of hustle and there will be slow periods. You could potentially work evenings and weekends to build up the funds and the portfolio and see how you like it before taking the plunge.
posted by mochapickle at 11:07 AM on June 5, 2016 [6 favorites]

It can happen. Web developers probably already exist in your area, but your academic background could help you niche with some parties. Only way to know is to network or cold call companies. Did your university department have clients? Might be useful to contact them and let them know you're available to work on projects.
posted by parmanparman at 11:09 AM on June 5, 2016

I think your current situation has a lot going for it in terms of making the transition to self-employment. Specifically, you have the opportunity to start seeking out self-employment jobs on a part-time basis while you still have a steady income. It also gives you the opportunity to assess if your self-employment potential can be a full-time endeavour or just a nice bit of extra money.

I'd suggest starting by outlining the skills you have that are most marketable and defining the type of client who might purchase those services. How would those clients find someone like you? Do you need to focus on local clients for in-person work or can you find clients globally and work remotely? What are current hiring trends in your field? I'm not in your field so I don't have any specific recommendations, but perhaps other mefites can recommend ways that you can advertise to your target clients.

Good luck!
posted by bkpiano at 11:12 AM on June 5, 2016 [1 favorite]

You mention starting by helping small businesses improve their websites, but also consider the following low-barrier-to-entry clients for building a portfolio: not-for-profit organizations, especially churches and membership groups (e.g., Rotary, LWV), small local governments (e.g., townships, boroughs and villages, depending on where you live), schools, and hobby groups, including small private clubs. Start with the ones with which you are affiliated and/or offer the best opportunity for exposure to the next tier of potential clients.
posted by carmicha at 11:38 AM on June 5, 2016

You don't have kids which means that you have free time and energy. Do your small business on nights and weekends until you have enough clients to support yourself without your current job. Take classes through your local community college (this will put a hold on your student loans) on weekends.
posted by myselfasme at 11:55 AM on June 5, 2016 [2 favorites]

Here's one thing: You don't 'jump', you 'transition'. There will be a lot of overlap, which is great, as you will have a safety net as you build your business. If you look at it that way, you can come up with a plan that will grow with you, rather than just taking a risk and jump into the unknown. Classes, volunteer, etc., will slowly transition you to having the skill set you need.

Good luck! I love being self employed!
posted by Vaike at 12:38 PM on June 5, 2016 [1 favorite]

You're in a new situation and you have $3000 to your name. Slow down, you shouldn't strike out on your own until you have a) savings; b) a professional network; and c) likely clients/customers.

See also this day-trading question from the other day.
posted by rhizome at 12:57 PM on June 5, 2016 [2 favorites]

No guarantees this will work, but this is what I did... Start with your local Chamber, look for people that do what you do and contact them. You don't have to join the chamber, but it's a good place to start. While you do that, build a client list and portfolio and start networking for your own clients. Once you get about 20 or so, you should get enough referral work to get to the point where you're hiring your own freelancers. I now find myself hiring independent developers all the time when I get busy. Over time, as you visit with clients, you'll probably find other areas or needs and be able to fine-tune your offerings and client niche. If you find you're working with a lot of dentists, then maybe you go to some dental conventions...

I will say it's not as glamorous as it seems from the other side of the fence. I work a ton of hours for a modest living. I've never been able to break that wall where I'm making a ton managing a lot of freelancers, but for me, that's okay. Oh, and I never did this, but a lot of people work with their local SBA. Good luck...
posted by iscavenger at 1:21 PM on June 5, 2016 [2 favorites]

Build up a roster of client contacts. In a year or two, email them all saying they can now get web design and development services at a fraction of what they pay your marketing company.
posted by xammerboy at 1:32 PM on June 5, 2016

Here's one thing: You don't 'jump', you 'transition'. Quoted for truth.

Self-employment is something you need to ease into. You say you're shy. . .how are your networking skills, both online and in-person? This is vital to freelancers.

As many others have said, take jobs on evenings and weekends until you build your network and client list out. Save at least a year of expenses before leaving your current position.

Also, take some classes or check out some books on self-employment regulations and taxes both for federal and your state and county. You'll probably need a business license, and you will need to understand how you track and deduct business expenses. You will also have to pay more in taxes, the celebrated "self-employment tax", and pay both state and federal quarterly.

Take it slow, do your research, and join us in the hustle that is freelancing :)
posted by ananci at 2:03 PM on June 5, 2016

Your local Chamber of Commerce may have free classes that will help you figure out what to do. You can also google up info on things like writing up a business plan. The Small Business Administration has a website with info.

But make sure you think of this as a real business where, ultimately, you need to make real money from it. Over the years, I have read far too many articles where someone has some flakey idea that they want to "help" small businesses or whatever and it winds up being almost like a charity in the sense that they are giving away far too much of their time and energy with little or not hope of it leading to real money for them.

There is nothing inherently wrong with targeting small businesses as your target market, but make sure you aren't doing this out of some idea that you can't market to big companies, established universities, individuals, etc. Do a bit of research. Don't just assume that because you will be a small business, your target market is other small businesses.
posted by Michele in California at 2:41 PM on June 5, 2016 [1 favorite]

Back when I was running my own business (did it for over seven years), I wrote So Ya Wanna Start a Business. It's out of date, but I still think most of the things on that list are questions you should at least ask yourself before jumping in.

Start working on the transition now. Pick up a freelance gig and use the proceeds to move you to the next step. I had three months of salary on-hand when I started my business, which meant that I could cover expenses for six months. I just barely squeaked by, as my first clients wanted to pay net-90. Build up your savings by freelancing on the side while you have a paying gig.

I also targeted "websites for small businesses" for a while. Be aware that most small businesses will have equally small budgets, will not want a lot of work, and your overhead will be huge. You'll spend months negotiating a contract that will barely allow you to pay the rent for a week or two. You're going to need a big client or two to smooth the cash-flow. Almost twenty years after I was doing that, there's a reason these small businesses STILL don't have websites.
posted by DaveP at 4:11 AM on June 6, 2016

But is it realistic to expect to make the same amount of money as a freelancer/self employed person?

It sure is! You can absolutely make as much money or more than some self employed people make! Even if you quit your job today and switch entirely to self employment!

Now the bad news -- you might have an overly rosy view of how much money people make being self employed. Many people work for themselves for less than minimum wage, or even loose money -- sometimes loosing money while getting a business established, or sometimes loosing money because their business venture fails. In some cases, there area a lot of upfront expenses. One can easily get tens or hundreds of thousands into the red with things like starting a restaurant, for example. But you'd have to make some very bad decisions indeed to end up in that much debt doing web development -- so you'd very likely make more money than that.

You don't have nearly enough money to quit your day job. That's for after you get your "side job" off the ground.

You'll need to make sure there's nothing in your employment contract that prevents you from having a side job in this area. Then work on it nights and weekends. Learn how to market yourself to others, try some small business meetups or Toastmasters. Check out local resources for entrepreneurs in your area, often there are classes. It's great that you are at a marketing agency now -- pay lots of attention and learn as much about marketing as you can while you are there.

Work on your credit score and get it as good as you can, and make sure you have at the very least credit cards available so you can buy food and pay the electric bill even if your clients aren't paying. Save as much money as you can.
posted by yohko at 11:17 AM on June 7, 2016

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