Are you considering self-employment this year? Or perhaps you’re currently in the early stages of running your own business? In either of these cases, there are a few things you’ll need to know about self-employment. Here are 11 top tips to consider if you want to be your own boss:
Make Your Passion Your Pay Check
The first thing to know about self-employment is to have passion for what you do. It will be that extra driving force in your business. Picking an idea purely for money-making purpose with no real passion for your product or service will prove more challenging in the beginning when you’re trying to get it off the ground. Passion is what will fuel you more in the long run.
Financial Planning
Depending on the nature of your self-employment, the beginning may require a few investments, particularly if you are a product-based business. In any case, you should financially plan what investments you will be needing for your business and budget accordingly. Will you need to hire people? What tools will you need? There are also certain types of insurance required for certain businesses. This is also necessary to look into.
Tax
HMRC notes that as soon as you start making any profit from your business, you’ll need to register as self-employed, even if you’re not earning enough to pay tax. The annual tax threshold is £12,500 per year. If you earn more than this annually, you’ll need to pay tax. Not paying tax and filling in your self-employment assessment form can result in a fine. So make sure you are on top of your income. An accountant can help you with all of this if you need the extra guidance and would prefer not to deal with all this side of things.
Is Your Idea Business Worthy?
So you’ve got an idea – that’s great! The next step is to assess whether it is business worthy. Remember; the bottom line of business is to make a profit. So you may have an idea that sounds good, but the business element is key. Is there a gap in the market for your idea? What is the unique selling point (USP)? Why should people buy your product/service? These are all questions to help filter down and decide on your business-worthy idea.
Be Careful With Who You Choose To Work With
Oh, have I learnt this the hard way! Particularly as there aren’t many laws protecting working rights for freelancers. But generally, with being self-employed, you are responsible for putting things in place to help avoid issues surrounding the exchange between your clients or customers. Freelancers should make template contracts with regular clients and send them to their client when starting work. Also, legally freelancers have the right to charge £40 interest for late invoices.
Happy #NationalFreelancersDay to you all. Please feel free to copy and use my invoice template footer which has had a dramatic effect on the speed with which I am paid. pic.twitter.com/Itn3nhFsh3
— Martha Sprackland (@mj_sprackland) June 28, 2018
Unfortunately, if you’re a freelancer or even just in the early stages of your startup, some people will try to take advantage of your early steps. So, to help filter out those less serious clients/customers, you can ask for a deposit before starting work with your client and familiarise yourself with your business rights. Also if you’re a service-based business, in particular, researching potential client’s background through their website, reviews and even asking previous people who have worked with them on LinkedIn. I have a striking example of how this saved me from what could have been an awful working situation! Needless to say, do your research and putting things in place, are steps towards being careful with who you’re working with. This is an important thing to know about self-employment.
Research Competitors
Once you’ve decided on your business-worthy idea, look at your competitors and how they market themselves. What social media platforms are popular in your niche? What will be your marketing strategy? Make plans to deliver this. Researching your competitors can help you get an understanding of your target audience too and what they gravitate towards.
Find The Right Working Space
Your working space plays a significant role in how you carry out your work. Many people start out working from their home when first becoming self-employed (if your business allows it). But as time goes on, you may want to work in other venues.
There are several free working spaces available for you to switch up your working environment as a freelancer. If you need your own building for your business, or would prefer to rent your own office/ coworking space; this is something else you’ll need to factor in your financial planning. Nonetheless, finding a space to work effectively with all the tools you need is something to prepare for when becoming self-employed.
Be Organised
Time management is also a key feature of self-employment. You’ll likely be working with others in some shape or form, so you’ll need to schedule plans and respect their time. Poor time management is unprofessional and can deter others from doing business with you.
Time blocking your tasks through Google Calendar, for example, can really help allocate your time specifically and keep yourself accountable. Keeping your working space organised also helps keep your mind clear when working. It helps prevent you from rushing around to look for work files when you need them.
Self- Motivation
This is a must as a self-employed person. There is no micro-management overseeing your work as you are the boss! This links to why having a product or service that you are passionate about helps so much, as it will help motivate you.
However, running a business means there will likely be aspects you’re not as fond of. For example, for me, it’s the admin side of things. However, these things will need to get done for your business to work effectively and as the boss- you need to make sure these things are all in order. Being self-motivated helps make the process easier.
Sole Trader or Limited Company
How will you register your business? Think about your company size and how you would like your business to relate to you. If you’re a freelancer, for example, and want your business to link directly to you, you may want to register as a sole trader. However, if you’re a product-based business, you may be more likely to want to register as a Private Limited Company.
Know Your Business’ Worth
Research into the market rate of your field, but also recognise the USP that your business brings and reflect this into your pricing plan.
If you’ve got a wealth of expertise in your field, this too should be incorporated in your pricing. Quality service attracts both clients and customers, so if you offer this you should honour your business’ value and the standard that you bring. Granted, there will be times where clients or customers try to bargain, but you should always have a line where you are not prepared to go below in order to maintain the value of your business.
These are just a few things to know about self-employment before you decide to take the plunge! Please feel free to comment on any other self-employed tips you may have.
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