Moving from being employed to self employed?

[stndn]

Pardon me for saying this, but I'm starting to get sick of the daily 8-6 schedule that I'm living now.

Every day, at least five days a week, the routines are the same:
Wake up at 6, breakfast, shower, commute, work 8 to 6+ (with lunch break at noon and browsings in betweens), drive home, dinner, sit down and check email at home, listen to radio for a while, go sleep.


Sometimes I think about leaving the 8-6s and start my own business. That way, I can at least work on my own schedule (to some extent) and not have to keep with the tight hours and deadlines.


Is there a lot of people here who has moved from being employed by others, to being self employed?

How did you do it? Was it hard to begin?
What did you do the first time?
How did you come up with the capital to start your own business?
Did you succeed right off the bat? Or had to restart a few times before settling down? Any other major hurdles?
Did you hire any employees or work on your own? Form a partnership with your friends or family?
Did you regret it? Did you have to return to being employed?


Yes, there are a lot more questions, but these should hopefully cover for now.
And yes, I know I can always move out of the daily routines. That's why I'm thinking of these now.

 

[snoopdoug1]

I think you'll still have deadlines and such... it's still a business afterall. Actually, the people that I know who start their own company work more. They're constantly working, but they do make more money.

 

[Gibson486]

If you start your own business, change that 8 - 6 day to a 8 AM to 10 PM day.

 

[lokiju]

Good questions...I'm looking into doing my own thing also.

 

[dirtboy]

Originally posted by: stndn
Is there a lot of people here who has moved from being employed by others, to being self employed?

I don't know. I am self employed and I once worked for the man...errr... woman.

How did you do it? Was it hard to begin?

It all began when my wife filed for divorce and I moved back home. Extremely hard. I hated every part of it.

What did you do the first time?

Sold investments to educators.

How did you come up with the capital to start your own business?

My dad just started the business and he was doing quite well out of the gate. I rode in his coattails for awhile until my residual income rose.

Did you succeed right off the bat? Or had to restart a few times before settling down? Any other major hurdles?

The business did, thanks to my dad dabling in it for a few years. I failed, but that was expected.

Did you hire any employees or work on your own? Form a partnership with your friends or family?

My dad & I now have a LLC. Still no employees; although I'd like to hire my gf at some point.

Did you regret it? Did you have to return to being employed?

At first, yes. I could have taken a job a friend offered. I'd never be the person I am today. I work hard, but I make good money and this is only the beginning. At my age, with my skills, there is no limit to my success. Especially with the opportunities that will be unfolding in the next couple weeks.

And yes, I know I can always move out of the daily routines. That's why I'm thinking of these now.

Get out of as much debt as possible and start saving some money. Research opportunities. I know there are ways to get money to start businesses, but I didn't have to do that.

 

[stndn]

thanks for the responses so far.
Yah, i've heard a few things that say being your own employer actually cost more time and work.
In addition to taking care of own self, we also need to take care of our employees, which in itself is a headache.

But still, the hope for better income and more flexible hours is just too much to resist.

 

[DAGTA]

Originally posted by: stndn
Is there a lot of people here who has moved from being employed by others, to being self employed?

How did you do it? Was it hard to begin?
What did you do the first time?
How did you come up with the capital to start your own business?
Did you succeed right off the bat? Or had to restart a few times before settling down? Any other major hurdles?
Did you hire any employees or work on your own? Form a partnership with your friends or family?
Did you regret it? Did you have to return to being employed?


Yes, there are a lot more questions, but these should hopefully cover for now.
And yes, I know I can always move out of the daily routines. That's why I'm thinking of these now.

I'll try to answer your questions based on my experience and add more info, too.

I became self-employed when I was 25. Same as you, I was sick of being on a fixed schedule and subject to the whims of a boss. I also had just walked off of a very bad job (first time in my life I walked off a job) and didn't want to go through another job like that.

The first question you need to ask is what do you mean by self employed? Do you wish to be a contractor that grows his own business by contracting himself out and then gradually hiring employees, or do you wish to start a storefront business like a restaurant or sports equipment store, etc?

I think it's easier to start a business as a contractor than to start a store front business. Less start up capital needed and overall expenses.

The hardest part about beginning is getting over the anxiety/nervousness of the idea. Just don't dwell on that aspect of it.

How did I do it at first? Well, I spent a month looking for jobs, sending out resumes, and thinking about starting my own business. I wanted to start my own but I was uncertain about it. A friend sent me a listing of a company looking for a contractor, not a full time employee. I decided to give it a shot. They were impressed with my interview and offered me the contract. I took it and then learned the laws, rules, and works as I went. You definitely make more mistakes doing it this way, but it's do-able.

As a contractor doing computer programming, my start up expenses were low. I needed a laptop to be able to take my work to my clients for demonstration and I needed legal licenses for all of my development software. How did I get this start up capital? Credit cards. Not the best way to go but it can be done if you do it carefully and have a good credit rating.

I have succeded, so far. Being 25 when I started, most companies weren't willing to pay me the average rates for my area. They viewed me as too young and inexperienced to 'be worth those prices'. Be aware: you need a thicker skin since no one worries about offending a contractor. I took the lesser rates and have gradually raised my rates over the past 2 years and 2 months.

I have just recently hired my first part time employee. He's a much better designer than me so he does only design work for me on projects.

I do not regret it at all! So far I have not had to return to the employee world, though I've had a few offers. None of the offers were enticing enough. One person asked me what it would take for me to give up my business and work for his company. When I told him the salary it would take, he choked and wished me luck with my business.


Some things you need to be aware of:
1. Your taxes are going to go WAY up. WAY up. If you are making $50,000 for someone else, you will need to pull in at least $65,000 to be comparible in take home pay. Probably more depending on your deductions and expenses.

2. You will have more expenses. No one is paying your health care or for the supplies you need to do your work.

3. You have no paid time off. If you get sick and don't work, you lose money. If you take a vacation, you lose money for the days you don't work.

4. Flexible hours are great... and dangerous. It's REALLY easy to fall into a trap of sleeping in and working late to make up for it.

5. You will need a thick skin. People will be rude to you.

6. Business cards, nice dress clothes, and a good car go a long way with impressions. Use them.

7. You will need to make your own retirement plans. No company is doing it for you and you won't have a pension.

That's the basics. If you want to know more, feel free to PM me or post more questions here and I'll try to answer them as best as I can based on my experiences.

It can be worthwhile. I am making more money than I ever did working for anyone else, and I have the freedom to choose my clients/projects and set my own hours, but I do work for it and I've still got a long way to go before I am where I want to be.

-DAGTA

 

[LED]

My #1 concern and point out would be Insurance as that is thye best perk from Employers if available...so cover yourself and yours!!

 

[stndn]

Well, most of the time I don't get insurance working here anyway (I'm not in the states)
I do get medical benefits, but it's usually only up to one month's salary per year.

DAGTA, thanks for the useful information. Yah, I realize that towards the end, I'll spend more money to pay myself than if I sit down monkeying with codes for the monthly salary.

I was actually thinking towards starting my own consulting or web programming business. Well, more of a freelance type of work (or contract? what's the difference?). A few things that got me stumped was where to start looking for projects, and yes - the anxious and nervous feeling on how to get things started.

Oh yah, thanks for the offer for help through PM. I think it's better (if you don't mind) to have Q&A here. Maybe it's going to be helpful to others, too -)

 

[rh71]

I've been thinking about this as I have had a business idea for a while. I would love to do my own thing... no bosses... no responsibility other than what I assign to myself.

The problem are the hours. There's no way around it - at least not until it gets off the ground so much so that I can trust others with it... and that won't be for a few years. I'm not so sure I can handle ridiculous hours 7 days a week for any length of time.

 

[DAGTA]

Originally posted by: stndn
Well, most of the time I don't get insurance working here anyway (I'm not in the states)
I do get medical benefits, but it's usually only up to one month's salary per year.

DAGTA, thanks for the useful information. Yah, I realize that towards the end, I'll spend more money to pay myself than if I sit down monkeying with codes for the monthly salary.

I was actually thinking towards starting my own consulting or web programming business. Well, more of a freelance type of work (or contract? what's the difference?). A few things that got me stumped was where to start looking for projects, and yes - the anxious and nervous feeling on how to get things started.

Oh yah, thanks for the offer for help through PM. I think it's better (if you don't mind) to have Q&A here. Maybe it's going to be helpful to others, too -)

Web development and programming is exactly what I do. Freelance/contract are pretty much the same thing.

My largest contract came through a newsgroup listing.
Many of my smaller contracts have come from people I have met and given a business card to. Always carry at least three business cards in your wallet and refill them each night.
After a few projects, word of mouth starts going around if people are happy with your work and then you get more projects, etc.

You can also buy ad space in phone directories, newspapers, internet sites, etc. Just depends on how much you want to spend and how much return on investment you think you will get.

I've been successful mostly with just word of mouth and being very friendly/agressive with talking to people and handing out my business cards. If you are friendly and kind to people, your name will get around faster.

 

[stndn]

Will it be hard to get a start at freelance/contract while working full time at my current job?

Unfortunately, I had the most common mistakes of being afraid of failure.
I realized that having a cushion to fall back to means I won't really put much effort into starting on my own.
How did you actually convince yourself to remove the cushion from behind your back and jump straight into your own venture?

Oh yah, another thing.
Since I don't really have a real world portfolio (I can't really use my current job as portfolio, right?), do you think it's a good idea to start from doing almost-for-free freelance and development work? Or just go ahead and get started on charging whatever I feel like charging?

How did you present yourself to your first prospective client? Did you just show them your portfolio, or present them with sample screenshots/works on how you can turn their website to something fancy? Or was it mostly all talk and drawings on paper?

My friend network is quite limited, so I guess relying on word of mouth will be hard at the beginning. Ad space will cost a lot, but I've been considering investing on a new laptop (mine only has battery that lasts for 3 minutes, so it's more of a desktop now -( ..... )

 

[shud]

My dad did it and I think he regrets it. He works MORE hours. There's no benefits, no paid vacations, etc.

 

[MadPeriot]

I did just like DAGTA did but computer/web/network consulting. I actually went from working for the MAN to self employed (2 years) and back working for the MAN now. Few of my experiences:

Started freelancing for a small company and working out of my apartment. small company referred me to more and more clients work became more hectic (which is a good thing) and income starts to stable. I started a corporation to separate business with personal and protect my assets. Taxes are higher but good write offs when you are a contractor. My days were always unexpected. I may be called in on a Sunday night to no calls for the whole day. Doing administration stuff such as filing, invoicing, researching, marketings, and writing proposals, all that and more are nonbillable hours you work hard to establish your business. I tried to always cover myself in terms and contract so no one can screw with you. You will develop an art just writing these things because it defines your rights, what you will be doing for the client, and get paid (your contract is your best friend.) Later I hired 2 programmer, 1 tech support, and realized I needed a good partner. I grew the business to at least 10-12 clients from web development, tech support, and network support. On days where there are no urgency or support I go to mixers and seminars to learn whats out in the industry. Customer service is the key to my business. I spent over 1k on marketing that did nothing for me, best thing was word of mouth from my other clients. Did this for 2 years and one of my client who was a big corporation wanted to hire me and offered me a job that I couldn't resist. You will work so much harder when its your own, I started missing the regular 8-5 daily job so I went back. Hope this helps.

 

[DAGTA]

Originally posted by: stndn
Will it be hard to get a start at freelance/contract while working full time at my current job?

Unfortunately, I had the most common mistakes of being afraid of failure.
I realized that having a cushion to fall back to means I won't really put much effort into starting on my own.
How did you actually convince yourself to remove the cushion from behind your back and jump straight into your own venture?

Oh yah, another thing.
Since I don't really have a real world portfolio (I can't really use my current job as portfolio, right?), do you think it's a good idea to start from doing almost-for-free freelance and development work? Or just go ahead and get started on charging whatever I feel like charging?

How did you present yourself to your first prospective client? Did you just show them your portfolio, or present them with sample screenshots/works on how you can turn their website to something fancy? Or was it mostly all talk and drawings on paper?

My friend network is quite limited, so I guess relying on word of mouth will be hard at the beginning. Ad space will cost a lot, but I've been considering investing on a new laptop (mine only has battery that lasts for 3 minutes, so it's more of a desktop now -( ..... )

1. If you keep your full time job, you will only be able to attract small contracts. Many of the large contracts will want you to work a minimum amount each week. For instance, my current large contract is paying me for 40 hours week so long as I prove my 40 hours each week. It's almost like a full time job, except I do it from home and get paid as a contractor. If the big clients know you still have a full time job, they are very unlikely to hire you. However, starting with some small projects on the evenings and weekends is a good way to test the waters.

2. Removing the cushion was actually something I did in anger one day when I hit my 'limit' of BS from my last boss. I was working a job where I was traveling all over the US, working 40 to 65 hours each week, and paid a salary of $38,500. There were a lot of small things that added up until one day, after working 10 days straight out of a hotel, my boss calls me up in the morning and talks down to me like I was 8 years old. I packed up my bags, knocked on his door, handed him my hotel room key and said 'see ya'. I rented a car and spent the 15 hour drive home thinking about my career. That salary was not worth that job. I have had no trouble making much more than that on my own.

For someone that has a good/decent job, it's harder to decide what to do. I think 'testing the waters' as mentioned in #1 is a good option to see if you want to quit your regular job.

3. Decided what rates to charge is tricky. First, use monster.com and other sites to get a feel for the average range for your line of work in your area. After that, keep in mind a few things:
- When you are new and starting out, it can be good to be lower than avg rate in order to get started and make a name for yourself
- Humans have a psychology thing where they think paying more = better quality. So, many times, you won't get hired unless you charge enough. I know that sounds odd but it's really true. The contractors that charge more often get more respect even if they are BS artists (I've met a few), because people think, "Oh, he charges so much, he must be an expert!"
- You can vary your rates based on the project and the client. I usually charge less for small simple projects. Also, I like to see people start their own businesses so sometimes I'll exchange services with a person that is just starting out and can't afford to pay me. For example, I setup a simple website for a woman starting a massage company. She matched me hour for hour with massages for my work.

4. With my first client, I talked to them on the phone briefly before meeting them and was told that the meeting would be an interview of me. I didn't have a laptop, yet, so I printed out some of the code and designs of previous work I had done and took that with me. Two people interviewed me together: the owner of the company and his technology manager. The owner focused on the idea and estimated timeline of the project. The technology manager tested my technical knowledge and programming abilities. A few hours after the interview, the technology manager called me, offered me the contract and began negotiating rates with me. I think the two reasons I landed that contract were: I showed competent skill. I probably wasn't the most experienced of the people they interviewed. Second, I think I had the lowest rates of anyone they interviewed. Keep in mind, as I said above, I had just come off a job that paid me less than 40,000 salary so I was fairly clueless as to what I was really worth. My first rates were higher than the equivalent of 40,000 a year but still very well below the market average at that time.

5. Advertising is so often hit-or-miss. You can spend a ton of money and get nothing out of it and that is really disappointing. So long as you are polite and friendly with people (and try to show confidence without being arrogant), you can build up a small network fairly fast, especially after you have your first contract. Each time you please a client, they WILL mention your name to other people they encounter and that goes a LONG way. Make up some business cards for yourself. You can probably get 500 or so free somewhere on the internet. Keep them on you and hand them to anyone you discuss your business with. They may not use it, but they may pass the card onto someone else. If you can help it, never pass up an opportunity to network and make a good impression.


As others have said: you can expect to work long hours. It's typical for me to be on my laptop 10 to 14 hours each day during the week and at least a few hours on the weekend. Consider I just bought this laptop in March and the lettering on my keys is already starting to wear off. You will also have many unpaid administration hours to keep your business running, as someone else mentioned.

However, it is rewarding to know that you:
a) set your own hours
b) set your own projects
c) have no pay ceiling, you can go as high as the market will bear and you can prove you are worth
d) are growing your own business and the rate it grows is up to you

-DAGTA

 

[stndn]

:thumbsup:

Very informative and helpful. Thanks for all the insights, everyone.

Now, to pick a time to get everything started....
(hopefully as early as beginning of next year)

 

[Markbnj]

It's a big change. I would bet fewer people plan it and leap in a controlled manner than fall gradually into it from the work they do. Can't prove that, though. I never had the guts to go the straight solo consulting route. It's got to be tough to market yourself effectively and still get the work done.

It's easier in some ways to start a bigger business, which I did with two colleagues in 1997. Took it to $15m in revenue and then the market changed and we slid down to $8m before we were acquired. I didn't get much, but the venture guys did ok . The first three years of that thing were an absolute blast. A small team working all hours, eating crappy chinese food and setting up Unreal tourneys on the file server at 2 am. Once it got bigger it wasn't half as much fun. I'd do it again in a minute if I had the right idea and my wife would let me.

I think a good mix might be a consultancy with a few people, enough to spread the load and provide a completer package of services. Still have to market your a$$ off though.

 

[dartworth]

Originally posted by: Gibson486
If you start your own business, change that 8 - 6 day to a 6 AM to 10 PM+ day.

 

[yobarman]

Good thread! "Work 40 hours a week for survival... anything more is for weatlh."

I'm graduating college in Febuary and starting a business with a good friend of mine in Denver when April rolls around. Since we decided on doing this, I have been reading and listening to every piece of literature and audio I can get my hands on. I think I learned more about running a business in the past 6 months than people learn in 10 years of running them, and I haven't even started yet. Anyways, we have a few baseline clients that could keep us fed for a while. By our calculations we could spend two days a week on said client's work and have the rest of the week to find new customers. Since theres two of us, we can break up the general work more efficiently than one person, and we have skills that supplement each others. Also, my partner already wrote some DB software to keep track of invoices and call logs, etc... and since I'm a graphic desginer, advertising will be very good (not too Toot my own horn lol)

The key in making it big is customers. Without them you're nothing. You have to be relentless in keeping your funnel of customers filled. You have to be able to find new ones, satisfy the current ones, and ditch the deadbeats. Although I'm an artist by trade.... my goal is to be the best possible sales person I can be. Aim for the big fish. You have to find something that seperates you from all the other people doing what you do. Whatever it is, it's your competitive advantage that will decided wether you succeed or fail.

Enough rambling... All i know is that we're hungry for money like no one else we know. If you don't see me on the cover of Forbes magizine in 10 years then I've failed