Working in your pajamas, setting your own hours, having good coffee at your desk for a change ... there are lots of reasons people dream of leaving the normal workplace and launching out to become their own boss. The perks are great, but the work is still hard. If you're serious about being your own boss and working from home, you can definitely do it; here are the steps you need to take. (For additional related reading, see Start Your Own Financial Planning Firm.)
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Know Your Financial Situation
The essential first step to becoming your own boss is figuring out how you're going to write your own paycheck. You need to know - to the dollar - how much money your own business will have to make in order to keep operating and keep providing you with a livable wage.
Before you start mentally decorating your new home office, sit down with your financial records and your calculator. You need to not only know your personal finances, but also the projected financial situation for your new business. How much money do you need to get started? How much money do you need to keep operating, week after week? With these numbers in hand, you'll be able to see if your business is financially viable.
Critique Your Stability and Personal Discipline
Money isn't the only factor when it comes to being your own boss. You need to have stability in several areas of your life:
Your own emotional state: Are you easily upset or panicked? Do you freak out in times of crisis? How do you respond to pressure?
Your personal support system: Do you have support from your family or close friends? Do you have at least one business-minded, trustworthy person to talk to about decisions and options?
Your time management skills: Do you overload yourself constantly? Do you meet deadlines? Can you make yourself stay organized? Being your own boss means keeping track of your own time, money and projects.
Figure out Your Work
If you're going to be your own boss, you've also got to be the employee; so what's the work going to be? Hopefully the answer is based not only on your professional skills but also your personal passions.
If you can find something you love to do, you do it well, and you can make money doing it as your own boss, you've found the sweet spot. Get specific with exactly what you mean; don't just decide you'll be a business consultant. Decide what kind of consulting you'll do and who your ideal clients are.
Unless there is an ethical or legal reason for not doing so, take several months to start being your own boss on a part-time basis. Set aside an evening or two a week and a day out of the weekend to start building up your business.
Why do this instead of jump right into it? Well, the simple truth is that it takes time to build up a client base big enough and regular enough to provide you with the income you need to live on. In the first several months of building up your own business, you may find that you don't have enough work to take up all the time you now have. So start part-time, hang on to that stable income and squeeze your "extra" work in on nights and weekends. Yes, it means you will be busy. That won't change once you quit your job and go at it full-time, so this will simply help you hone those time management skills. (We provide six tips for creating a winning business in a losing economy. See Starting A Small Business In Tough Economic Times.)
Figure out the Transition
As you build up your client base, you'll start feeling the call of the home office stronger and stronger. At this point, you need to figure out how you'll transition from your office job to your be-your-own-boss job.
If it's an option, talk to your boss about cutting down to half-time or part-time at your current job. You can ease that financial switch by extending your income, saving up whatever is extra and take off some of the pressure. If there's no part-time option at your job, then figure out a time frame for quitting and where you need to be in terms of clients and money at that time.
Set up Shop
Once you've got a time frame in place, you need to get serious about becoming a legal business entity, keeping tax records and financial documents organized, and having adequate space in which to work from home. If you haven't already, look into the options for legal business structures; you can choose anything from sticking with a simple sole proprietorship to forming a C Corporation. All have different benefits, drawbacks, requirements and, of course, taxes. Get professional help if you're uncertain about any of the options, because this is one thing that needs to be done right.
Along with your legal structure, you'll also want to take some of that transitional time to make sure your home office is set up for productive work. If you're having problems getting quiet time, private space or regular hours to work at home, you'll want to start figuring those problems out now and working on a solution.
Don't Burn Your Bridges
When the time comes to say goodbye to your old job, do it graciously - even if you hated everything about it. Chances are your old work somehow relates to your new work and you'll run across some of the same people. There's no need to tell people off or leave everyone with an unprofessional memory in their minds. So be courteous in your leaving, stay in contact with the people important in your new work, and don't slam the door on your way out. (Incorporating these steps will help your business thrive. Check out In Small Business, Success Is Spelled With 5 "C"s.)
Keep the Work Coming
The main secret to success in running your own show is to keep the work flowing in. Make it a priority to spend a regular amount of time cultivating new work even when you're already swamped. Even if you're booked solid, don't assume the work will come in automatically. Work tends to ebb and flow; if you don't hustle before the ebb, you'll be living on rice and beans until the flow comes back in. It's up to you to keep the flow going; make it a regular part of your schedule every week, and you'll find that you're actually a good boss to work for.
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The Bottom Line
The beauty of being your own boss is that the more you put into it, the more you really will get out of it directly. It isn't easy forcing yourself to be organized and on top of time management - even if you are organizing in your pajamas - but it's worth it to reap the benefits of a business that is successful and profitable, and gives you the freedom to take it in the direction you find most rewarding.
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