Being your own boss has a good ring to it, but there are Risks of self-employment.
Making that transition to being self-employed is what millions dream about. It’s filled with excitement, nerves, and a whole host of other emotions.
I still remember clearly making that transition over 25 years ago. It was good decision for me, not without its mistakes, successes, highs, and lows.
In this episode of I Hate Numbers I am going to run through 10 financial and business risks you are likely to face on your self-employment journey. Buckle up!
Risks of Self-Employment
If you have an idea of your business future, a plan, and the challenges and actions then you have choices. You can figure what you need to do to minimise risk and maximise opportunities. Avoiding bankruptcy becomes a lot easier!
Here is a flavour of some of those business risks, more are covered in the podcast.
Choose the right business structure to suit your business. Main choices come down to sole trader vs. limited company. We’ve dived deeper into this in our last podcast Have a listen and get up to speed.
Saving and hustling.
Who knows what lies ahead ? Certainly, the current pandemic has shown how life can be turned upside down .
Cash flow is what keeps you going and enables you to survive and thrive . Put money aside for those times when things are slow, don’t stop marketing, hustling, and selling.
Taking care of yourself.
In the early days of your business money is not going to be plentiful.
When you become self-employed, you don’t have the benefit of holiday entitlement, sick pay, or pension schemes. You must take care of all that, you are solely responsible for earning your living. No work, no money, at least in the early stages of your self-employment. Insurance may help.
At some point when you might be slowing down or when you want to change direction in your life, you need to have funds built up to sustain yourself. Pensions, savings, whatever your choice, think and act now.
A personal survival budget, with your business budget are recommended.
Working capital is the money that you need for the day to day business operation and activities. Imagine your business as a beautiful car. The car won’t get you anywhere without fuel into the tank to make it run, to make it operate.
Your working capital is the fuel that will keep your business going so that you reach your destination. Poor working capital means your business will be running hand to mouth, and on the edge of stopping!
Even if you run a business from home with a simple laptop at your kitchen table, you need to make sure you’ve got money to pay those ongoing bills.
Here are just some of the risks involved with your self-employment start-up, and ongoing. Have a listen to the rest of this podcast episode to learn about more challenges that lay ahead.
Grab a drink, make yourself comfortable, sit back and listen.
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Next week I’m going to be looking at the personal and lifestyle risks that you have when you’re your own boss. Stay tuned!
In This Episode
- Preparing yourself for self-employment.
- Understanding the risks involved with going out on your own.
- Managing your personal and business finances.
- Understanding what you need to sustain your business.