Becoming Your Own Boss in Search of Financial Independence

In years past, people took to a freelance career because their vocation dictated that choice. If you opened a company, it’s because you wanted to run your own autobody shop or open a private practice. In today’s economy, ripe with gig seekers and part-time workers, people seek out the freelance lifestyle before deciding exactly what they want that career to look like.

There’s nothing wrong with this approach. If you value free time over the security of a 9 to 5, no one can tell you it’s the wrong decision to step out and find yourself a new career where you’re in control. You’ll have your work cut out for you, but if being your own boss suits your lifestyle, I say it’s time for you to learn how to start a business.

Unfortunately, the transition from structured employment to unstructured self-management sends a lot of people racing for the comfort of their old job. The growing pains are excruciating and the vague abyss that makes up the freelance workforce can be nothing short of terrifying. If you’re going to succeed and (eventually) achieve financial independence, you’ll need a heavy dose of two things: passion and determination. If you’re missing one of those ingredients, things will get overwhelming in a hurry.

However, as long as you have the right makeup and commit to the effort, it’s easier than ever to start your own business. And, not only is it easier to become self-employed, it’s easier to make a lot of money while you’re at it.

If becoming the CEO of your own LLC beckons you, or you’re just interested in snagging a few of the best freelance jobs on a temporary basis, here’s my step-by-step guide for how you can take the plunge and be your own boss.

1. Figure Out What and Why

This first step is a strange combination of obvious and tricky. Everyone knows you need a business concept even before figuring out how to start a business, and yet people continue setting out to launch companies without really knowing why they’re doing so. The number of clients I’ve worked with who have multiple defunct business licenses is astounding, simply because they didn’t have a clear concept of the business they intended to start.

Of course, you have to know what before you can answer why. What kind of business can you successfully operate? What freelance work can you see yourself doing every day, weekends included, and probably on the occasional holiday? Photography? Copy editing? Landscaping? Consulting work? Remember, the romantic vision of being your own boss can’t factor into this decision. If you like to garden on the weekends, that doesn’t mean your successful landscaping company will scratch the same itch. Turning a hobby into a profession is a 50/50 gamble; a great many people find out they don’t actually want to spend 50+ hours fighting to make sure a pastime pays the bills.

A kind of trial period before you seriously commit can help you determine if your business idea will keep you motivated. Start working on your website, dip your toes in the networking pool, find out what expenses and hardships people in your desired field run into. You’ll rarely have access to the best freelance jobs if you don’t have a few positive reviews from prior clients, so start small with little, low-paying or volunteer tasks. If you enjoy the work even while plugging away at another job, that’s a good sign you’ll continue putting in effort when you decide to go all in on financial independence.

As the business concept solidifies, don’t lose sight of why you’re taking this step. This involves more than identifying why you want to become your own boss; you need to convince yourself why this service will motivate customers and clients to spend money. There’s a certain amount of blind faith that comes with self-employment, but that can’t come at the expense of practicality. Don’t let passion muddy the waters of what people want and will pay for.

The field for freelance work is wide open. If you have an interest and a skill, you can turn it into a career. That said, you have to recognize the hard work self-employment requires, and you need to be confident that your new career targets something people will actually pay for.

2. Put a Price on Your Time

When you work for yourself and make the rules, everything can cost a penny or a billion dollars. You get to choose because the product is yours to sell. While a handful of people overvalue their services, most of us sell ourselves short in hopes of getting and satisfying clients. This model isn’t sustainable, no matter how much you love offering people a price break.

As soon as you start to identify as self-employed, you begin to work harder than you ever have in the past. Since the buck stops with you, you’ll find yourself writing emails and doing work at insane hours of the night. There’s nothing wrong with hard work, but when you crunch the numbers and realize you’re making $0.14/hour, you’ll probably become pretty discouraged.

You have to value your time. It’s not your clients’ job to realize your prices are too low and decide to pay you more. Most customers don’t know what the competitive rate is, so they’ll be thrilled to hear you charge less than others and simply pay what you ask. If you let that cycle continue, you’ll constantly be strapped for cash. But you’re not leaving a regular job so you can be your own boss and earn an unlivable wage, right?

In the early going, you’ll probably still work too hard for too little. Any successful self-starter spends too much time double-checking their work and trying to reach new clients. And, it’s totally viable to offer introductory rates if it means you get people in the door. It’s especially useful when you need to build a portfolio to attract the best freelance jobs later in your new career.

The hardest part will be acknowledging your worth and asking others to believe it. Every bit of doubt that creeps into your mind will have you thinking you don’t yet deserve a competitive wage, or that asking for reasonable money will turn people away. One way or another, this mindset has to go. If you spend the first few months working your tail off and have hardly any money to show for it, you might get too frustrated and throw in the towel. Quitting because you undervalued your time would be a sad way to end your shot at financial independence.

So, you either embrace the imposter syndrome or start a daily mantra to build yourself up. Do whatever it takes to convince yourself that your time has value and anyone using your services needs to pay accordingly. Offer the freebie here and there, but don’t settle for scraps when you deserve so much more.

3. Get a Business Name and a Banking Strategy

For many, this is the fun part of starting a small business. Naming your new company lets you be creative and gives you something to talk about at dinner parties. Even if you’re stepping into a sole proprietor role and don’t feel like you need a clever moniker, you still have to think up some sort of title for all your online business tools:

● Website

● Facebook page

● LinkedIn

● Social media

Whatever name you land on, attaching it to multiple sites will boost your web presence and give you the networking tools you need to make quick connections. There’s nothing worse than describing your business, getting someone excited, and then having no way for that person to connect with you online so the relationship fizzles out.

Naming your business is easy in some ways, as you just have to pick a name and get a website and that’s that. However, this is your first step in branding your business. The title you choose will have people forming immediate opinions about you and your services, and you want those thoughts to be both positive and accurate.

It’s important to remember that you can always rename and rebrand your company. If the need and inspiration arise, you have the ability and authority to rework your website and get a new Twitter handle. Having just gone through a company name change, I can say it takes a lot of effort and coordination, but it’s worth it if you go about things in the right way.

Perhaps the most complicated part of naming your business is picking the little letters that go at the end. Are you an LLC or an S-Corp type of operation? Choosing a business structure can be a headache, especially when you’re diving in for the first time and don’t know how to start a business in the legal sense.

It’s hard to know how business licensing will work when you’re self-employment is in the early stages. If you start small and work for local clients doing relatively simple stuff, you should be fine with a sole proprietorship. Working with another party often leads people straight to an LLC, but you can also form a basic partnership with relative ease and avoid some of the red tape that comes with a registered business.

Don’t rush to incorporate because you think it’s the only way to be taken seriously. You can have a long and fruitful career as a sole proprietor. Just make sure you think about the different tax scenarios and liability issues, as the specifics of your area of freelancing will help determine what steps you should take.

And, since we’re thinking about business structure, we might as well talk about business banking. It’s always a great idea to keep personal and professional finances separate, especially when tax time rolls around and you try to maximize your business deductions.

Unfortunately, it’s not as easy as walking into a Chase or a Wells Fargo and opening up a business account. Business banking usually requires a minimum balance and some documentation regarding company registration and history. As much as you might want a separate bank account with a flashy business credit card, you might not be able to get it until the self-employed income gets a little steadier. Better to focus on tracking income and spending and worry about separate accounts down the line.

In the meantime, think about the ways in which you’ll pay and be paid for things. Do you have the means to offer credit card processing, or will you limit payments to online transfers that will be easy to track? Do you have the discipline to put business expenses on a certain credit card and still pay that balance down each month so you don’t immediately load your sole proprietorship with debt?

Transitioning from employee to self-employed usually requires some upfront spending, so a little debt might be unavoidable. It’s when you become too accepting of debt that your initial business spending turns into a problem. Pay for your website, your registration fees and any necessary inventory; don’t start taking people out to lunch every day just because you can write it off as a business expense.

To recap:

● Name your business

● Structure your business

● Figure out your business accounts

Some of you will have an easier time of this than others, all depending on what type of freelance career you pursue. Whether your company is just a sole proprietorship under your name or an LLC with a fancy title and a trademark, it’s important to figure this stuff out in the early going. Even if things change later, you need to have a clear and concise business plan as soon as possible.

4. Spread the Word

And now, we network. Being your own boss means putting yourself all the way out there.

Networking means different things to different people. Some of you may picture attending fancy cocktail parties to talk up your company around fancy people. Others envision long days of cold calling potential clients, hoping that one out of a hundred people will take an interest in what you have to say. All of the networking strategies work in their own ways; you need to find the method that works for you and jives with your recently branded company.

In my view, the most important part of networking is staying connected to people within your circle. This means maintaining outreach via email blasts and blog posts; sending individual messages to business contacts when you have important updates; staying active in the community and supporting the people and businesses you hope will support you in return. You can never tell from where the best freelance jobs will fall into your lap.

Networking doesn’t have to feel like shmoozing. If you worry about seeming disingenuous, find a different way to connect with people that gives you a sense of integrity. Having worked for a Wall Street firm and now running my own company, I’ve definitely seen both the good and bad sides of connecting with people to promote your business. Now my primary form of networking is to try and help people. Whether it’s this blog or offering free advice to a neighborhood parent, I try to spread the word about Kovar Wealth Management by having a positive effect on people’s lives.

You can spend money on a newspaper ad or a local radio commercial, and those efforts can be hugely beneficial. In my experience, you’ll have more success if you just step into the community and see who needs your help. Connect with other business owners who might want to cross-promote, or sponsor a local charity. Be there for people and there’s a good chance those people will be there for you.

And, of course, think up those clever digital marketing campaigns and post online content like crazy. Networking can be fun, but there’s also a busywork element to it. Don’t slack off when it comes to building that web presence.

5. Stay Flexible

You have to be a little stubborn in your determination to become self-employed. At the same time, you’ll struggle mightily if you aren’t able to roll with the punches.

You never know what clients will come your way in the early days of a freelance career. It’s entirely possible people will ask you to do work you don’t know how to do. While the fear of failure might push you toward turning down job opportunities, I’d advise you to give it a shot. Self-starters learn by doing, and I’ve certainly learned a lot of things on the fly since opening my own business. If you aren’t willing to step out of your comfort zone, you’ll severely limit your opportunities for growth.

Adjust when you need to and accept that the best-laid plans often go awry. You might set out to become a novelist and end up working as a freelance marketing director for multiple companies. Cliché as it may sound, the journey of achieving self-employment is much more exciting than when you finally settle into a long-term position.

Becoming your own boss is an incredibly difficult undertaking, and yet anyone can make it happen. If you can choose the right field, find the right motivation, and develop a solid strategy for making all the pieces fit together, your dream of becoming self-employed is much more attainable than you might expect.

Make it happen!

Taylor & Megan Kovar

The Money Couple