Running your own business? The truth nobody tells you about self-employment.
Considering a post-pandemic lifestyle change that includes self-employment or running your own business? Check out this article first.
– Peggy Richardson / Marketing Manager, Fraser Valley Continuing Education, Langley BC
I’m the child of employed-turned-self-employed parents. I grew up watching my parents build (at least) three businesses, learned the advantages and sacrifices that it requires, and now I’ve also been both self-employed, and an employee, along with my husband. I’ve felt the same challenges and advantages that my parents did with self-employment or running your own business (and that his parents did) first-hand.
The recent employment market has been a dramatic change from where we were two years ago: the labour shortage is not just here in Canada, or in the USA. It’s worldwide. It’s causing problems with fulfillment of goods that are made domestically, and overseas. Anyone looking for a job right now can essentially walk in anywhere, and be snapped up. Barriers like the lack of a degree from a major university are not the obstacle they once were, and employers are luring staff with bonuses and salaries that under normal circumstances don’t really make good business sense, because without the staff, they are closing their businesses altogether.
What does this mean for those who’ve spent the last two years contemplating their lifestyles, their values, and deciding to make the leap to self-employment? Is it the right time for you? Consider the following points as you make your decision. These are based on my own personal experience, and there are many, many different experiences, of course. But at least you can say you “looked before you leapt”.
Self-employment doesn’t give you more free time.
I laugh when I hear this. At the start of a new business, everyone knows you’re spending all your early mornings and evenings and weekends working just like it’s the middle of the day, learning the ropes, fixing problems, (hopefully) setting up systems for the future, handling customer service failures, and doing the one thing you really should be doing, creating a vision of what your company can become. If you have small children, be sure you’re prepared with adequate child care. And prepared to spend that time away from them. You will be very tired. You will feel rewarded at the end of the day, but you will be very, very tired.
Don’t assume you need to mortgage your house to invest in your business.
I know. This goes against conventional wisdom. If you have money that you can risk, then perhaps it’s different. But I watched my parents (and, as it turned out, other family members) heavily mortgage their homes in the early 80’s, to expand businesses that it turned out were about to be hit by a recession. A pandemic is even less predictable. The stability of your home is something most of us aren’t prepared to risk, especially with predictions of the housing bubble about to burst. There are other ways to grow.
Be sure you put aside as much money as you can.
I don’t just mean for a rainy day, or if there is a slow month. I mean to do that aforementioned investment back into your business, but also for things like business AND personal income tax. I personally know at least half a dozen people who’ve gotten into serious trouble with the CRA because they didn’t adequately set aside enough to pay just their personal income tax, and it caused an insane amount of stress. Just don’t go there. If you can make yourself an employee of your own business, even better.
You don’t get to be in charge.
Don’t think for a minute that self-employment or running your own business gives you a feeling of control. If anything, it’s the opposite, because it’s more like the buck stops at you. All the time. Instead, being the boss is more about relationships, and treating staff well, especially if perhaps they weren’t treated well in their past jobs. Sometimes, you’ll feel like a mom, a coach, a relationship counselor (although that’s obviously not a good sign) or a shepherd, getting everyone on the same page. Mutual respect is the name of the game.
You probably won’t make more money.
At least, not at first. Eventually, you’ll form an exit strategy for your business, which might include selling it, and that’s when you can cash in. While all business owners should obey the rule that they need to pay themselves properly, bear in mind that the salary you take from your company may be inconsistent, and it comes after all the costs are covered, employees are paid, and everyone is happy. The image of money rolling in the door like a river is only in the movies. Don’t get me wrong – the revenue should be there, or you should re-examine your model. But don’t expect to be swimming in diamond-studded Rolexes right away.
And finally, a non-negotiable: hire a good accountant.
If there’s anyone in your business that pays for themselves hundreds of times over, it’s your accountant. You want them on your side from day ONE. Not only will they help you do the day-to-day bookkeeping and paying suppliers, staff, and rent, they will help you analyze if your company is actually making the money you think it should. (A common problem for those of us in self-employment or running your own business.) It’s more than just about keeping you out of trouble – which they will – they can tell you which things are more profitable, and which you should think about dropping. They will tell you where your weaknesses are, and where you should expand. Knowing your pennies means you won’t accidentally waste dollars, as they say.
If you think the points I make above mean that I’m against running your own business, you’re wrong. I still do both, and probably will well past standard retirement age, partly because of a love of the excitement of running your own business. It’s a skill I’m adamant that I want my daughter to have, because I know she’ll never find herself unemployed. Even if self-employment is not for you – and being honest with yourself about that is probably one of the biggest things to know about yourself in your entire life – having an entrepreneurial spirit as an employee is something employers need to keep their businesses alive. Many people have a day job with benefits and a pension, and have a side hustle to give them that satisfaction and extra income. It’s entirely up to you.
Peggy Richardson is the Marketing Manager of Events Plus Management Ltd, the company that operates Fraser Valley Continuing Education. She splits her time between the Fraser Valley and the gulf islands. She’s been an IT professional, a marketer, a writer, a trainer, and a Star Trek fan for most of her life. Follow us on social media for more articles: @fvcontinuinged and Facebook.com/fraservalleycontinuingeducation.