There is nothing quite like being your own boss.
Running your own freelance business can be one of the most exhilarating and thrilling experiences of your life. However, it’s important to remember that being self-employed is also equal parts exhausting and scary.
Just like with anything else running your own business has its own faults and there are certain realities that you need to get ready for when it comes to striking out on your own.
In a recent study by Quickbooks Self-Employed, 500 self-employed individuals were asked to share their day-to-day experiences with running their own business. The report, titled “The Realities of Self Employment”, gives us an insightful look into what it’s like to run your own business.
To better prepare you for that transition from employed to self-employed, let’s take a moment to examine the not-so-fantastic realities of self-employment.
Reality #1: Expect to miss a birthday or two
While you might not have to answer to a single boss anymore as a freelancer, you do have to find a way to please multiple clients at the same time. To make it even worse, each one of those clients will have their own very specific ideas about how things should be done.
Unlike a regular job where your work life is neatly organized into structured hours. As a freelancer you do the job that’s given to you, whenever it’s given to you.
Which can easily translate into you staying up on the weekend to get a project done, and waking up ludicrously early the next day to get started on the next one. Meaning that it can be very difficult to create an organized schedule with a clearly defined work-life balance.
All of this making it very easy for freelancers out there to choose work over friends and family.
According to the Quickbooks Self-Employed Study, 22.2% of respondents say that they miss important social events a few times a year. Closely followed by 19.4% of respondents who say they miss important social events every week, and 18% choose work over socializing every two weeks.
Across the board you’ll find that freelancers will regularly find themselves working through the weekend, with over 60% stating that they work every weekend or every other weekend.
Not only can this be detrimental to a freelancer’s health with a higher risk of burning out, but it can also damage your personal relationship with the people you care about the most.
As a freelancer it’s inevitable that you’re going to miss a few important social occasions. But you can help mitigate hurt feelings by being communicating clearly to your loved ones that just because you work for yourself doesn’t mean that you suddenly have a load of free time, and that sometimes your work will have take a higher priority.
While it can be difficult to have those conversations, it is incredibly important that you manage those expectations early.
Reality #2: Cashflow will be your biggest worry
As liberating as it is to be your own boss, it also comes with the responsibility of having to deal with the day-to-day worries of managing your own small business. Chief among them being making sure that you have enough money coming in every day. I
According to the Quickbooks study, for the majority of all freelancers surveyed they reported that their biggest worry was managing cashflow, closely followed by uncertainty of the future. The survey goes even further to find that 20% of respondents stated that they struggle to make ends meet.
This is especially true amongst freelancers over the age of 45, with 50% stating managing cash flow as their biggest challenge. This is often due to the fact that the majority of older freelancers have invested their own money into their business, are supporting their families, and are closer to retirement age.
Running a businesses, even a small one, is an expensive endeavour. Not only do you have to make sure that you’re paying yourself a livable wage, but you also have to ensure that you’re investing enough money back into the business to keep it running.
Cashflow is a simple enough concept to understand but can be incredibly difficult to master for a variety of reasons. For example there are times when client might not pay on time, materials might suddenly cost more, and sometimes work can just dry up. All of this amounts to a precarious financial situation for many freelancers.
But it doesn’t have to be that way.
The best way to circumvent, or at the very least lessen, cashflow worries is to implement some basic procedures into your business. The number one being learning how to manage and track your freelance finances and making sure you know exactly where your money is going.
Another procedure every small business owner should implement is create payment terms where clients either pay upfront, or you collect a deposit before you begin any work. Try adopting freelance tools that will automatically chase clients over late payments for you so you can focus your time and energy on actually working. And, finally, do your best to set aside at least a few months worth of savings as a safety net for those cash flow gaps.
While you might never stop worrying about cashflow as a small business owner. These simple tips can at least save you a few hours of sleep every night.
Reality #3: It’ll be Difficult NOT to Work
Something that’s often hard for other to wrap their heads around about freelancing is that you don’t have one job, you have many.
As a freelancer you’re not just a worker, but you’re suddenly your own boss too. Freelancers are essentially small business owners and like most small business owners they’re often the company accountant, salesperson, receptionist, and everything else in between.
As I’m sure every small business owner in the world will testify on, there is never a shortage of things to do, and almost never enough time to do them all.
So what happens when you get sick?
When you have a regular job taking a sick day is as easy as picking up the phone. When you’re freelancing on the other hand, that’s when things start to get a little tricky.
Among the 500 surveyed in the Quickbooks Self-Employed Study, 81% of all respondents reported that they rarely take time off when sick. Diving in a little deeper, 54% of respondents reported they “rarely” or “almost never” take time off. For freelancers who often have to work within razor-sharp deadlines and whose biggest worries are around cashflow, it’s easy to see why almost all of them refuse to take a day off.
Even when they are taking time off for a vacation 59% of freelancers report that they’re still working! That’s a lot of people choosing to work no through sickness and in health. But especially sickness.
Which is why it really comes as no surprise that freelancers have a much higher chance of burning out. All that pressure to keep the business running can easily make someone feel guilty or ashamed for taking time off when sick.
The reality though is that getting sick is an inevitable part of life, no one ever plans to be sick, it just happens. Making sure to take time off to take care of yourself is just as important for your business as it is for your own personal wellbeing. After all, working while sick only ensures that you’re sicker for longer and that’s worse for you and your business in the long run.
While no one ever plans to be sick, you can plan for those unexpected times off. Create a list of other freelancers who you can outsource work to in a pinch, and know exactly what the procedure will be for handling clients and ongoing work.
It can be difficult for freelancers to take time off, but as important as it is to get all those tasks done, it’s important to know when to listen to your body.