Last night, I received an email from a talented man in the Phoenix technical community. He was looking for my advice about whether he should quit his job and start freelancing in this tough economy. I take request like this seriously. I remember when I stood in that spot in my own life, wondering if I had the necessary chops to take on self-employment.
Over the years, I’ve been asked for this kind of advice regularly, and I’m pleased to say that the quality of my advice has improved over the years, although my basic message remains the same.
Letter To An Employed Friend
If you have a job and you are wondering the same thing, here’s my advice.
Dear Employed Friend,
I certainly relate to your feelings that you want to quit your job and start working for yourself. That’s what I did almost 15 years ago, back when freelancing was for writers who wrote for magazines and not for people in technical careers. Working from home? Almost unheard of.
If you know this is what you want to do, it’s what you need to do. The first bit of advice I would give is to follow your own heart. No one else can tell you what is best for you, anyway. You have to figure it out for yourself.
When I decided to jump, I spent about a year getting things ready. I paid off my credit cards. I saved money. I turned around the way I thought about things. I stopped taking a regular paycheck for granted. I researched insurance options. I came up with a rough business plan and marketing strategy, which just means that I figured out what services I could sell and who is most likely to buy them. I made a list of the specific companies in town who might hire me.
I figured out what it cost me to live each month at a minimum. I figure out two numbers, one without cable TV which I figured I could sacrifice if necessary. I researched how much money self-employed people pay in taxes (it’s more) and how often it must be paid. Then I calculated how much I would have to earn each month to cover my minimum expenses and pay my taxes. I figured out my hourly rate, and how many hours a week and month I had to work to pay the bills. Then, I figured out the amount I could earn each month after paying my taxes if I could manage to sell all 40 hours a week, every week of the month. That was a reality check.
Then, I started figuring out how to start a business in Arizona. I made a list of the steps I would have to take to register a trade name with the state and a DBA (doing business as) name with the county. I asked about a business checking account at my bank. (Turns out, if a client writes me a check made out to my business name, my bank won’t deposit it in my personal account. Who knew?) There’s some nuts and bolts things like this that you have to figure out to stay on the good side of the government, including the IRS.
I’m not qualified to walk you through all of these things. I’m always happy to tell you what I do, what I’ve done (because it changes all of the time), when I got an accountant, when I got an attorney, etc.
There is someone who can help you. Pam Slim. Have you met her? She’s got a blog, Escape from Cubicle Nation, and her book comes out shortly. She’s full of brilliant advice. I’d recommend you start by reading her blog, from the first post to the last one, with a pen and notebook to make a list of what you need to do.
I understand being frustrated and wanting to jump right now. But I can tell you that you are trading in one set of problems that you know for another set of problems that you don’t yet know. I’m not saying you should stay put. I can’t imaging going back. The second bit of advice I would give is this: spend some time researching what you need to do. Give yourself some time to get prepared. Start working really hard on your exit plan and your business setup plan. The benefits from waiting until you do this are amazing, and can make the difference between being successful and failing. Seriously. This is true in every economy, but is even more important when things are tough.
I don’t know where you work or anything about your work situation. If you tell me it’s unbearable, I believe you. If you say its toxic and killing you, I believe you. But if you start working every spare minute outside of your job on your escape plan, you can walk in there with a different outlook for a while. You can say to them (under your breath, of course): “You don’t own my soul. I only came to work today because it’s part of MY plan to make a better life for ME. You are serving me today, and every day that I still come in here I’m one step closer to leaving. When I’m good and ready, I’m going to launch myself from here and do my thing my way. So bring it on. I’m in control and I’m up for the challenge because I know it will end very soon.”
A few more practical things you can do: Find the holes in your pocket and save money. Cut back on the things you consider normal expenses today. Cut your TV viewing, gaming, and other recreation time to 6 hours a week. (I watch only 4 hours of TV a week myself.) Spend your time and your money on your escape and setup plan. Get used to working more than 40 hours a week, because when you don’t have billable client projects to work on, you have business things you must do. Some of them are not fun, but they are all necessary and feed the machine that will allow you to be self-employed.
Give yourself the best launch you can. You will never regret the time you invest in yourself.
I wish you all the best!
If you are self-employed, or if you have worked as a freelancer, what advice would you give my friend? If you are wanting to become self-employed, what do you think of this advice? Let’s open up this conversation and see what we can learn together.