It’s pretty daunting so it’s no surprise that many people think about doing it, then freak out and stick to their predictable nine-to-five job.
“I’m over working in a job I don’t enjoy, for a boss I don’t like. I wish I could start my own business but I have no idea where to start.”
“I’d love to have a more flexible job so I can fit more of my life around it.”
“Running a business sounds awesome, but it’s a lot of hard work. I don’t know if I’ve got what it takes.”
“Don’t you need a lot of upfront cash to start a business?”
Sound familiar? These kinds of questions and fears are common for wannabe contractors, freelancers and people who want to start their own businesses. It’s pretty daunting so it’s no surprise that many people think about doing it, then freak out and stick to their predictable nine-to-five job. But in actual fact, there are more than half a million entrepreneurs and self-employed people in New Zealand which adds up to almost 20% of our total working population. If it’s good enough for them, it might be good enough for you too.
The Best Bits about Being Your Own Boss
Most people decide to work for themselves (either setting up their own business or becoming a freelancer or contractor) so they can work more flexible hours.
Simon Anderson has set up an online printing company and consults to a number of other businesses on a freelance basis.
“Growing up, my parents were on the sideline at every rugby game and in the crowd for every school prize giving or school play because they were self-employed and could fit life around work,” he says. “For me, that highlighted that work should fit around family, not the other way around. Being self-employed is one way to control that.”
Another pro is that there’s an opportunity to earn more. Generally speaking, contractors earn more than people who are on salary because they get paid for every hour they work (compared with staff who might not get paid for overtime).
The Bad Bits about Working for Yourself
Earning more up front might not always work out though. Being self-employed, you have to manage your own taxes and Kiwisaver, and you don’t get paid holiday or sick leave.
Another con is that work can be up and down, which can be stressful. For example, you might not get offered work for a few weeks then four clients might give you work at the same time. It’s common for freelancers and contractors to work very long hours because they say ‘yes’ to everyone, just in case the following month is really quiet. It usually balances out, but it can require a lot of self-management and organisation.
Why Taxes Are Important (& Why It’s Easy to Get Them Wrong)
Managing your own taxes is probably the most daunting part of being self-employed, especially if you’re not great at maths. Claire Warin, a self-employed social media specialist based in Auckland, says her best investment is an accountant.
“Unless you’re a finance guru, an accountant is worth every penny to ensure your finances and taxes are managed properly,” she says. “Also, don’t assume that everyone will pay you on time. Have a plan for how you’ll deal with overdue invoices and manage your cash flow appropriately to cope with late payments.”
Auckland-based copywriter Erin Reilly writes articles and website content for a number of companies. She says that having different savings accounts for different things helps her worry less about money.
“It’s very tempting to spend all the money I earn, but I have a very real fear of the Taxman too,” she says. “Every time I get paid, I transfer my GST (15%) into one savings account and my tax (20%) into another. This means whenever I get a tax or GST bill, the money’s sitting there all ready to go. There’s nothing worse than getting a big tax bill that you’re not prepared for.”
Build Relationships to Further Your Own Career
Self-employed wedding photographer Jonathan Suckling says that networking with people you admire in your industry is essential.
“Build relationships with people who have done what you want to do,” he says. “You’ll learn so much about their journey, the decisions they made and the reality of what running a business is like for them.”
“Find a couple of people to lean on who have also started their own business in a similar space,” says Claire Warin. “Don’t be shy to take them out for a coffee and pick their brains.”
You can find inspiration and networking opportunities just about anywhere.
“For me, it was joining a business coffee group at a church I went to,” says Sam Ardern, the managing director of Wellington-based video production company Onepost Media Production. “I would get so many good ideas on how to talk with clients and how to follow up leads. It was great to socialise with people too, which helped me relate with future clients.”
Think about where you work too.
“When I first started my business, I thought that working from home was the best thing for me,” says Simon Anderson. “I justified that I could save on rent and pump that money into the business. These days I work in a coworking space – and I wish I’d done it sooner. The stimulation, shared ideas and referral business that you get from working with other people more than offsets the minimal rent.”
It’s easy for business owners to get so caught up in the moment that they forget to stay up-to-date with everything going on with their industry.
“Don’t become so busy that you don’t keep up with changes and developments in your industry,” says Claire. “Put time aside for ongoing learning and development.”
Simon says that ongoing learning is pretty easy to find – and you don’t have to pay much, if anything, to do it.
“Thanks to the internet, YouTube tutorials and even basic FAQ sections on any website, you can learn a lot for free,” he says. “Put aside a few hours a week to upskill, and make it a routine. Technology is always changing and being quick to embrace it will give your business (and lifestyle) a significant head start.”
Is Self-Employment Right for You?
Going it alone isn’t for everyone – but it can be really rewarding. If you think you’ve got a skill that’s in demand, you’ve got a bit of a business mind, and you’ve got the stamina and commitment to make it work, self-employment might be right up your alley. Find out more tips and tricks about setting up your own business here.