66% of millennials are self-employed, and I’m happy to be among them. But what many are surprised to learn is that while being self-employed is great (and looks great on instagram…every job has parts of it you’re not going to like. Still, there is nothing that compares to the joy (and pain) of being your own boss.
The biggest advantages of being your own boss are:
1) getting to set your own schedule
2) getting to decide how much you earn.
The unlimited flexibility that comes with working for yourself is truly unparalleled, and once you become your own boss you can make as much or as little as you want. It just depends on your hustle.
One thing is certain, is that in a full-time gig you’ll get told by your boss and your company how much you earn.
Being Your Own Boss: Common FAQs
What are the other benefits of being your own boss?
Where do I begin?
- You don’t have anyone telling you what to do
- No boss or manager to report to or try to prove your value to
- Creative license to work on the projects that give you joy
- The freedom to build the business on your terms
- Unlimited flexibility
- No cap on how much you can earn
- Work from home in your pajamas if you want
- Unlimited vacation if you want
- Work from anywhere (depending on the type of business you’re running)
- Ability to work less if you want and spend time on things you truly value
- No corporate politics or bureaucracy
And the list goes on, and on.
Below is a quick tutorial on how to be your own boss, some common questions I get all the time, and the biggest lessons I’ve learned running a blog-based business from home.
So, how can I be my own boss?
There is so much more detail to go into (that I’ll try to cover in the post) but really, becoming your own boss is a series of four straightforward steps.
Step 1: Start your own business (doesn’t matter what it is, just that it’s yours)
Step 2: Build your business income up enough to replace the income you get from your full-time job
Step 3: Quit your day job
Step 4: Run your business and be your own boss
What jobs can I be my own boss?
There are literally scads of traditional 9-5 jobs with real companies where you can be a salaried employee and work from home. Work from home jobs are much more common now than they were even 5-10 years ago. (You can check Flexjobs for opportunities near you.)
Still, working from home is a bit different than being your own boss.
You still have to adhere to company policies, (likely) have a boss, and have to adhere to the schedule they set for you.
The biggest difference to being your own boss means you bring in all the income and you pay yourself like an employee. The advent of the internet and gig economy now means it’s easier than ever to be your own boss, even if it’s cobbling together income from a variety of freelance jobs.
- You can be a freelancer (or contractor) or temp employee. You'll get paid by an agency, but you work for yourself.
- You can cobble together income from multiple gigs.
- Starting a strictly e-commerce gig.
- Running a service based business (like a landscape company, freelancer, or developer-for-hire).
How can I start my own business with no money?
This way, you’re providing a service, have little overhead and can invest more marketing dollars as your business grows. You’re not providing a product (like at a restaurant or shop) and have no overhead since you usually do these services at the clients home or from your own office.
If you want to be your own boss but desire something that needs more capital, you can always create a business plan and apply for a small business loan.
Most prefer to shoestring together some work first to prove their business idea is viable (that people actually want to pay you for what your business does) before investing time or taking the leap and quitting their 9-5 job.
I work for myself as a full-time blogger and started this website for under $100. Click here to read the full tutorial.
Can I start a business while working full time?
Yes. In fact, most work tirelessly to start and grow their businesses before leaving the steady comfort of a salaried job. It can be done (and in many cases, most don’t have the luxury of solely focusing on a side business that may not generate an income).
It takes time to build a business and to make the business truly profitable, and it will be a lot of work to get to the point where you can leave your job. Still, it's done successfully every day, probably by people not as smart as you. They just had the balls to go out and get it.
Usually, people start a side hustle and then work to make it into their full-time or main gig. All of my tips, worksheets, and tricks for starting a successful side hustle that can sustainably start a business are in my Grow Your Money Tree Tool Kit. It was built with those who want to start an online side hustle or location independent in mind, but anyone can use and find value in it.
How will I know when it’s time to leave my full-time job?
Finally, my bandwidth got so maxed out I had to make a decision: pull the trigger on working for myself, or let some clients go.
There are other milestones that may signal it’s time to “go pro” with your business:
- Meeting a financial goal or having the right amount of money saved.
- Knowing you could be earning more in your business if you have 40 hours a week do it.
- No longer having the time to take on new clients in your business.
- Setting a deadline for when you’ll leave your job and it is approaching.
What should I know about the financial side of being your own boss?
There are ebbs and flows with business income
Business income is beautiful because it’s all yours. But it’s also unpredictable.
When I first started, it never occurred to me that with digital marketing and content there could be “busy” and “slow” seasons just like any other business.
Every business has ebbs and flows, peaks and valleys.
Running a business (and you know, preserving your own mental sanity) gets so much easier when you are able to tell when those times are and financially prepare for them.
Here’s how to prepare for the busy (and slow) seasons:
- Ask, when you have down seasons (and you will trust me) how do you get paid?
- Diversify your income when you can. Multiple income streams FTW!
- Prepare for this ebb and flow by opening a business savings account and sock money away for the months where the money just doesn’t seem to be coming in.
- Get an emergency fund for your business that’s separate from your personal one. Even your business needs an emergency fund!
- Build your budget around your lowest income month.
- Track your income each month and year. Be sure to pay special attention to your budgets around this slow period; so you don’t overspend, and so you know what to expect for next year.
Save up more than necessary from your full-time job.
I wrote in this article for Grow that one of the biggest mistakes I made was not giving myself enough financial runway.
Here’s why: your first year of business, you don’t know yet when your busy and slow seasons are yet (see above). It’s important to save what you need and THEN some, so there won’t be any surprises and you can focus on successfully navigating self-employment without having to worry about money stress.
Open a separate checking account for your business
When you own your own business it is important that you keep your business and your personal accounts separate.
It can be tempting to deposit payments straight to your personal checking account, but what happens when tax season rolls around or you have business expenses to be paid?
You don’t want to have your business earnings tied to your personal accounts or you could run into trouble if you are audited by the IRS.
By separating your business earnings from your personal earnings, you’re creating plenty of records of your cash flow.
Automate and pay yourself like an employee
You can pay yourself a consistent amount weekly, bi-weekly, or monthly (similar to your old paychecks) to cover personal expenses and still keep a clear idea of your business revenue.
- Before opening business accounts at your regular bank, take time to research the benefits of other institutions. If you have an online business, an online bank may make more sense and have better benefits than a brick-and-mortar business.
- Banks may also have different incentives to bring your business accounts to them, so make sure you shop around! If you’re planning on opening accounts anyways it doesn’t hurt to reap some rewards.
- After you’ve started your business accounts you should set up automatic transfers for your paychecks and any recurring business expenses.
You don’t want to be stressing about late payments while you’re building your business! By automating one step of the process you can focus on what is really important: successfully growing (and running) your business.
After all, when you work for yourself, every part of your business is on you.
How much do I need to make in order to be my own boss?
I made the mistake of quitting my full-time job once my earnings had matched my salary.
But this was wrong because I didn’t factor in intangibles like business expenses, insurance, and saving for retirement. All of those extra benefits employers provide outside of your salary.
To calculate how much you’ll need to earn in order to meet your full-time salary you should calculate:
- Your ideal full-time salary
- 10% of that for retirement
- 25% for taxes and insurance
So in order to make $50,000 a year, I actually need to make $67,500 (give or take). That doesn’t even include business expenses!
Can I still save for retirement when self-employed
The good news is that solopreneurs and small business owners even have access to specialized IRA accounts knn as SEP IRAs. Speak to a tax or retirement specialist to learn what retirement option can save you the most in tax benefits while allowing you to contribute the maximum amount possible.
All the lessons I've learned being my own boss
Below are my top lessons from my crash course masters in “being your own boss.”
Get comfortable having tough conversations.
It's a learning curve, but eventually, you'll realize that being easy going all the time is taking a cut out of your bottom line.
Trust me, it sucks at first when you realize that there is literally NO ONE else to have those tough conversations like there was at your old job.
…But if you want to be your own boss, you have to grow a backbone. Not a fake one. A real one.
You are the authority in your business. No one else.
Sure, clients are important. They butter your bread and pay your bills and it's important to keep them happy.
A big part in standing up for yourself comes with realizing that there are no longer any authority figures in your work life.
It's just you, and you get to set the rules.
I was crying on the phone to my Mom after a particularly hard and stressful work day a few months back, agonizing over a decision.
“Lauren,” she said, incredulous I was even upset, “You work for yourself. Give yourself permission to do what you want to do.”
And I realized that she's right.
Give yourself permission to do the things you want to do, without waiting on someone else to give you the keys to your happiness.
Prioritize physical well being.
If I had a dollar for every time I skipped a workout or yoga class because I was caught up in something or wanted to accommodate a request for a phone call, I probably could retire.
When I first began being my own boss, I (foolishly) thought that working for myself meant I'd automatically have more time for daily yoga class and working on a hot summer bod. I mean, I work for myself and dictate my own schedule every single day.
Exercising, meal planning and doctor's visits should be no problem, right?
Except it's not as easy as all that.
Just like when you worked a 9-5, you'll have to schedule in time for yourself. It can even be more difficult once you’re out of a set routine and making up a schedule each day.
It's even more important because your business depends on your well-being.
Surround yourself with advocates and people who inspire.
We're all familiar with the old, “you are you hang out with” cliche.
Whether or not you believe there is any truth to it, your networks become even more vital when you're out running your own business.
Sure, networking is a great way to socialize and meet new folks who can (hopefully) bring you new clients, but networking with other entrepreneurs has been one of the most invaluable keys to my (albeit small) success these last few months.
When around other bloggers, I can vent about things that others wouldn't understand.
Having a support system is especially important when you work from home too. Work from home loneliness is real and even forced me to go back to corporate life for a spell.
Be strict with the boundaries you set.
One of my favorite quotes about business owners and entrepreneurs is this: “I'd rather hustle 24/7 than work 9-5.”
I like the notion that working for yourself is harder than working a 9-5, but honestly, setting boundaries is hard.
It’s so dangerous because it is too easy to create this life where there really isn’t ever any “work time” or “me time.”
Work-life balance is crucial at any point in your career, but it can be elusive once you become your own boss (see point #5 above.)
What does it feel like to be your own boss?
After working full time for an employer, writing this blog, and hustling on the side for clients for over three years I (foolishly) thought that working for myself would be a step back in a lot of ways: more free time + less expectations = less stress, right?
Being your own boss is stressful. (Sorry, it just is. I'm not going to candy coat it for you.)
This is mostly because every aspect of your business is all on you. All of it. 100%. It's sink or swim. Feast or Famine.
But that's not to say the stress won't lessen over time, or that the struggle isn't worth it.
I've had some of the most stressful weeks of my life since becoming my own boss, but I do know that I've never been as challenged, engaged, or in love with the small tasks I do each day that comprise the bigger puzzle that is my business.
Like any big experience, being your own boss will change you. And perhaps this is the biggest perk – you’ll grow once you get out of the cubicle and into the sunlight.