Is the number one goal on your bucket list to set up your own entity and become a Solopreneur business owner or consultant? Are you planning to leave the “security” of a traditional job to directly market and sell your products or services to customers with the money and motivation to do business with you?
Going out alone is an exciting and sometimes terrifying prospect. Those who take the plunge eventually discover that many resources casually taken for granted while working in an office are not available to those who take the plunge on their own. As you weigh your options and prepare to write your business plan, keep in mind some additional changes and expenses to expect if you join the self-employed sector:
No paid days off
There will be no more paid sick days, holidays, vacation days or personal days when you become the captain of your own company. Holidays resulting from bad weather will not be paid either. When winter comes and it starts to snow, there will be days when harsh weather conditions will affect your business and your income. When your state governor declares a snow emergency, important meetings will be postponed and businesses may not be able to open and operate.
In particular, for those who own a B2B or B2C business where the business model requires you or your employees to visit a customer’s location (for example, cleaning services) or for customers to visit your location (for example, a laundromat), snow days = no revenue days. Small businesses have been known to close within a year after periods of extreme weather.
Establish business credit
For tax purposes, it will help to open a separate business bank account and also apply for a business credit card or two. There will be business expenses to write off and you’ll want to make it easy to control spending. Do yourself a favor and check your personal credit as soon as possible and pay off any outstanding credit card balances to improve your credit score and correct any errors.
Financial management
Financial management will take more than one form. As stated above, you’ll need to establish credit for the business so that you can order inventory and supplies without immediately affecting the business’s cash flow, for example. Those are accounts payable items. You’ll also need to make sure customers pay you on time, or not at all, and that’s an Accounts Receivable function.
Maintaining sufficient cash flow is crucial to business survival and your own ability to keep a roof over your head, food on the table, and your car on the road. You must develop a business budget and plan for equipment purchases, license costs (if applicable), insurance (if applicable), professional certifications (if applicable), or space rental (if necessary).
Additionally, you can consult with a business attorney or accountant to discuss the legal structure of your business: sole proprietorship, corporation (chapter S or C), or limited liability company (LLC). The type of business you are in and your exit strategy will play a role in choosing the business legal entity.
Pay for office supplies
No more free scans and photocopies. When you need to staple some sheets of paper, you need to buy the stapler and staples, and you will also buy paper clips and envelopes.
There will also be no meeting space or audiovisual equipment for you to reserve. You will need to meet at the client’s office, or at a coffee shop or other restaurant. Privacy can be an issue, and hosting a PowerPoint or other visual presentation can also be awkward.
A laptop or tablet will be essential as office equipment. It will be imperative to possess the tools of your trade and always appear as a competent and prepared professional as you develop your reputation and build your brand. Good luck!
Thank you for reading,
kim