There are many great reasons to be self-employed. After all, who doesn’t want to own their own time and have the freedom to roam anywhere as they please? To be your own boss and build a business that you’re passionate about while making money is a dream for anyone with an entrepreneurial spirit. But there are some serious realities about being self-employed that you need to know before you take the leap to quit your 9 to 5 job.
Being Your Own Boss Means 100% Responsibility
The first and very obvious thing you need to realize if you are to quit your 9 to 5 life is that you will be 100% responsible for yourself. When you are self-employed, you are completely responsible for every outcome of your business.
That means how much time and effort you will put in each day and your day-to-day operations. You will have to figure out how much money you can bring in and how often to be able to support yourself.
There will be no supervisors or managers to oversee the quality of your work. Your results will speak for themselves. There is no free employer-sponsored training. You will have to learn on the job as you go and even pay for courses. There are no steady direct deposits to rely on.
That is why it is recommended to start as a side hustle first and grow enough to be able to replace your 9 to 5 income. It is also recommended to have a business plan. There are a ton of business plan templates online. It is not just a formality.
In fact, no one else but you have to see your business plan if you’re not looking for other investors. But a business plan will help define your goal and keep you focused.
You May Work Way More Hours
When people think of being their own boss, able to work from home or anywhere in the world, they think of waking up on an island and day drinking while putting in a few hours online. That may not be the best expectation to go into when you’re thinking of quitting the 9 to 5 life.
When you’re self-employed, you may easily find yourself working beyond a traditional 40 hour work week. Because if you don’t produce, you don’t get paid. You will be wearing multiple hats, doing every single task before you’re able to hire employees. That means you’re the owner, manager, worker, customer service, and support.
There is a quote on the internet going around that goes something like this:
I quit my 9 to 5 job to work 24 hours a day.
And that is the reality when you have to put in the work and the many hours it takes to get your business off the ground. You will not be doing just the busy work that you may do at your day job. But you may find yourself having to work way more hours than you expect when you quit the 9 to 5 life.
Self-Discipline Is Harder Than You May Think
We all think we have a certain level of self-discipline. But when you’re self-employed, it requires a greater amount than you may think. When you work a 9 to 5 job, you know you’re supposed to show up during those hours. Your brain is not given the choice but to show up or face the consequences. It does not take much discipline to do what you’re expected to do.
When you’re self-employed, you can do anything with your time. You can choose to work or to go to brunch and day drink. You can choose to wake up when you want any hour of the day. And you can make your schedule anyway as you please.
But having all the choice in the world makes it harder for those that are challenged with time management or those that are easily distracted. It may be tempting to procrastinate or to not work at all just because you can. You may rather go out late, knowing you don’t have to wake up early for work. It may be more tempting to finish a Netflix series than to show up for your business.
You may find that the biggest bottleneck for results and productivity is yourself when you’re not disciplined.
And you may find this out when you’re self-employed. When you don’t work, the results are yours to deal with. You will have to manage your time and effort to get the results you want. If you have a weakness in this area, consider your personal development first. Here is one of the best books for this subject.
You May Not Make Much Money For A While
There are entrepreneurs all over the internet that make tens of thousands and even hundreds of thousands of dollars a month being self-employed. But the reality is that no one starts with that kind of figure overnight.
It takes months of unrelenting work, if not years to get to those numbers. You will have to figure out a profitable niche and get over the learning curve of gaining multiple streams of income to be where they’re at.
Let’s look at a popular digital self-employment work –blogging. You will read that there are blogs making $20,000 a month or more. Those figures are absolutely possible with time, consistency, and helpful content. But according to Zip Recruiter, as of June 2021, the national average income for bloggers is $38,440 per year. Glassdoor gives a similar range at $39,932 per year.
While those figures are possible to live off of in certain parts of the country, remember that your initial income may be much lower. If you live in a place with a much higher cost of living, that is something you need to take into serious consideration as well. It may take a longer time and a higher initial investment to get clients, viewers, or customers than you expected.
You MUST Be Disciplined With Your Finances
Being self-employed means you need to know all aspects of your finances. You have to be able to track all your business income and expenses. If you never budgeted before with a steady paycheck, you will have to learn to manage your cash flow quickly.
An emergency fund will be more applicable than ever when you’re not sure of your next pay day. You may also not know how much your next paycheck will be. It is a lot harder to live paycheck-to-paycheck when you’re self-employed because you need to be able to cover your bills if your payments are delayed.
And the one thing you absolutely cannot forget to do is putting away money for taxes.
Tax season will no longer be a simple W2. You will want to pay attention to what business deductions you can take, including retirement and health insurance that we will go over next.
Make sure you consult with a CPA and do your bookkeeping legitimately. Check out additional tips that every small business owner should know. We personally invest in a bookkeeping service to make our lives easier. Read more about them here.
You Are Responsible For Your Retirement
Speaking of finances, don’t forget that you will be responsible for setting up, contributing to, and investing for your retirement . It may be tempting in the beginning to ignore your retirement funds. But remember the power of compound interest. So you will need to learn the best retirement account for you.
There are many retirement options out there for the self-employed. Those include a SEP IRA, a SOLO 401k, a defined benefit plan, SIMPLE IRA, and other Traditional or Roth IRA.
You can actually save more for retirement being self-employed than you can with a regular employer-sponsored 401k.
While you may not be getting a 401k match, you can still set yourself up to retire comfortably. But again, you are 100% responsible for it.
Don’t Forget Your Health Insurance
You will read a ton of articles about the benefits of self-employment. There are tons of tips online about how to make money, the hustle of being your own boss, and the work required. But one subject that is seldom talked about is health insurance.
Without employer-sponsored health insurance, you will have to buy your own through individual Health Insurance Marketplaces. You will have to decide the deductible you’re comfortable to pay based on your health needs. But we would not recommend you to skip out on health insurance, no matter your age or health condition.
You want to cover yourself and your family for accidents that you can’t possibly predict.
Make sure you are looking into health insurance in your area with a plan that meets your health needs and budget. Your health is your wealth. If something happens to you, remember you are 100% responsible for it. You may want to consider other insurance too, such as disability insurance or life insurance if you have dependents.
Quit The 9 to 5: Is Being Self-Employed Worth It?
There are many great benefits to being self-employed and starting your own business. But social media and articles often only sell the highlights of leaving a 9 to 5 for the life of freedom. The truth is, a life of freedom still has a price.
Self-employment requires a tremendous amount of discipline, time management, work ethics, creativity, and responsibility than you may initially thought.
It is risky to quit the steady, comfortable 9 to 5 life. But what you lose from the comfort of stability, you can make up with the limitless rewards that come with the risk. There is no cap to how much you can bring in. You’re not limited by a salary or hourly rate. And as long as you’re able to meet your personal needs being self employed, sometimes money is not everything.
Owning your own time, living without stress, and enjoying life during your healthy years is priceless to many. Self-employment is absolutely worth it for those that know what they want out of life. It is a great alternative to a 9 to 5 job for those that are go-getters with the creativity and work ethics to perform.