Five years ago, I could have thought of any number of reasons and barriers to becoming self-employed. I'd never done it before. We were having a child. I had a great paying job. I had no experience in the career that I was contemplating entering.
But most of those reasons skirted the main issue, which was the financial barrier to making such a move. However, once I recognized and dealt with the various financial hurdles to moving into the self-employment realm, I could more confidently begin to make the transition to a role in which I've now worked for half a decade.
Depending upon what self-employment field one is planning to move into, as well as the level of previous experience within that field, income may or may not be present right away. This can be a real shock to the system for those who have been used to getting a paycheck on a regular basis.
For me, moving into freelance writing -- an area in which I had absolutely no experience or background -- income went from a nice, mid-range level in the hotel business, to almost nothing. It then took me nearly a year to start building any semblance of a regular income again, and even then, the amount was significantly reduced compared to my previous earnings.
Determining New Income Streams
When I began my self-employment, the plan was to publish books. This goal however, was much more difficult and time consuming that I had initially imagined. And in the interim, there was little income to pay the bills. I therefore had to begin working toward clearing the hurdle of searching for and developing income streams other than that I had first envisioned.
This entailed venturing into the realm of online writing, where I began turning out personal finance articles, writing for several websites, picking up some regular customers, and starting my own blog to begin building various income streams. This way, I could still focus on writing books, but could also diversify my various lines of income so that I could pay the bills and protect against the loss of one or two lines of income, while still maintaining my ability to remain self-employed.
I also found that beyond just the barrier of my own personal living expenses, I had various other expenses related to my new line of work for which I had to account. Creating a home office, buying work software and supplies, paying for subscriptions to certain services, budgeting for postage, and taking into account other work-related costs of doing business on my own added additional items to my monthly expenditures -- costs that sometimes bumped my regular budget higher by 10 or 15 percent or more.
Then there was the reduction of benefits that came as another hurdle to my move into self-employment. Loss of employer-sponsored health insurance wasn't a major blow, as we could move our family's coverage onto my wife's plan. However, there were other employer-sponsored benefits that I was suddenly missing out on as well.
I was losing out on an employer (other than myself) to sponsor and contribute to a retirement account and to share the costs of the payroll tax with. Then there were all those little extras like employee appreciation parties, free lunches, free coffee, employee outings, and free laundry and dry cleaning service that were suddenly gone. Such benefits that can be taken for granted, but they can really add up over the course of a year, and suddenly being without them came as kind of a shock. I don't think I fully appreciated such amenities, and realizing that I was on my own when it came to replacing such benefits, certainly took some time to get used to and was yet another hurdle of my becoming self-employed.
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