How Does Self-Employment Work? Part One

It's been a year since I led my first training as a self-employed person. My website was being built (painstakingly, with great frustration and much coffee, by me, definitely not a website designer), I was meeting with potential clients, and also my accountant, my attorney, and sussing out which bank would be best for my business account. Thankfully I am married to a former data analyst, and god made Quickbooks intuitive enough for even a theatre-kid-turned-social-worker to understand. 

It became clear so quickly that while you go out on your own to do the work you're great at, you actually spend about 80% of your time doing things you've never done before. Administrative tasks, marketing, selling. It's a wild ride. 

Many people have asked me over the last year about self-employment, and I try to answer honestly. There is a whole lot of self-employed, self-empowerment, "girl boss" culture right now out there, and it does look super attractive. How many times have you seen a beautiful photo of a beach, someone's front porch, a trendy coffeehouse, and the caption #myoffice ? If you follow me, you've seen it a couple times at least. And, yes, it is true that I have put some serious work time in on my front porch with my dog at my feet. But this is also not the full picture. I've written a little before about the realities of the last year, and I wanted to write a few posts to address specific questions people interested in working for themselves have brought to me. Here is today's topic.

How do you swing it financially?
A self-employed colleague, Julie Kratz, told me that it took about a year for her to start getting consistent clients, and that she had been told the same by other consultants. That has been true for me too. And in that first year before you're making real money, you're also spending a lot to start your business. Because I wasn't opening a brick and mortar store, buying light fixtures or inventory, or even renting office space, I didn't think about how much money I would still be spending. But, oh did I. Office supplies. Technology--I had a laptop, but needed a projector, adapters because every room seems to have a different plug situation, a printer and then money at copy shops when that printer inevitably died. Membership dues and continuing education hours for the licenses I hold as a social worker, therapist, and yoga teacher. Malpractice insurance for both therapy and yoga. Meals with potential clients, and meals when I am traveling for work. Attending networking events. An accountant, an attorney, photographer for a professional headshot. Registering as an LLC with the state, and registering my website URL, the associated email address, and the software I use to design my logos, fliers, business cards, and social media posts. Sure, you can write all this off on your taxes. But writing something off doesn't mean it is free! The huge cost that stopped me from leaving my job even earlier than I did? Paying for health insurance without employer help. The next time you get your pay stub, really look at how much money your employer puts toward your health care. Get on the ACA Marketplace and do find out what health insurance will cost you before you leave your job. The price will shock you.

It takes a certain amount of planning and saving, and privilege, to be able to spend more to make less, and to not know for certain when that math will flip in your favor. A few things that helped me feel more secure taking this risk? 
-First and foremost, again, economic privilege. Plenty of people start successful businesses without it, but it sure does make it easier.
-I have a few skills that I knew could yield immediate income like teaching yoga and providing therapy. Of course, gaining these skills also cost a lot of money and time. But I had already made that investment when I set out on my own, so I had them at my disposal.
-I had a previous career in the tech start-up world and I knew it was not a forever thing while I was there. Luckily I had the foresight and ability (privilege again! See?)  to save a lot of my income at that time, knowing that I would likely want it later when the time came to do something weird. Here we are!
-I do have a partner who shares my household expenses, and we are both very comfy living on the cheap.

You need to get really honest. You do need to be brutally honest with yourself about how much money you need, what you can sacrifice and for how long, what you have saved, and how you will handle emergencies. An example? Earlier this year I had the unanticipated experience of traveling to Northern Ireland and presenting a workshop in Belfast. Because I have family in Ireland and I had the flexibility with my time in a way traditional employment never allowed, I decided to backpack Ireland and Northern Ireland the entire month leading up to the work engagement. I budgeted for a year to make that happen, including renting out a room in our home and trading rent for dog-sitting during the two and a half weeks of the Ireland trip where my partner joined me. Brilliant! All planned out! The night before I left, while I was busy congratulating myself on the execution of this plan, our furnace died, it was in the 30s where we live, and we had to find $2500 within hours, on my way to the airport. 

You will be tested. I felt that at many points I was being tested on how much I really wanted this. And you can call this "manifesting" or "prayer" or, like me, the practical outcome when we focus our time and energy fully and intentionally.  Whatever you call it, as soon as I said "I am 100% in for this thing I am doing," it started to work in a new way. I could see the light at the end of the tunnel. I am a year in, and this happened very recently. 

Limit your "free" work. You will get so many exciting connections to potential work, only to be told that they intend to compensate you with "exposure." Unlike booking a Southwest flight, I can't choose to pay my bills with either "Dollars" or "Points." AT&T has only accepted my dollars up to this point in our relationship, with no regard to my vast exposure points, and so dollars are what I need to earn. Look, there is something to be said for getting your name and what you have to offer in front of the right people. But my experience has been that if they know they can get it for free, they value it less, and assume you will give it away again. When I have worked for free, it has not generated the paid work that "exposure" was supposed to get me. But doing work for pay has generated a lot more paid work. I don't know what alchemy this is, but it is true. Charge what you're worth, give some discounts to non-profits and others with limited budgets, but don't put yourself out of business before you even get going. 

The grass is always greener. I have had several people say, "Well yeah if I had a partner that helped pay the bills I could do this too." Or: "Well sure, if I didn't have kids, I could work for myself as well!" Don't guess at the resources of others, pals. You are rarely correct. Yes, having a working partner does help--and, his job isn't high paying, stable, and doesn't cover our health care. Doing this was asking a lot of him too, and it required a commitment to communication and vulnerability that we have not had to muster before. We do not have children to care for, that is true--and we chose that, so we could pursue other things,namely work that is meaningful to us, if not secure. Also most of the people I know who own their own businesses have children. I don't know how they do it, but they do. Oh, also? Know other people doing this. They will talk you down when you need it, they usually also have weird daytime availability to do it, and they will rejoice with you in your wins in such a heartfelt way, because they understand it in a way others won't. Find you a village, and love them hard. That isn't financial advice, but it is so important.