The idea of being your own boss and doing things your own way is extremely seductive. Finding yourself out of work can be the perfect opportunity and motivation to turn a good idea into a business, providing you have some access to financial resources and are prepared to make significant sacrifices in the beginning. However, resigning to become self-employed requires a far braver leap of faith. So many benefits you take for granted are suddenly gone, including the reassurance of a regular paycheck. Because it can take years for a new business to provide an adequate personal income, the risks can be substantial. It is vital to prepare through research, training and saving before handing in your resignation letter.
One of the first risks to consider is just how hard you are going to have to work. In most cases, self-employed people have long working days, few weekends and can rarely afford to take vacations, at least until the business is well-established. This inevitably takes a toll on health. It is a good idea to get a physical before embarking on your venture to eliminate any possible concerns. You should also seriously consider if you are mentally and emotionally ready for the stress of the challenge.
It seems obvious, yet it is surprising how many new business owners grossly underestimate how much financial investment is required. Set-up costs including equipment, services, insurance, legal fees, marketing, business location and, of course, taxes all need to be in the budget. If you are supporting a family, their needs remain paramount. Where your employer may have covered costs such as a company car, health or dental insurance, you will have to cover yourself at least during the set-up phase. Planning your personal finances becomes even more critical, and lifestyle sacrifices may be necessary.
by Shelagh Dillon