By choice or by necessity, the economic circumstances of the COVID-19 pandemic have given rise to a new crop of small business owners and freelancers. How about you, are you ready to become your own boss?
“In 2020, there was an explosion in new business applications, reaching nearly 4.5 million by year’s end,” according to a February report by the Economic Innovation Group, a Washington, D.C., think tank. That’s an increase of 24.3% from 2019 and was the highest on record — 51% higher than the average from 2010 to 2019.
“COVID-19 was a social, cultural, and emotional shock the likes of which we have not experienced for generations. Becoming an entrepreneur is a deeply personal decision, and the pandemic may have delivered the push for many to embrace it,” the report said.
But are you ready to bust out and make that kind of move yourself? Is self-employment the right way, right now, to help you reach your personal financial goals? Here are a few tips from the experts!
Do You Have the Mind Set and Personality to be Self-Employed?
There is more to being self-employed than the appeal of being your own boss and the luxury of working from home. “Being in charge is very, very attractive to many people,” says Keith Hall, president and CEO of the National Association for the Self-Employed, or NASE, a resource and advocacy group. “The other side of that coin is that when you are in charge of your own destiny, you are also responsible for it.”
The best way to see if “you have what it takes” to go freelance is to evaluate your abilities as a prospective employer.
“Freelancers need to be self-motivated, work well independently, be organized, learn how to market their services well, and be comfortable with a certain level of uncertainty,” CEO Sara Sutton said by email. She runs two companies focused on remote and flexible job opportunities: FlexJobs, a job search site, and Remote. co, which provides resources for companies considering remote work.
Hall suggests asking yourself if you have the motivation to be in charge of your own destiny. “If you wake up Monday morning and decide to stay in bed late, that’s a financial loss. Nobody is going to be standing over you, making you get out of your bed.”
Take a Serious Look at Your Financial Picture
Before you can make the decision of whether or not self-employment is right for you, you need to have a very clear picture of your personal finances, your monthly budget, and your overall plan for growing wealth and financial independence.
Many folks cobbled together a budget during the pandemic. Revisit that plan to make sure you understand your hard costs, such as food, rent, and daycare. (The 50/30/20 approach is a quick way to divide your dollars into three buckets: needs, wants, and savings.)
Isolate what you can put toward a business. Small costs like purchasing a domain name, buying the premium version of a software, or membership fees for a networking group can add up.
Use your budget to set short- and long-term business goals, Hall says. “Know exactly what you need to earn to meet your family goals and translate that into a time schedule.”
Know You Don’t Have to Do it Alone
If you are ready to make the big leap, know that there is help out there.
Laura Licursi, founder of Elite Virtual Assistants, an agency that connects employers with remote assistants, says the pandemic was surprisingly hard on her online-only business as clients cut back. Licursi, who works from the Cleveland area, navigated through the uncertainty with a mentor from SCORE, a network of volunteer business mentors that partners with the Small Business Administration.
“My mentor helped me work through the inner workings of the business when things were slow, which really helped when business picked up again,” she says.
Entrepreneurs have more resources available than they realize. Hall says here are a few you can and should reach out to:
- The SBA provides local resources to support aspiring entrepreneurs.
- The NASE offers a business development grant program for members.
- SCORE has mentorship resources, webinars, and other online resources.
- The IRS website has information on the tax implications of self-employment.
The bottom line is if you are self-motivated, able to responsibly assess risk, and know how to keep track of your personal and professional finances, chances are, you are the perfect candidate to become an entrepreneur!