I get asked a lot, “Is it worth working for yourself?” It usually comes from drafters and engineers who have either been offered a contracting role or want to go out on their own as a contractor, but I do get asked by quite a few people in other fields also. Given the frequency I have been asked lately and the fact there is a distinct upward trend in contract work availability of late I thought it may be worth sharing my thoughts for anyone out there thinking of forging their own path. So here are my top 5 things to think about before chucking in your job and doing your own thing.
1) Do you really LOVE what you are doing?
I know it sounds cliché, but if you are going to work for yourself you really do need to LOVE what you do. To be honest I always used to think this was a load of s#!+, but I have finally worked out why people say this. It turns out you need the love when things get hard. By love I mean an undying passion for what you do. Not “kinda like it” or “enjoy it because I get paid a lot to do it” and certainly not “I’d enjoy it more if I got paid more”. If you don’t like doing it for the money someone else is paying you to do it, you’re going to HATE doing it for yourself.
So how do you know if you LOVE what you do? The way I think of it is this;
If someone came to you tomorrow and said you now have an endless supply of money, but just for you. You can’t give it to anyone else. What would you do with yourself? Sure we all say things like travel, spend time with friends and family, learn X skill, try Y experience (myself included). However, if you are in your mid twenties or thirties, as most of the people that ask me are, you have 30-40 years of work alone ahead of you. Not to mention at least 20 years of retirement after that all going well.
Even on an bottomless bank account you will get bored of travel after enough years. Your friends and family all still have to work and will likely get sick of the sight of you after a while. So what would you do to fill your time? What hobby/pursuit would you take up to fill the 2000ish hours per year hole that not having to work for money leaves? What would you do that you could wake up every morning and go and do and never get tired of doing it? Your answer to these questions is what you need to be doing if you want to work for yourself. If that is not what you are thinking about doing, then forget about it. Stick to your day job until you can work out what you love.
2) Kiss the 40 hr work week goodbye!
And say hello to your new 80-120 hr work week! That’s right. 80-120 HOURS per WEEK. I don’t know anyone that has, or has had, a successful business that hasn’t spent at least the first few years of that business working 80 plus hours a week. It seems to be a rite of passage.
I was talking to someone the other week that does a lot of work with small businesses and they said that most small business owners (themselves included) don’t take a holiday for the first 2 years of their businesses life. (I fit firmly into that category. 4yrs for me between holidays because i stupidly took a few weeks off in my first year.) So not only do you need to work 80-120 hrs a week but you need to do it for 52 weeks a year, 2 years straight. Possibly more.
That right there is why you need to LOVE what you do. Because you better believe you have plenty of days in that time where you want to chuck it all in and go back to a 40 hr week working for someone else! But the love of what you do is what makes it just that little bit easier to drag yourself out of bed on those tough days.
If that thought scares you, stick to your day job until you work out what you love.
3) There is a lot to consider.
A hell of a lot more than just doing your actual job/work that your client is paying you for. You need to think about things like, what software do you need to do your work and track your business? What equipment do you need to do your job? What PPE do you need? Do you know how to do your taxes? What records do you need to keep for the business and your work? How do you keep/store those? Where do you keep/store them? For how long? How do you back it all up? Business name? Business logo? Website? Advertising? Office space when you can’t work on site? What will your invoices look like? Do you need a purchasing system? Business Asset Management? Do you need to hire someone? Can you take care of all of the above yourself or do you have to pay someone to handle some or all of it? If you are going to pay someone, how much will that cost? How do you pay for that?
Head spinning yet?
These are just the things I can think of off the top of my head. You will have to consider all of them and so, so, so much more PLUS do your 40 hr week. The best part is you don’t get paid to take care of ANY of those things! They all take time to sort out and some take a lot of time and thought and are then ongoing for the life of the business. All of which you do after you have worked your billable 40 hr week.
How will all that effect your family, friends and life in general? Are you ready to make that commitment for what you are thinking about doing? If not, stick to your day job until you work out what you love.
4) You won’t do it for the money.
Fact is you likely won’t earn much more, and likely a lot less, than your current hourly rate when you work for yourself. Especially when you start out. Sure you can now bill your time at a much higher rate than your boss pays you. However, out of that straight up you give about 40(ish)% to the tax man. More if you earn really good money. Then out of the 60(ish)% you have left you have to take out ALL of your costs. From every lead you buy for your mechanical pencil to your uniform, website, car running costs, PPE, software and business insurance. It ALL has to come out of that 60%. Then and only then do you get paid what is left.
Suddenly you might find you need to do a lot more than 40 billable hours to cover a lot of the costs of getting the business going. Either that or you are back to eating 2 minute noodles and share housing for a while.
Fact is even if you bill your time at $100/hr you only get $60 of that after tax. You then take out operating costs which if you have a reasonably low cost business model you might be lucky to get $30-$40 left over. Most professionals get about that or more working for someone else anyway. Oh, and if you think paying tax on $30 – $40/h sucks, wait till you have to pay it on double that or more, man are you in for a shock!
If you then factor in that you might go a month or even more without getting any work. If your sick at all and you can’t work, you don’t get paid. And the fact you will now work closer to or over 4000 hrs a year, rather than the 2000 hrs you are working in your day job, you will be lucky in most cases to be getting $15-$20/hr for all the hours you work. Likely less.
Not willing to work for $15-20/h 80+ hrs/week? Stick to your day job until you work out what you love.
5) How long do you want to do this for?
Is it just a short 1 off contract? Or do you want to see out your career as a contractor? If you want to see out your career, do you want to be a one man band or do you want to grow a business? Either way it goes, how do you win that work? If you are thinking “it’s OK, I have been doing this for years and know heaps of other people in the industry.” How many of them could actually approve you or your company being hired? Odds are, that number is really small. When you factor in if they have the work to put your way, that number gets minute fast.
Also, you need to consider that there is a time limit you pass where making the switch back to a 40 hr week working for someone else will be hard or almost impossible for a lot of people. There are two main reasons for this;
1) If you have worked for yourself for even a short while employers will be reluctant to take you on because you might run off the second another good contract comes up, leaving them high and dry. They won’t want to hire you.
2) Because once you have worked for yourself it is REALLY hard for you to even imagine being an employee again.
That’s the real kicker here. I have said for a couple of years now that if someone put on paper everything you had to go through in the first few years of your business, I would have looked at it and said NO thank you. I now know why my boss had that look on his face when I gave notice and said I am going to work for myself. (Thanks for the warning Gary!)
The truth is I watched my parents go through this exact same struggle 3 distinct times in my time living at home. Each time was just as hard for them, I lived through it with them to a large extent and still I had NO idea how hard it would be. They are both doing it again right now as well, and from the outside it doesn’t appear to be any easier.
Luckily for me I truly LOVE what I do. I sometimes have moments where I think to myself I can’t believe people pay me to do this. In all honesty, if I never had to worry about money again I would still be doing this kind of work to pass my days. (If any of my clients are reading this, sorry but I still have to worry about money!)
While I still work huge hours, the worst of the headaches and start up costs of getting the business going are almost behind me (i hope). While the operating costs are still pretty high, the business cash flow is such that I finally managed to have a few days off this year and hope to have a couple more before the year is out. But it is the love of it that drives me to keep at it.
5 years on and there is still a lot to think about and consider. I don’t really ever see that bit changing. I spend almost every waking minute thinking about work, what I have to get done now and what I want to do in the near and distant future. It is almost an obsession or addiction, I truly do LOVE what I do.
Thankfully I am not motivated by money. The last few slow years are proof of that. It is the love of what I do and the satisfaction of happy clients that have driven me to keep going every day. I have literally done days where I have worked 8 hrs for one client, stopped their job and done 8 hrs for another client. Add to that a couple of hours of answering phone calls and emails, doing quotes and what not and that’s 18-20 hour days. For weeks on end. If I didn’t love what I do there is no way that would have been possible. (Thankfully that doesn’t happen to often.)
I do all of this because after working for myself for a couple of years, I realised that the perks that come with it, the satisfaction of knowing that every bit of effort I put in is bettering my own future and not someone else’s, means I will likely never be an employee again if i can help it.
If people ask me if it is it worth it? I think so, but it’s worth it because I LOVE it and not because it’s easy or I get paid a lot to do it.