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To Be (Self-Employed ) or Not To Be by Bill Ferguson
September 6, 2022

That is the question, parroting the words of Willy Shakespeare. Or words to that effect. No question, many of us, at some point in our lifetime trying to earn a living, have asked that question. It’s been “out there”, calling to us – the promise of a better and more financially rewarding lifestyle. To be your own boss. To make all the decisions yourself rather than be told what to do, how to do it, and when to do it. To reap all the rewards of your time and talent. Doesn’t it just delight your imagination, just the mere thought of it? Tempting? Yes, but the book of business history is loaded with failed businesses. Oh, yes. The hoped-for next giant of industry had a wonderful new product – a better mousetrap, perhaps. Only to go down in flames.

It takes more than a better mousetrap to be successful in business. The purpose here is to tell you what you need to be successful, in addition to the better mousetrap.

Thoughtful planning. It’s often called a “business plan”. It’s a roadmap showing you, along every inch of the way, what problems you may no doubt encounter and how you will solve those problems. Unlike, when you might have been an employee, you can’t refer problems to HR, or accounting, or legal. You are now: HR, the CFO, the chief attorney, and the salesperson. Yes, you have to wear many hats. Well, not really. You can always hire these things out but that can get expensive.

I call it the who, what, when, where, and how of your business:

Who will be your customers, who will be your financial advisor, your legal advisor, or your marketing advisor? Who will help you obtain the money to run the business? A bank, a trusted friend, or a rich uncle? And don’t forget the most important person of all – your spouse or significant other. Will he/she be there when you need support and encouragement?

What? What exactly are you going to sell?

When, 24/7, or just 10-3 Monday through Friday?

Where? In your spare bedroom, a local office?

How are you going to reach your customers?

Get definite answers to those questions and write them down.

If you can’t write it down, maybe you don’t know what you’re doing. Writing it down; it has life. Your life. Let it rest for a day or two then hold it up to the light. Maybe, you’ll have second thoughts. Maybe you’ll think of some new ideas. When you’re happy with it, show it to a trusted friend who’s not afraid to tell you that you’re bordering on crazy or entering an area of thin ice. Let your local SCORE mentor read it and give you his or her thoughts. The final conclusion should, hopefully, be a final, well-thought-out roadmap. Or, you decide it’s not worth it. Either way, you gave it your best.

Definitely not trying to crush somebody’s dream here. Just being realistic and practical. Don’t go where angels fear to tread without knowing what you’re dealing with. Maybe, you’re done climbing the corporate ladder; you’re the sole breadwinner and the last hope to survive Covid-19, or you just want something to do besides playing golf or working jigsaw puzzles.

There are costs.

If you’ve been earning, $50,000 as an employee and you want to match that as self-employed, you need to make, bottom line, after all, expenses, maybe $75,000 as self-employed. Here’s why. Who is paying for your health insurance and your pension? You are. Who is paying the other half of the payroll tax that your employer used to pay? You are. Factor in those factors and, yes, you probably need to bring $75,000 to the bottom line. Oh, did I mention paid holidays and sick pay?

On a more positive and brighter note, think of the opportunities. You can deduct the expenses of maintaining an office in your home. It’s just been sitting there holding all your baby pictures and athletic trophies. Now, it’s a free, no cash out-of-pocket tax deduction. When you drive around town conducting business you get to deduct your mileage. Oh, and when it comes time to pay income taxes on your net income, you get to deduct 20% from that number and pay taxes on only 80%. So, there are some positives. Take advantage of them.

Once you’ve made the decision to go forward, be positive; be persistent. A guy named Walt Disney had this idea. Have cartooned animals talk like humans on the screen. Stupid idea, everyone said. Well, it didn’t turn out too badly for Walt because he was persistent.

Hold yourself accountable. Tomorrow is always a day away. Do it now. And remember, there’s always a way out - simply buy a business already in existence.

Good luck to all and good night. Bon Noel. Felix Navidad.

Written by Bill Ferguson, Certified Score Mentor

PO Box 248
Madison, WI 53715
(608) 535-4978

Copyright © 2023 SCORE Association,

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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