Transparency & Normalcy: Cutting the Mystery out of Sustainable Self-Employment
Earlier this week I read a really great article on the Behance blog 99U written by time management coach Elizabeth Grace Saunders. It was called “Guilt-Free Creativity: Stop Kicking Yourself and Start Producing”, and it was all about the guilt we creatives often encounter when we dedicate time, resources and energy toward our creative side projects, because often we feel like we’re taking it away from something else and focusing on something that doesn’t necessarily produce or pay off right away. And I was one of several commenters who agreed – “Was this written straight out of my own head? I can totally RELATE!”
Today I was talking to someone else about the idea of “normalcy”, and how much we as humans enjoy reading books, articles and other accounts of how other people experience the same situations and emotions we do. How often do you read a great article like Saunders’, where you feel like you could have written it from your own account, and walk away feeling kinda “Wow, it’s really good to know that I’m not the only one experiencing this,”?
I love that feeling – I try to reproduce it often, by educating myself, doing research, networking with other people, and listening to their stories. I love hearing how other people started their businesses and made that transition, what challenges they encountered and overcame, what lessons they learned, and what “A ha!” moment resulted. Seeing other people be transparent makes me want to be even more transparent. Because I want you to see that, while it may not always feel like it, there’s a high degree of “normalcy” in what you will experience through the process of starting a business, but that ultimately the execution of those goals is unique to each of us as individuals.
Insight #1: Everyone’s transition will look a little bit different. So learn from others, but avoid the temptation to emulate their model of perceived success. Why do I say “perceived” success? Because people in this industry talk a lot of talk. It doesn’t take much to set up a website, throw up a couple testimonials from folks in your network, and declare yourself a subject matter guru. You never hear about what went on between the lines, what even some of the most successful people struggled with, and how they made it work.
Want to know how I started working for myself a few years ago? I survived round 3 of layoffs at the tech company I was working at, had socked away roughly $5000 from a bonus I got for staying on and not quitting early (that was hard, believe it or not), and quit my $60K salary and benefits not long after the check cleared. Even though I had been working part time in my business for over a year, it would take some time before clients were steadily rolling in, enough to rely upon for income. I needed a plan B and C, in other words, diversify my income stream and make sure I had some cash flow coming in. After all, 5K doesn’t get you very far in New York City. My rent alone is $2000 – which I share with my husband (then fiancé), who happens to be a web developer at an NYC startup with a very good job, so that helps. But I have student loans and other expenses that I take full responsibility for paying, and oh yea – we were planning a wedding 12 months away. I also had virtually no 401K, since I had cashed it out several months back to get through the first round of layoffs, which translated to 30% pay cuts for 6 months, for everyone who wasn’t fired.
I quit on a Friday and started a new job that Monday. I got a part time job doing some HR and administrative work at a design firm in SoHo. Several months in, we all agreed that I was overqualified and bored, and they let me go. So I got another part time job doing some creative recruiting work for a colleague of mine. We weren’t married yet, so Adam couldn’t claim me on his insurance (which I later found out was wrong – ugh!), so I found a low cost health insurance plan subsidized by the state that would carry me at least a year, until I could prove that my business was pulling in profit beyond the maximum income level. Adam and I renegotiated the rent split so that he was paying a little bit more to help offset my decreased income. But everything else I was previously paying, I continued paying – health insurance, utilities, cell phone, 2 student loans, multiple credit cards, transportation and whatever I spent on leisure activities (eating, drinking, travel, and groceries).
When your livelihood directly affects someone else, it’s important to realize that there’s a difference between “support” and “supportive”. To this day I maintain that he does not “support” me, nor vice versa, but he is by all means 100% supportive. We are partners, helping each other out, but also holding one another accountable for our own decisions. And starting this business was my decision.
Know what else was fun? I now had to sock away a chunk of what little income I was making for taxes. When you are self-employed, you have pay regular income taxes from any wages you make, and self-employment tax to subsidize the Medicare and Social Security tax that would normally be paid for by an employer. This can be as much as a 15% increase. And I had to pay it every 3 months, also known as quarterly taxes, to avoid getting slammed with a huge tax bill come the following April. One thing I did invest in early on was a good accountant – and I suggest you do the same, if you purchase nothing else for your business in the first several months.
I also suggest setting up some kind of system to track your incoming revenue and outgoing expenses – you will thank me later, particularly at tax time. I’m a complete Excel nerd – my entire life is drafted into various spreadsheets. So early on I adopted a P&L (Profit & Loss statement) to track everything I spent and earned. And for those initial months as I was starting up, the former far outweighed the latter (also normal). It’s so normal in fact, that the government knows this well, and allows you to deduct a lot of these things known as “startup expenses”, and later on “operational expenses”, come tax time.
Save yourself the anxiety and deflation of looking at someone else who has made their way, and trying to figure out how they got there. Even worse, stop assuming that their path to success was flawless and easy, because nobody’s is. Building a business is a complicated process with many many components, and the only person who can determine the right course of action when it comes to managing your career, your life and your finances, is you. So my first month flying solo, not counting my side job, I pulled in about $400 through my business (not bad, actually). I doubled that two months later, and continued on a steady climb from there on.
Until I hit January of the following year.
When you’ve been in business less than 12 months, you don’t yet have a sense of your busy and non-busy seasons, and the trends which affect your undulating revenue levels. The first three months of the year, leading up to my 1 year anniversary flying solo, were terrible. You would have thought people would be riding their New Year’s resolution high after January 1, and ramped up to get out there and start businesses, or jump on their job search. But they weren’t – everyone was still in holiday mode and/or paying off bills. Companies weren’t back in the hiring swing just yet, and people weren’t hiring me to consult or write resumes. I had totally miscalculated. And I drained my savings, several months before my wedding.
And then April and May came, and things picked up. I went from record lows to record highs in revenue in a matter of weeks. And I learned a valuable lesson about anticipating the natural ebb and flow of the business cycle, something that would help me tremendously in planning and preparing for the following year. I wouldn’t necessarily say it was smooth sailing form there on out, but it was certainly easier now that I had a better sense of my business, of my revenue cycle, and really what I was capable of.
Insight #2: Ask people’s opinions, but take it with a grain of salt. Unless you are paying them. Friends and family mean well, but they are biased toward what they perceive to be in your best interest. If you’re starting a business, get someone who has started one successfully, and who closely understands the nature and nuances of yours. And when you decide to make that investment, make sure you do your homework ahead of time and make sure they’re the right resource for you. Remember that cashed out 401K? $2500 of that went to investing in the wrong business coach. “Ouch”, said my dwindling bank account (and my pride) later on.
Insight #3: Your professional pursuits don’t have to line up with your paycheck. Whenever anyone asked early on what I did, I told them I was a career and business consultant. Because I was – I was dedicating any and all of my time, energy and resources to building my business, educating myself, and building my brand. But had someone asked me “How do you make your living?” the answer would have been more along the lines of: “Part time jobs, savings accounts, my fiancé and a few clients here and there.” But who really asks that anyway? Just because some schmoe on Twitter talks about making $100K in his or her business in the first year or two, doesn’t mean I have to. Talent, experience, and reputation make you legit – not tax returns. Don’t believe me? Ask an artist.
Which brings me to Insight #4: Build a business that supports your lifestyle, not a lifestyle that supports your business. Really you can do both. But the point is to build a business based on the right reasons. What do you love about the work you’re setting out to do, or the people you’re aiming to work with? Why can’t you do that working for someone else? Do you love it enough to weather the multiple, inevitable shit storms? I love business, I have experience in business, and I give really great career advice. On top of that, I knew I wanted to work for myself and never again give someone else power over my earning potential. Or the power to take it away.
Don’t get me wrong – there’s nothing wrong with having a large savings accounts with which to start a business, or having a spouse or partner fully support you through your professional goals. But most people who come to me aren’t in either of those scenarios – the decision to move forward on building a business is one they take the majority of accountability on, and they struggle to figure out how to make it work. It’s like a very fine cocktail – there might be a general recipe, but every bartender puts their own spin on it to make it work for them, and the people they serve. That’s my advice on making the transition to starting a business – pay attention to your own needs, challenges and interests. Those things together have to be finely measured and balanced to make the right cocktail, and no one else has your tastebuds and can tell you what’s right. Whether you work one job or 6, and it takes you 3 months or 3 years to start up, the process is yours.
And while we all experience some of the same “normal” things as entrepreneurs – anxiety, worry, financial burden, self-questioning, unrelenting passion, etc. etc. – through the process, there is no normal experience, no standard of how to work your way through the start up transition. You have to find a balance that works for you needs, interests and ideas. And guess what – that’s YOUR problem. And that’s a very good thing.
SHARE: What is/was your experience starting up like?
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