Being Your Own Boss: Hidden Costs of Going Solo
This is the second essay in a four-part series.
For most people, myself included, going to work for yourself isn’t just embarking on a new role. It means embarking on many, many roles and not knowing where to invest your time.
In the first part of the series, I hope I made two things clear:
1) I didn’t know what I was doing when I first set out on my own
2) What I did and how I did it evolved over time
With that in mind, let’s dive in to the hidden costs of working for yourself, and the difference in my experience then versus now.
The hidden cost of becoming your own boss is similar to the iceberg metaphor, people only see what is above the surface, and no one realizes all the hours invested under the water. The single biggest hidden cost is time.
For about a year, I said yes to almost every opportunity that came my way. Every invitation to speak, to facilitate, to advise, to participate, to network.
The benefit of me saying yes was the experience. Plain and simple. The best way for me to figure out what people wanted from me, the What and How from the prior essay, was to say yes and learn first-hand, what people needed and how I might be able to assist.
“We are hoping you’d speak to our group about…”
“I’m looking for a session on…”
“Would you be interested in serving as an advisor for…”
Yes, yes and yes.
These invites helped me to see how others saw me. The value others found in what knowledge I could share. It was a helpful start to securing some paid work and testing the waters for the future.
It was also what opened my eyes up to the cost of doing business as a business of one, because if there is one thing working for yourself can do, it is keeping you extremely busy and have nothing to show for it.
Speaking became my primary source of income. Either giving talks or facilitating workshops. For the first 18-months, I’d agree to an opportunity and then get busy building all the assets – digital or physical – to accompany that opportunity. Those early months meant tons of time developing.
I need to say, the planner in me did not care for this approach.
It was a little stressful at times, to say “yes, I can” and then get to work figuring how to deliver. What this approach did, was enable me to build up assets as needed, and then assess which could be repurposed. That is, which images, slides, talking points and activities could be swapped in and out of various workshops. This catalogue takes time to build, and as mine was built alongside actual work, I feel it was time well spent.
The alternative approach, sinking countless hours into designing the perfect workshop that no one wants, well that is precisely what my planner-side would prefer. A little self-awareness goes a long way.
And that is one of the biggest hidden costs to working for yourself. Devoting time to being busy, to developing a product or service nobody expressede interest in.
Which is why I spent an entire year saying yes. I knew it wasn’t sustainable. I knew I was lowballing my value on some occasions, but it was with a goal of learning, exploration and evolution.
Welcome to the Back Office
Going solo? Welcome to the back office, administering the running of your business. If what you have to offer reflects what you used to do as an employee, you may be in for a big surprise at how expensive the tools, software and hardware you are used to using, truly are. There are also many administrative tasks, which means more time, you are now responsible for.
This is the one section where I feel comfortable offering straight up advice.
Administering to your business, no what field you enter, is where your mistakes can be costly. This is where spending your money and time wisely pays off the most.
What to Spend Your Money On Immediately
If you plan to offer a service – of any kind – that requires a contract. Do not attempt to do this yourself or download a template off the internet and call it a day.
Pay the money to speak with a contract lawyer. Someone who will ask questions about your services, and who can not only draft a document tailored to your needs, but who will explain all of it to you so you understand what each clause means and why it is important. Your contract protects you. You won’t need to contact them each time, they set you up with a reusable document that reflects your needs.
Laptop warranty. You are now your techology support team. Unless you have access to an IT hardware/OS expert, pay for the best warranty available for your hardware. Take it from me, a person working on a brand new Dell laptop, thanks to said top-tier warranty after mine died nearly three years after purchase.
Back. Up. Everything. The cloud is wonderful, and cheap for storage. It is also beyond your control. I recommend investing in a few external drives and get in the habit of regularly backing up whatever data drives your business. Digital images. Customer information. Presentations. Invoices. Works-in-progress. If it is important, make copies frequently and store them safely.
Avoid Annual Subscriptions at the Outset
Don’t spend a ton of money upfront on other business administration software or services. Wait to see what you truly need to support your business.
Purchase any software/services on a monthly basis at first and reassess after three, six and twelve months. Yes, I know that annual fees are lower. They also waste money if you don’t need them, or they stop meeting your needs as your business evolves.
Remember how what I did and how I did it changed after a while?
Keep that perspective when determining what tools and programs best support your business. You need to think of what you need now and what you might need later. Before signing up for the bottom tier of a subscription or service, check out the premium options available.
Will the expanded options meet your needs if your business scales? What if the type of work you do changes? What if the platform you choose goes out of business or merges with a competitor?
Now vs Then
Besides dropping a whole lot of service subscriptions that I didn’t need, the single biggest change I made to reduce the hidden costs is updating my payment terms.
All contracts for services require a deposit. Even though I built-as-needed in the past, there were occasions where that contract fell through.
Today, no work is being done on a project until that non-refundable deposit is received. The old me (employee brain) would dive right in, excited by the possibilities of a new opportunity. Business owner brain says hold on there, show me the money.
Sole proprietors and self-employed people are not employees.
We need to figure out how to spend every second of every day. Investing time learning about your industry, or how-to-run your own business is time well spent. Doing unpaid work for a project and having the project fall through, could be time well spent, but at what cost? Securing a reasonable deposit upfront before devoting a lot time and energy, is a sound business decision.
The importance of downtime is the second adjustment I’ve made.
Now I understand the time it takes to develop, deliver and recover from certain types of work. The amount of time for each will vary by person and by the kind of work you do. Some activities will take longer the first time around, other efoorts remain static. As I noted last week, keep records of everything you do. What was the elapsed time? How did you feel doing that work? How long did it take to recover? These records are also a data rich source when considering services you may wish to use as your business grows or stabilizes.
There are two other aspects I will speak to regarding becoming your own boss.
Networking, which I will address when I talk about building a support team; and social media/advertising. In my experience, social media and advertising was one of the larger hidden costs of going solo, with the steepest learning curve, which is why I’m devoting next week’s essay entirely to that topic.
