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Let’s take our hats off to everyone who is self-employed. I think it takes real courage to invest your own money in yourself, in a business you believe in, taking a calculated risk, knowing that if it fails, your whole world could come crashing down. Being self-employed is a case of putting your money where your mouth is and should be applauded.


Typically, employed people will look longingly at the self-employed and say things like “Oh it must be wonderful being your own boss!” or if “I was self-employed, I’d be on the golf course every Friday”. I mean look at the benefits, surely – you can run your business as you want, see and feel the fruits of your own labour, manage your diary to include leisure time, take time off as and when you want, utilise inspired accounting to pay less tax and best of all, report to no one but yourself!


But is being your own boss really that good? How about the fact that most self-employed people don’t have a work pension scheme, no sick or holiday pay and tend to have incomes that fluctuate wildly, making planning difficult? If you are self-employed, you may be worried about taking on commitments, especially long term ones, such as buying a home, paying into a pension, savings plan or insurance policy. How do you cope with long term commitments when you don’t have a regular income? Here are five ways to cope:


1: Treat yourself as an employee. This may sound like a paradox as one of the main benefits of being self-employed is not feeling like an employee! Many self-employed people however live on bread and water; investing everything that comes into the business back into the business. This is probably necessary for the first 12 months. If the pattern continues however, something may be wrong. If affordable, pay yourself what you think you are worth; reward yourself realistically for your efforts and the rest will fall into place.


2: Don’t be afraid to take on commitments. You may not want to take on any commitments in your first year of trading whist the business is on shaky ground, however after the first 12 months, you should be looking at a basic package for yourself similar to that which you would take for granted as an employee. Don’t deny yourself. The basics would be sick pay, death benefit for your loved ones and a personal pension.


3: Take a holistic view: Many self-employed business owners are narrow minded and short sighted in their thinking, worrying about the next contract or concerned about what would happen if work dried up. Uncertainty causes fear and fear paralyses so don’t allow fear to paralyse your thinking and your ability to plan. The best way to counter fear of the unknown is to build a reserve of three month’s income. Think about your likely income for the whole year, not just on a month by month basis. Then plan accordingly.


4: Budget, budget, budget! Know thy self, know how much you need coming in and understand your expenditure. Many self-employed people bury their heads in the sand and try to bumble along from day to day without really understanding how their cash-flow works. Having a clear understanding of your income and expenditure will give you confidence.


5: Believe. Remember why you did this in the first place, revisit your business plan and drive your business forward with guts and determination. Never take anything for granted and be prepared to do whatever you have to. Most of all, believe in yourself.  Being self-employed is a case in point of putting your money where your mouth is. Round of applause for you!




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