I’ve been working for myself full-time for almost a year now, after side hustling for three years, and I’ve learned a lot during this time. While I’m not an expert, I do have some experience with owning and running businesses from my previous job as a business analyst.
In my old job, I did a lot of things like interviewing company staff to understand their operations, analyzing legal and business agreements, and reviewing financial documents such as tax returns and financial reports. I saw some incredible companies that started from scratch and grew into multi-million dollar businesses. But I also saw many companies make terrible mistakes, operating at a loss year after year.
Running my own simple business with just a laptop and internet, I’ve come to understand what those business owners went through to achieve their success. I’ve made my own mistakes too, and while no one is perfect, hopefully, you can avoid some of these common pitfalls.
Here are four common mistakes made by the self-employed:
1. **Not Being Organized**
This is a mistake I’m guilty of too. When you have your own business, staying organized is crucial. You need to keep your personal and business finances separate, organize receipts and papers, and prepare everything you need for taxes. Disorganization can quickly take over your life, making it hard to find important documents when you need them.
2. **Thinking Being Self-Employed Will Be Easy**
Some people think self-employment is a breeze, but it’s not. It’s not a never-ending vacation. You need a solid business plan, financial organization, legal handling, and you must manage to keep your business from taking over your life. There’s also providing services, selling products, finding health insurance, saving for retirement, and, of course, dealing with taxes.
3. **Not Having an Emergency Fund**
Many people give up on self-employment after a few bad months because they don’t have an emergency fund. Different people save different amounts, but having a year’s worth of expenses saved can be a lifesaver. An emergency fund can help you get through tough times without giving up on your dream.
4. **Spending Too Much Money**
My business is cheap to run; I just need a laptop and internet. But I’ve seen others spend too much on unnecessary items. While some expenses are necessary, others can wait until you have a viable business plan. Spending a lot just to write it off on your taxes isn’t wise because you still have to pay for it.
What mistakes have you seen or made?