These days, you don’t need to buy an office in the city or launch your own store if you want to be self-employed. People with an entrepreneurial mindset can start their strategy as small and as simple as they like – thanks to the arrival of freelancing, micro businesses and the gig economy.
For instance, if you’ve just become a parent, you might decide that going to work at an office every day from 9 to 5 is no longer right for you. To give yourself greater work-life balance, you might decide to have one parent continue with traditional work, while the other supplements their income with an at-home business. A few baking classes later, or a freelancer profile online, and you have a micro business that you can use to make some serious cash.
The question is, how do you make sure that you manage your cash flow, and keep your budget on track when you become self-employed?
1.Manage Loans and Debts Carefully
The good thing about a micro business, is that you’re probably not going to need a massive loan from a bank to get you started. This is a good thing because banks and other credit providers often make business owners jump through countless hoops to get the money they need to borrow for an office or piece of crucial business real-estate.
As a micro business owner, you could even get the money you need to launch your venture from a personal loan. A small loan that covers the cost of a computer and printer or transforming your spare room into an office should be easier to manage over time than a huge business loan. Just make sure you know exactly how much you’re going to need to get started before you apply and be sure to use a reputable lender such as MoneyWorld.co.uk.
2. Assess Your Income Needs
If the idea of setting up a full budget is overwhelming to you, start by figuring out exactly how much you need to make ends meet. This means finding out your “break-even” point. Look at all the expenses that you’re going to need to deal with to keep your business running. This might mean paying for a business phone line, broadband, computer maintenance and so on.
Once you know your outgoing expenses, you’ll be able to figure out how much you need to charge and earn each month to cover those costs. It’s also worth knowing how much money you need to make for things like taxes and paying yourself too. This will give you an idea of what to aim for each month.
3. Consider Keeping Your Day Job at First
Some people can earn a decent amount of money running a micro business. However, just because you have an in-demand skill, or a good idea of what to sell doesn’t mean that you’re definitely going to be successful. If you’re worried about not having a consistent income as a small business owner, it’s worth holding onto your day job to begin with.
Start building your micro business in your spare time, gathering repeat customers and potential clients wherever you can. Save any extra money you make towards your “emergency” fund for when things aren’t going according to plan. This will give you a safety net to fall back on when you decide to ditch your day job completely.
4. Pay Close Attention to your Finances
When you have a traditional job, you don’t have to pay a lot of attention to your incoming expenses. The chances are that you pay your bills with direct debits each month and adjust your budget every now and again to help you reach your goals. However, when you’re running your micro business, you’ll be in control of your finances in a brand-new way.
It’s up to you to make sure that you’re consistently saving money towards those rough patches in your business when you don’t earn as much. You’ll also need to save for your taxes, your retirement, and any professional help you need too.
5. Remain Flexible
Finally, setting a budget which allows you to see your incoming and outgoing expenses more clearly is a great way to boost your chances of success in a micro business. However, it’s essential to remain flexible too. As your company evolves and changes, your needs may change also. Make sure that you’re ready to go back to your budget and adjust whenever necessary.
As exciting as being self-employed with your own business can be, there are challenges to consider too. Make sure that you have a plan for success before you get started.
