Most employees have probably considered self-employment at some point, but decide not to pursue a passion due to practical considerations. You’ve likely seen success stories about corporate workers quitting their jobs and making millions after turning a hobby into a business. But for every happy outcome, there are many more entrepreneurs struggling to make ends meet. Before you decide to make the self-employment leap, consider how you’ll deal with these common pitfalls.
What will it cost to run your business? If you don’t have a clear answer for this question, it’s time to do some calculations. Consider legal, accounting, materials,equipment, insurance and marketing expenses. The money you make from your hobby may seem impressive now, but when you factor in additional expenses required to run a business you may be surprised how quickly revenue is eaten up.
Competition and Demand
Even if you aren’t seeking a loan, write out a business plan including research on your competition and target market. Certain industries are saturated with new businesses, so it’s important to be realistic about your chances of success. What unique products are services do you offer and is there a clear demand for those products and services?
Insurance and Retirement
The self-employed in the United States bear the burden of seeking out their own health insurance and retirement plans. If you’ve always worked for someone else, it may be a shock to discover how much individual insurance plans cost. For married individuals, it may be best to be added on a spouses’ plan. If that’s not an option, research and compare plans on eHealthinsurance. Retirement may also present challenges, because you won’t have retirement matching that many employers offer. To get started, visit a financial advisor to learn about the different self-employment retirement options and which plan would best help you reach your goals .
As an entrepreneur, you’ll always be on call and ready to handle emergencies or customer demands. This can be a huge adjustment for those accustomed to leaving work behind at the end of the day or on weekends. Are you prepared to fully devote yourself to a business? Can you stay positive and committed in the face of setbacks or negativity? If not, it’s best to keep enjoying your hobby and continue with your day job.
Turning a hobby into full-time business isn’t as romantic as you might imagine. It requires practical planning and lots of hard work. And if you aren’t fully committed to your new business, a favorite hobby could turn into something you dread.