Do you have the right personality for running your own business?

I’m always meeting people who have jumped into freelance or small business life without really understanding their own skills matrix. As rewarding as it is starting your own business, there are some negatives as well. It’s great that you’re a PHP expert, or can design like the best of them, but do you really want to run your own business?

Here’s some myths of running your own business, and the reality I have found from these;

I can spend all day doing what I want to do, and turning down the rest.
Sure – if your dream is wanting to spend copious amounts of hours wrestling with your accounting package, endless meetings with clients, planning your cash flow and dealing with debtors, then I guess that myth holds true. The rest of us though will find we get very little actual time to do what our hearts would prefer.

Running my own business means I can work how and when I want.
Within reason, this is true, however you’ll also find, especially in the early days, you’ll end up working when your clients want you to, and never actually getting that weekly game of Golf in. When you realise that billable hours equals income, you tend to work more than you do now, not less.

I’ll get paid more than my current job.
This is a big one – normally the way business works, is that the majority of it ends up being in goodwill or intangible benefits that you won’t receive until you are in the position to sell it – do you plan to have an exit strategy? Once you’ve taken the costs of taxation, superannuation, equipment, office lease, etc, will you be much better off on a short term basis? Not likely.

As soon as I can afford to take on staff, I can sit back.
Not true at all. As soon as you start having other mouths to feed, you not only have to double your efforts, you have the added pressure of knowing you are supporting their families through your own vision. If you take a wrong turn, you could end up having to fire someone. The added pressures of actually managing others, and ensuring you can pay them, turns many off taking on staff.

If you are anything like me, you also think your way is the best way, so letting go and allowing others to take ownership of workloads is a hard thing to do.

It’s certainly not all doom and gloom though (I don’t regret any moment of the path I have taken) – you’ll quickly find being in charge of your own destiny is an exciting place to be, and worthwhile in the lessons you learn and the challenges you overcome. It’s just important to not only be talented at what you do, but also have the motivation to overlook the negatives and embrace the challenges of creating your own future.

Don’t go into your own business all starry eyed, without understanding the pitfalls, especially in the short term. Learn as much as you can before taking the leap, find others who have gone before you to act as mentors, and above all, have a realistic expectation of where your own skills lay.

There’s no rule that says you can’t start small by working part time, and then taking the leap to full time when you feel you’re prepared for the above. Keep your goals in sight, and don’t forget to have fun!

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  • sarge

    Listen to him lads, this guy knows what he’s on about :)

  • Joshua

    This is a good read .. I enjoyed the bit about the other mouths to feed and the wrestling with the accounting package.. Life as a boss is tough going.. but has it’s rewards in the long run..

  • Gezprila

    Great post!

    It’s good to hear you have the same experiences as me. I identify me with the text above. I think your “myths” above is true, and sometimes it’s a lot of hard work just to be motivated enough. It is very important to alway motivate yourself to keep on the good work, keep on getting new customers and keep on collect enough money to keep it going. If you unmotivated and tired of the tasks mentioned above your business is soon gone.

    But is also important to mention that it is the best feeling ever to achieve your goals, to get the new customer or to launch a new product who have a great success. This feeling makes me work seven days a week and to love this life.. running my own business.

  • ikeo

    Another myth that really isn’t a myth is that success is guaranteed. It isn’t, you might fail in your business venture … in fact the odds of you succeeding are actually only about 35% in the US (I hope thats correct).

  • http://manwithnoblog.com tuna

    I’m reading this going.. nod and nod and again nod…

    Listen to the wise man folks what he says is all true. Good post Miles.

    I will add that you may discover that you are a bad manager of people or need to learn how to manage and lead which is a lot different than getting that PHP application out the door or wrangling that CSS on IE6.

    An important aspect of this is your family and lifestyle, you can end up with all work and nothing else. Watch out for this it can happen.

    @ikeo it’s around 50% of startups stop trading in the first 2 years in Australia.

  • http://www.brothercake.com/ brothercake

    There are exceptions though. I ran my own business successfully for four years – I never did any complex accounting, never had client meetings, kept very flexible hours, and earned far more than I had been in my previous job (or for that matter, than I am in my current job!)

    Having said that, self-motivation was a serious issue, hours were often very long, and client deadlines sometimes extremely demanding.

    A useful tip I would give is to look for horizontal expansion, rather than vertical expansion – ways of increasing your profitability without having to do more work, because there are only so many hours, and only so much those hours can be worth. Developing products or services that bring in continual incomes is a investment in this kind of expansion – it may be costly and time consuming initially, but it can become a cash cow.

  • smsu

    Good article Miles, I enjoyed it.

    Looking forward to your next one

  • elemental70

    All too true. There is one thing I’d like ot add even though its not a myth: Just because you fail at one thing, doesn’t mean you ever give up. It may just mean you ‘build some other guy’s dream’ while you also build your own. And don’t let the naysayers bring you down. Whenever I talk to some of my family about what I’m doing (internet marketing and some web design as well as part time at Bestbuy), They want me to be realistic. No gold medalist ever got to the Olympics by being a realist: They are all DREAMERS.

  • http://www.davidbehan.com davidbehan

    100% agree! :D

  • adiel_m

    I’ve started a new web design business with my wife just now and this article makes me think about the whole thing again.

  • http://www.dangrossman.info Dan Grossman

    I simply find or create products to sell… I do only what I want, work how and when I want, and get paid more than any job I’ve taken. I don’t have meetings or clients or deadlines or long hours. All I have to do is occasionally check in on my advertising to keep the sales coming, look over new orders for signs of fraud, and respond to e-mails with simple questions from customers. These are all outsourceable tasks at some point.

    You only have the problems this blog post mentions if your business is working long hours for people…. you don’t have to choose that!

  • brent3721

    brothercake, I totally agree with your comment about horizontal expansion, any suggestions on how this could be applied to a web design business. A few things that come to mind are hosting and maintenance contracts, but neither of them really come into play with our clients, I’d be interested in hearing if anyone else out there has ideas

    brent
    at
    mimoymima.com

  • blackmax

    Don’t forget you also have to become a salesperson. I started my own business because I just wanted to do the work and not play the office politics. I never wanted to be a salesperson – but it’s the only way to survive and grow your business.

  • http://www.brothercake.com/ brothercake

    Develop products that bring in licensing revenue – online or offline applications, resource bundles, that kinda of thing. In my case it was a DHTML menu, that brought in very nice income for several years, and then I sold it.

    IP is where it’s at :)

    And don’t underestimate the value of reputation – write articles, books, speak at conferences – things that are not profitable in themselves, but raise your profile and establish you as a player in your field.

  • Kat

    When you own your own business, you can choose which 14 hours of every day you want to work ;)

  • Hey jerks!

    I turned on pop-up blocking so that I wouldn’t get any pop-ups not so you could figure out a way to circumvent it.

  • http://www.sitepoint.com Mark Harbottle

    What Brothercake is saying is build a scalable business. To me horizontal expansion means diversifying into other areas, which of course is part of it, but scalability is the key. The best way to scale a web design business is to build IP with the help of your clients, maintain ownership of that IP, then find ways to leverage it into a scalable business. For example you might build a mailout application for a client which forms the foundations for an online application that anyone can sign up to and use to send mailouts for a fee. Or it could be a CMS that you charge an annual license fee for etc.

  • http://www.deanclatworthy.com Dean C

    This blog post is so true. Particularly this part ;)

    “When you realise that billable hours equals income, you tend to work more than you do now, not less.”

  • SarahH

    I just started my business and it has gone well for the first 6months with almost continuous work, but is now slowing down and like someone said earlier you become “the salesperson” as well, although I expected most of what has been thrown at me so far, I didn’t expect the quantity of work and what Dean C has just said is so so true for me, “Income = Work” and when no-one is looking I am working :) I have to say I do love it but have been “warned” about becoming an addict :?

  • Richard Morton

    If you are billing half your working hours (meaning including all the admin, accounting, sales time, networking, making coffee, chasing debtors, fixing the printer etc.) then you are probably doing well. In other words if you expect to work 40 hours a week then make sure your rates are enough for a max of 20 hours per week.

  • http://www.dangrossman.info Dan Grossman

    I suppose I’ll never understand most of you. If you have the skill to build beautiful and functional websites for clients, why aren’t you building them for yourself instead? If you can build an ecommerce site for the business down the street, why not build one for yourself and compete with him? Freelancing isn’t life without a boss, you simply switch bosses for each new client you slave for. There are so many more degrees of “free” than that… :)

  • Colin Behr

    Having gone down this route over the last couple of years I can completely relate to everything which has been said, particularly the staffing part.

  • http://www.bam.com.au miles

    Thanks everyone for your comments and feedback.

    The intention of this post was to point out some possible pitfalls, I wasn’t suggesting that all businesses face the above. I’ve got a post lined up all about scaling your business through IP and recurring income, so will take everyones points on board.