The First 3 Years Are the Hardest

self employed tips, tax tips for self employed, first year self employed tax

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Hanifmr.com - Anyone who believes that they can earn a lot of money as a self-employed person in a very short time will usually be taught better.

The start-up phase is difficult and it often takes 2-3 years to generate regular and satisfactory income.

This article provides tips and information about the difficult start-up phase of self-employment. I also describe my own experiences.

The First 3 Years Are the Hardest - Tips for Founders and the Self-Employed

It is often said and I can only sign it.

If you start your own business, you don't just have to get used to a completely different kind of work than in a job. In addition, you have to take care of everything yourself and you have to build an income in the first place.

A lot of work, little time, little income. All of this causes problems for many founders.

My Experiences

I started my own business in 2006 and developed websites for small regional companies and other self-employed people. I have made the experience that the first few years are not easy.

It is a lot of fun to work on what you like to do and to be your boss, but that is only one side of the coin.

My income was very low in the first year because I haven't been able to win that many clients and these projects weren't that extensive. During this time I worked a lot on my own CMS, which was a good decision in the long term, but of course, didn't bring in any money at the beginning.

So I lived mainly on my savings, my wife's income, and government funding.

The second-year went better and I was able to win more customers. In addition, the existing customers brought in money and so I didn't make a profit yet, but the development was positive.

In addition, I had already got used to the tasks of a self-employed person that went beyond the technical area. Accounting, planning, control, marketing, and more.

The turning point came in the third year. Not only did I get good web design contracts and work for regular customers, but I also started my websites and this blog here.

All of this ensured that I was able to generate a really good income in the third year without being able to plan my retirement from it. However, it was very important to see that I can get an income again that can match the previous employee income.

Fortunately, my wife is at home in the areas of accounting and taxes, so I was able to master the difficult phase with the tax office.

What Makes the First Few Years So Difficult?

There are some recurring reasons and problems why the first few years are so difficult:

You usually start without customers and therefore also without income. First, you have to win customers, build references and generate regular income. This usually takes a little longer and doesn't work overnight.
Building a steady income is not an easy task. Even if you have customers, it is often not that easy, as some of them cannot make progress and you cannot write invoices. In addition, it is usually necessary to build up several sources of income for regular income. And unfortunately, the day only has 24 hours.
Since the income is often missing at the beginning or at least too low, one has to live on savings. This is often unavoidable, but unfortunately, it usually doesn't last very long. That's why you have to work a lot of overtime to build up the sources of income as quickly as possible.
Many founders have to learn the hard way that being professionally very good is not enough for successful self-employment. Business skills are just as important and are often underestimated.
Another problem for many self-employed is the taxes and duties, which usually increase properly after 3 years. After the first good year, the tax office not only wants to have taxes paid but also demands advance payments. This creates liquidity bottlenecks.
In the beginning, it is not a problem for many self-employed people to work a lot of overtime and also to work on weekends. After all, the work is fun and necessary. Nevertheless, this can have negative consequences for your health and of course, that doesn't help in the long term. Motivation problems and health problems can be the result.
Not every partner is as understanding as you would like them to be. Often there is tension after a certain time, be it because money is running out or you hardly have any free time.

Tips for Founders and Self-Employed

What can you do to get through the first few years?

I think permanent motivation is very important. In order not to lose motivation in difficult times, you shouldn't start your own business just because of the prospect of money or as a stopgap because something else doesn't work. Instead, you should love what you do and have fun with it.
Good planning is important because the foundations for success are laid at the planning stage. You should think realistically and, if possible, already have experience and market values. In addition, one should plan the expenses long-term and not lose sight of the tax office, for example.
After that, however, what matters most is action. Those who brood too much and postpone decisions lose important time. That's why you should just try things out instead of thinking about them forever. In any case, you always learn something new, even if it doesn't work as you hoped.
It is also advisable not to start from scratch. Instead, you can gain experience, build references and make contacts during your studies or in your (still) job. That is a very good basis for independence.
A part-time job is often the better alternative to full-time self-employment right away, as this way you can earn your first income and win customers without having to make a living from this business. However, this double burden is not recommended in the long term.
Many bypasses the development phase of their business by taking over an existing business. Of course, this costs money and you usually need a loan. But basically, taking over a running business is not a bad idea as many entrepreneurs retire. And so you already have ongoing income and customers.
In general, you should focus on a few things and not try to do a thousand things. On the one hand, you are more likely to be perceived as an expert if you focus on certain services. On the other hand, you are more likely to develop routines and workflows and improve yourself.
As a founder, you shouldn't neglect your free time and recharge your batteries. Then you can do more and be happier.
Do not start your own business without reserves. Building a good income takes time and that is 2-3 years for many self-employed people.

Further success factors for founders and self-employed.

Your Experiences and Tips

How did you start your own business and what problems did you face?

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