This is Where Self-Employed People Fail - Part 17: Step by Step Into Self-Employment on the Internet
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| Photo by Brett Jordan on Unsplash |
You hear and read again and again that the first 3 years are the most difficult. I felt that too.
In addition to normal start-up difficulties, this is often also because one or more mistakes are made.
No business start-up is perfect, but you should try to make as few mistakes as possible and be aware of the problem areas to be able to take countermeasures at an early stage.
<< Part 16 - Contracts and Law
>> Part 18 - Success factors for the self-employed
[Overview of the article series " Step by step into self-employment on the Internet "]
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| This is Where Self-Employed People Fail - Part 17: Step by Step Into Self-Employment on the Internet |
This is Where Self-Employed People Fail
In the following, I list 15 points where self-employed people repeatedly fail.
Some of the points alone are enough to fail. For others, they are at least a big factor and, together with other mistakes, cause independence to fail.
- Bad Preparation
One point is bad preparation. It is frightening how little thought some start-ups have given their vague idea.
Market analysis, the assessment of one's qualifications and skills, target group definition, objectives, etc. are simply part of the process in advance so as not to start blindly. Keyword business plan and one that has been really thought through and not just written off somewhere.
Bad preparation also leads to false expectations and so you fall out of the clouds if the income is not as high as expected (desired).
More information on "Idea and Analysis" and "Planning, Goals and the Business Plan". - Commercial Skills
Many start-ups are very familiar with their specialist field and therefore believe that self-employment is not a problem.
This is still a consequence of previous employment with an employer. As a result, many start-ups have not noticed the commercial requirements.
Therefore you should improve your commercial skills and outsource work for which you do not have the necessary know-how.
More information on suitability and requirements. - Liquidity
A very important point where many fail or at least get into serious problems.
The savings are just enough to start a business so that you have to earn a full income almost immediately. However, this is not so easy for many start-ups and it often takes a while before you can realize the planned monthly income.
You also have to ensure that you are always liquid in the short term. Just because one expects a plus in the planning over the year can lead to financial bottlenecks due to bad debts or receivables paid later.
Because the expenses usually come quite regularly and need to be paid. So always have a cushion to compensate for fluctuations in your intake.
More information on liquidity planning. - Marketing
Either marketing is ignored from the start or it falls asleep over time.
Many start-ups still vigorously promote the business at the beginning. But often the time is no longer available when you have enough to do with customer orders.
However, customer acquisition should always be pursued and not only when the order situation is thin.
More information on marketing and customer acquisition. - Costs
Another mistake that is “often” made is that one underestimates the ongoing and also irregular costs.
In training courses, etc., prospective start-ups are often asked what they want to earn per month. And then there are often numbers around 3,000 euros. So exactly what many would expect from an employer as a salary or wage.
The fact that a self-employed person has to pay far more than the sales tax from his income, i.e. the money that comes in through bills, is often overlooked or at least underestimated.
Among other things, the net income still includes an old-age provision, health insurance, income tax, advance payments, advertising costs, risk reserves, building up liquidity cushions, loans, etc.
One should assume that 40-50% of the net income will flow away again.
I have not included expenses for raw materials and materials here. That would lower the percentage of revenue that you own even further.
As a self-employed person, you should very quickly turn away from the old way of thinking that the receipt of money on your business account belongs entirely to you.
More information on the costs of self-employment and insurance. - Taxes
That brings me straight to the point of taxes and accounting.
A complicated topic that I have outsourced. Apart from the fact that I don't want to deal with it at all, I also lack the knowledge that I don't even want to acquire. I can simply invest this time better and have more fun.
But of course, I've learned over the years that you should always be careful here to put enough money aside. If your income increases, that's nice, but then the tax office would also want more and then in ever-larger advance payments.
Likewise, other costs only come after a few years. Such as the trade tax.
A good bookkeeping office or tax advisor * will tell you about things to come.
More about taxes. - Investments
First a new car, new office furniture, and good business clothes. Okay, the latter should be, depending on the industry and activity.
But whether the other two status objects have to be at the beginning depends on the respective independence.
You should ask carefully whether an investment is really necessary or whether you just want to fulfill your own or external (friends, family, neighbors) stereotypes.
Every euro that does not have to be earned is an advantage.
In addition to investments that are too high, investments that are too low can also cause failure. If you start a restaurant and continue to use the 20-year-old furniture from the previous predecessor, you can give your new business the fatal blow.
Or the example with the office furnishings. If you regularly have customers in the office, you shouldn't have your old bedroom furniture there.
So you should think carefully about which investments are really important and how you can realize them with the best price/performance ratio.
More information about business premises and technology. - Business Review
It is important to regularly step back and analyze your own business. Keyword: controlling.
In the daily stress of work, it is easy to lose sight of the overall development and overlook emerging problems.
That is why, for example, a regular business analysis by a tax or accounting office is very helpful. - Assortment Maintenance
Of course, assortment maintenance also depends on this.
It is often the case that in the first time when you are not yet busy, you also do other work because you are grateful for every job.
That can be positive if you discover lucrative new services in this way and can offer them more frequently in the future.
But one should avoid becoming a “vendor's tray” and offering everything possible. Because then you will no longer be perceived as an expert in your subject area.
And you should delete unprofitable offers and services from your range through regular analysis.
More information about the price and offer. - Legal Risks
Legal risks can of course also lead to the failure of self-employment.
Expensive warnings, legal disputes in court, fines, etc. can bring down the thin financial ceiling, especially for business start-ups, very quickly.
Of course, advice from a lawyer in advance is not very cheap, but you should put important elements of your independence on a stable legal basis.
Contracts should also always be made in writing so as not to experience a rude awakening later.
And, as I have just learned, you should put money aside for legal disputes, warnings, etc.
More about contracts and law. - Health & Family
In the first few years of my self-employment, I almost only worked. For many business start-ups, this cannot be avoided to build something up in the first place.
But you shouldn't overstrain your health just to fall over at some point. Burnouts are not uncommon among the self-employed.
One should keep the work stress within limits and relieve it through friends, family, and free time.
In addition, you should ensure that your own business can do without you for a while.
Worst-case coverage, occupational disability, should also be considered. - Further Training
Due to the daily stress at work, many self-employed people neglect their further training. Especially with topics that are not part of the core competency, such as taxes, law, etc.
Either you train yourself or an employee in such neglected topics or you give this work to an external specialist. Here again, I can primarily refer to the topic of taxes. :-) - Do Everything Yourself
A mistake that does not lead to failure across the board, but can damage your own business in the long term.
In the beginning, you do most of the work yourself, mainly for cost reasons. This way of working should change over time.
On the one hand, you slow down the growth of your own business because you only have limited time resources.
On the other hand, external experts or good employees can use their know-how to improve the company. - Only One Pillar
In the long term, you should spread your business across several pillars. This does not work for every self-employed person, but if you only have one source of income, your risk is of course greater than if you break away, your self-employment will fail.
Those who increase their sources of income over time, on the one hand, have more potential but are also better equipped against the loss of a source of income. - Murphy's Law
Last but not least, I would like to point out that even with start-ups and the self-employed, things rarely go according to plan.
Murphy's Law is also found here and this should always be kept in mind.
Anyone who goes into self-employment and expects everything to run optimally and without problems has almost failed.
As you can see, I was able to link to earlier parts of this series of articles on most of the points.
Because the tips given there are of course, conversely, also the reasons for failure if you do not follow the recommendations.
Failure is Not the End
Whether you fail for the reasons mentioned above or simply because self-employment did not work, you should not despair.
There is no 100% guarantee of success as a self-employed person. Every year almost as many self-employed people give up as there are business start-ups.
One should learn from one failure and do better the next time.
So It Goes on
Part 18 of the article series “Step by Step into Self-Employment on the Net” is about success factors for the self-employed.
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