It’s a huge jump, but one that can ultimately reap you umpteen rewards (many of which are not financial).
However, taking this jump towards self-employment is one that a lot of people just struggle to get to grips with. Suddenly, the comfort of a standard 9-5 job is stripped away, and they are left with countless unknowns.
Well, before you even consider to take this leap you should take a long, hard look at your finances. With that, let’s take a look at some of the financial issues you should be raising yourself before pressing ahead.
Do you have enough savings to fall back on?
First and foremost, you need to make sure you are in a strong enough financial position to move forward with your dreams. Let’s not forget that this is going to be the period where your regular pay check goes out of the window, and you effectively enter the unknown.
Ultimately, there will be months where you might not have any income. It is for this reason that you need to put together something of a nest egg; you need sufficient money to fall back on in case you struggle to turn a sufficient profit in the initial months.
This might mean boosting your income through a second job, or even something like trading. In relation to the latter, technology has unquestionably made this a lot easier over recent times, with the likes of the Meta Trader 4 demo account meaning that you stand a much bigger chance of turning a profit and ultimately increasing the size of your savings ahead of your self-employment move.
Have you cut out all unnecessary expenses?
This next point is quite self-explanatory; after all, nobody needs unnecessary expenses.
However, this suddenly becomes a lot more urgent as you move into the world of self-employment. After all, as we have already alluded to, this is a period of the unknown. You don’t quite know what expense or even income is around the corner, so you need to cut back wherever possible.
Take a look at your finances and scale back, just to give yourself a bit of breathing space and alleviate some pressure.
What is your mortgage situation?
This next question is quite interesting. Now that you are self-employed, your borrowing situation becomes much different. Quite often, lending providers will require three years’ worth of accounts before considering lending you money, and obviously this is a stumbling block.
Ultimately, if you are thinking of remortgaging or getting another mortgage in the near future, this is something to be aware of. It might mean that you are handed a much higher interest rate than you may have been expecting.
Have you looked at possible help from the government?
Finally, it doesn’t have to all be bad. One of the wonders about starting your own business is that you can tap into a whole host of different grants. Many of these directly target start-up businesses, so sift through them and see if you can get some extra help along the way.