Starting your own business can be both an exciting and terrifying affair. On one hand, it can seem like a dream come true to answer only to yourself. On the other, unexpected business troubles can be crippling for inexperienced, self-employed bosses.
According to Independent Contractors Australia, 17.2 per cent of the Australian workforce were self-employed in 2013. Evidently, it’s a popular employment decision. A notable benefit of being your own boss is just that; you get to be your own boss. That means not having to conform to someone else’s business mission and pointing your skills toward what you actually want to accomplish. The availability of self employed home loans also mean that you’re not necessarily losing out when it comes to the finance side of things either.
That being said, here are three things to be aware of when starting your own business:
1) Be clear on what you want
Being self-employed is not a decision you should take lightly. When taking this step, you need to first be absolutely certain about several things. Try and write down the answers to these:
- What are your goals?
- How will you accomplish them?
- What skills and resources do you need?
- What are the pros and cons of starting this type of business on your own?
While this is just a starting point, it’ll help you to take a wider, more holistic view of your decision. Answering these will either boost your confidence and self-belief in knowing what you need to do, or encourage you to reassess your thoughts so you have every area covered.
2) Be extra careful with managing cash
Many Australians who stick it out on their own make a good living. However, being self-employed often equates to being an independent contractor. This can typically mean that the flow of cash isn’t always regular, whether or not your annual earnings are actually high. Aim to set aside a personal account from your business account, and pay yourself a wage. This ensures you have a steady flow of income even if things get a little rough, and will help you budget wisely for expenses.
Also, don’t forget to set aside money for income tax or you could be facing serious penalties.
3) Find different sources of financing
Being self-employed puts you in a special kind of position. As being your own boss means not receiving pay slips and income statements, you may have trouble with securing finance. This is because many traditional banks will need these official documents to verify your capacity to pay back loans.
Fortunately, there are plenty of alternative ways of borrowing, such as taking out low doc loans, which don’t force such requirements upon you. This is particularly true if you’re house hunting, in which case you’ll need have a look at low doc home loans instead of traditional mortgages.