Editor’s Note: Happy Sunday! This fine morning we have local small business consultant Emma Payton on hand addressing whether small business is right for you. This is the first of a three-part series, so stay tuned for more…

Self-employment – is it for you?

How many of you have thought, “Wow, I’d love to work for myself. I can pick my own hours and work around my family’s schedule. I will make more money than I’m making at my current job. It will be so easy!”?

Those of you who are currently business owners may be rolling your eyes at this point because most of us had these beliefs in the beginning. Those of you who are contemplating starting a business, read on.

Myth: I can pick my own hours and work around my family’s schedule

Reality: The reality of owning your own business is that you may not get to pick your own hours, certainly not in the beginning. Starting a business can take long hours and many people forget all the unpaid time that their business will require.

Depending on the type of business you start, you will need to put many hours into set up, building relationships with suppliers, marketing, sales, policies and procedures, bookkeeping and staffing.

Until your cash flow is positive you may not be able to afford to pay someone else to do some of these activities for you and some of these activities, like marketing, are not ones you generally sub-contract. Of all these activities, marketing will (or should) take up about 1/5 of your work week.

Working these activities around your family’s schedule might be possible but it is important to consider whether your particular business can operate within those constraints and whether your particular family can work around your business’ needs.

Work Around - Before starting your business, there are a few things you can do to help you work around your family’s time:

1. Have enough capital (cash) on hand to be able to hire a bookkeeper, accountant and lawyer

2. Plan out your time so that you always have at least 2 hours between 9am and noon to make calls to suppliers, marketing contacts and sales contacts

3. Work on business policies and procedures in the evening when everyone has gone to bed

4. Ensure your office is highly organized and efficient

5. Make sure your work time is uninterrupted

Myth: I will make more money than I’m making at my current job

Reality: The reality is that if you plan to replace your current income with self-employment income you may be in for a surprise. Depending on the business you start, you may not be able to draw a wage from your business in the first 1-3 years, and if you can draw a wage it may 3-5 years before you earn more than you were earning prior to being self employed.

The transition from being an employee to being self-employed can be a difficult one for some people.

As an employee you will be used to receiving a regular paycheck and you may also receive medical and retirement benefits, sick days, holidays and other perks.

Before deciding to start your own business, add up all these benefits and the value they represent to your family. Then do the math to determine exactly how many hours you will need to work, and how many widgets you will need to sell, to replace your current income.

Example: Carol works 85 hours per month for the school board earning $1700 per month ($20/hour). She is paid for stat holidays, sick time and has medical benefits. When she adds up all her benefits, Carol realizes that her job contributes about $2500 per month to her family’s bottom line.

Carol wants to start a bookkeeping business and when she works out how many hours she will have to work to replace her income, she determines that she will need to work at least 100 billable hours per month at $25/hour. Not only will she be working more hours but she will have to put in an additional 3-5 hours weekly to market and promote her business. She will also have additional expenses (fuel, insurance, office costs, CPP contributions) which will eat into her $25/hour billable time.

Work Around - If you or your family is not in a position to be without your income for any period of time then:

1. Consider gradually developing your business. Get clients and start working in the evenings to generate revenue. Do as much leg work as you can before your leave your job.

2. Choose a business that is low risk. Examples of low-risk businesses are those which have low overheads, low start up costs and are in high demand (i.e. bookkeeper) and those for which you may already have a clientele (i.e. hair stylist). Examples of high-risk businesses – those which have high overheads, high start up costs and are harder to generate sales for – are restaurants, manufacturing facilities, retail stores and grocery stores.

Being prepared for the reality of self-employment is crucial.

Too often people jump into self-employment without assessing all the risks and the hard work involved to ensure success.

Preparing a comprehensive business plan is the first step you can take to help determine the success or failure of your proposed business. To find business plan templates and samples, visit newcanadabusiness.ca

Future articles in this series will explore entrepreneurial attributes and entrepreneurial skills and abilities.