Advice for recently laid-off workers considering going into business in spite of themselves
By John Tozzi
So you lost your piece of work. Now that which? As some employee, you had a diurnal routine, health insurance coverage, and a regular paycheck. You liked the security—while it lasted. And admitting that you sometimes daydreamed about the independence of working for yourself, leaving a full-time job not ever seemed excellence the put in peril.
But at that time, laid off into a recession and the get the better of piece of work emporium in decades—2.6 million Americans lost jobs in 2008, through 524,000 eliminated in December without company—you may be thinking self-employment sounds like the best path out of unemployment. Rather than try to land common of the not many open jobs out there, as luck may have it you could work similar to a freelancer or consultant, at least until the job market recovers. You’re in good company: There were nearly 9 the multitude self-employed workers in December, according to the Bureau of Labor Statistics. But if you’re among the thousands of unemployed now trying to approve it alone, at which place do you spasm?
First, step back. Decide what your goals are and to what degree freelancing will help you achieve them, says Pamela Slim, writer of the Escape From Cubicle Nation blog and a forthcoming book of the same name. "It’s obviously very easy at the point of being laid off to really come from a position of fear and desperation," she says. Thinking about long-term goals from the start will keep you grounded and help you determine how to advance. Once you’re clear on your goals, Slim says, you should ask: "What are the specific skills, notice, money, resources, information, and contacts [you] destitution to bring that picture to life?"
Health CareThere are plenty of nuts-and-bolts concerns that be possible to overwhelm first-time freelancers, especially those who suddenly lost steady jobs. Chief among them is health care. The health insurance system does not accommodate independent workers well. If you have being possible to’confidentially get coverage through a spouse’s plan, you can continue your old employer’s plan at your own charge under COBRA. You may also have existence eligible for group health insurance through a group like New York-based Freelancers Union, which launched a health insurance company last year offering plans in 31 states.
Freelancers Union’s executive boss, Sara Horowitz, suggests checking with local chambers of commerce to see if they offer plans for individual proprietors. She also points self-employed workers to topical health insurance information adhering a site run by the Actors’ Fund called Access to Health Insurance/Resources for Care. Whatever choice freelancers choose, Horowitz says they should avoid going uninsured for even a month, calm whether they buy high-deductible plans. "So many states have preexisting-condition clauses. If you go and buy the most catastrophic plan, you will not have a break in coverage—and whether you get some other prepare it will all be counted," she says.
Another hurdle for any new freelancer is how to land your first gig. Slim suggests looking to former employers, even granting that you be obliged been downsized. "Many times, strangely, the identical companies that lay people off do hire them back onward a contract basis," she says. You can use that pristine client to show others that you’re capable of delivering value viewed like an independent contractor.
Network Full-TimeIn addition to maintaining ties to your of long date collection, you should prepare to make networking a full-time job. But realize that the people who can hinder you succeed may be different from the contacts that helped in the corporate world. "Freelancers, it’s kind of an underground culture, and once you plug into it, people know everything about where to go for what," Horowitz says.
One of the greatest in number important referrals you can get is for a unblemished accountant. Knowing what to write off as business expenses can save sufficiency on your tax bill to become hiring some accountant worth it, Horowitz says. Still, be prepared to indite hefty checks to the IRS. Since your employer isn’t withholding taxes anymore, you’ll need to pay estimated taxes four times a year. You’re also on the hook for the employer’s contribution to Social Security now. Horowitz says freelancers should set money to pay taxes aside in a sunder bank account. "Nobody ever puts gone enough," she says. "That’s the biggest way that people get themselves in a hole."
Besides paying taxes, verdict hale condition attention, and landing clients, self-employed workers face another big challenge: motivation. It’s easy to procrastinate when there’s no boss looking over your shoulder. Slim suggests freelancers establish a schedule and put themselves in environments where they be aware of they’ll do their most wise be, whether that’s having a clean home office, going to a co-working fact, or plugging in at the local coffee shop. Regardless, she says, the newly self-employed have a powerful incentive to deliver, specially in a tough administration: "There’s nothing greater degree motivating than knowing that if you do not complete your work you will not get paid."
Flip end this slide show for a 20-step checklist for recently laid-off workers considering going into business on this account that themselves.
Original text: http://www.businessweek.com/smallbiz/content/jan2009/sb20090123_156963.htm?campaign_id=rss_smlbz
