Many people wish to run their own business. Going self-employed is an exciting idea but you shouldn’t just dive in. Before you quit a job, or think about going into self-employment, you need to consider a few things.
Aimable Nkuranga, Executive Director of Association of Microfinance Institutions-AMIR and a personal finance coach in Kigali, says that for someone who is already employed, self-employment is not just changing the way you earn money, it can also be a great step towards financial freedom.
"You cease being under the control of someone else, and become your own boss. When you are employed, you use your skills and get a fixed salary, whereas when you become self-employed you trade your products or services for money,” Nkuranga says.
He says that when you are self-employed, your income is not limited by company policies and rules or office politics, instead, the more products and services you are able to sell, the more you earn.
However, much as this seems exciting, leaving employment to become self-employed is not that easy. There’s a cost.
Nkuranga says that you have to forego the comfort of a well-established institution, a stable and regular salary for something unknown. The benefits listed are only possible if you are passionate and determined. Otherwise, you might suffer from the harsh reality of the market.
He says if you are considering leaving your job to become self-employed, there are a few things you need to be aware of:
"Master your inner motivation. In the business world, you don’t need a supervisor or a boss to push you, to motivate you, to reward you for positive achievements or to warn you for poor performance,” he says.
According to Nkuranga, as a self-employed person, you need to rely on your internal motivation, instead of external. You have to do things because you chose to do them, not because there’s a deadline or a supervisor asking you to do it.
Manage your money well. He says, most employees spend their money as they go, without a plan and without giving it much thought because they know that the next paycheck will come soon.
Nkuranga explains that a self-employed person must always plan their spending with a budget. To go into business, you must start saving for that business because businesses need capital.
Even if you don’t have a clear business idea, you must start saving, and when the idea becomes clear, you will have some resources.
Diversify your relationships, Nkuranga says, adding that if you want to be an entrepreneur, you need to start networking with people who are already self-employed.
Nkuranga adds that you will notice the difference in the mind-set of the two groups, and you can learn a lot from the self-employed. The more you network with entrepreneurs, the more motivated you become to start your own business.
He recommends being mindful of the information you consume. In business, you need to consider different things, like packaging the product well, or the service, or polishing the processes.
Becoming self-employed
Do you know what separates all the people who want to be self-employed from the ones who actually do it? Deciding to. So make the decision to make the leap. It sounds simple, but there’s nobody else who can do this for you.
When you have made this decision, start considering different things. Choose your niche and narrow it down. Start from something you do better than others, something you have accumulated experience on, or something you have more information about.
Irena Ashcraft, in her article ‘How to Become Self-Employed: 10 Steps for Taking the Plunge’ says, "Get specific about your target market. Who are the people you will serve with your product or service? This is where a lot of self-employed people go wrong: they’ll say something like, ‘Well, I will serve anyone who would benefit from a product/service like mine!’ That’s not a helpful answer, because it doesn’t give you any actionable insight into your target market.”
"Being successfully self-employed isn’t about putting your business out there and then waiting to see who it attracts. It’s about building a very specific solution for a very specific set of people,” Ashcraft writes.
What to do when self-employed
When one is self-employed, they are still employees in their own enterprises. Everything revolves around this and the business cannot grow otherwise. You need to keep learning, as this will boost the enterprise, Nkuranga says.
"If financial freedom is your goal, then you need to thoroughly work on the process of your enterprise and transform it into a fully-fledged business that can run without the involvement of its owner.
"At this stage, you will not need to work into it and be self-employed, but you can employ people who can make your business more sustainable and take it to another level,” he notes.