Can Becoming Your Own Boss Maximize Your Income?
Thinking about leaving your full-time job to become your own boss, but worried you won't make enough money? Going self-employed could actually double—or quadruple—your income. Here's how.
Conventional wisdom tells us that the most sound financial advice is to find a full-time job with benefits—one that we don't mind working 40 hours a week at—and stay there until we retire. If this "wise choice" sounds like a nightmare to you, you're not alone.
Good news: This is 2021 and, for better or worse, we're in the age of the hustle. Financial security doesn't have to come in the form of one full-time, 40-hours-per-week job (or a mortgage, for that matter)—but neither does it have to entail hustling until we drop.
If you haven't noticed, the pandemic has changed things. Lockdown required us to slow down, look inward, and think about what we really want—which has resulted in a lot of workers kicking their 9-to-5s to the curb (myself included). One writer termed our current collective career crisis as "The Great Reshuffle."
"It is super real," says Lisa Tozzi, contributing editor for The Fuller Project. Christina Wallace, a senior lecturer of entrepreneurship at Harvard Business School, echoes that sentiment. "I've been having this conversation with everyone," she says, adding that careers in the coming years are "going to be like musical chairs."
For those of us thinking about leaving our full-time jobs and becoming our own bosses, there's always one question top of mind: Will I make enough money?
Friends, I'm here to tell you that not only will you make enough money to live, you may even see an increase to your income. Walk with me.
As mentioned above, I also recently quit my full-time job with benefits and promised pension. I am partnered, but my partner is a freelance musician in an industry where stability is just a word for that thing that keeps the stage from collapsing. Was I scared to leave my salaried life? You bet. But it was too late for me—the pandemic gave me a taste of that sweet, sweet boss-life freedom. I was determined to make it work.
Naturally, I asked the entrepreneurs in my life for the tricks of the trade, as well as that tender question of financial viability. What I learned was surprising: After becoming self-employed, almost all of them saw an eventual doubling of their income. Some even saw it quadruple.
"Your income directly relates to your efforts," says Katy McWhirter, owner of Heritage Creatives and writer of several historical nonfiction books. "I know that if I buckle down and take on more work, I will see that in my earnings."
Laurie Williamson, who runs her own copywriting business, agrees. "I can set my own hours and get paid for every hour, on every project." Before 2007, Laurie worked a 40-hours-a-week job at an ad agency that tended to look more like 60-70 hours each week by time Friday rolled around.
"I actually wanted a true '9 to 5' job," she says. "I wanted to be able to have fun in the evenings and weekends and not work all the time. I couldn't find that balance with a full-time job." Which is the case for so many employed "full-time," which in 2021 often means "full-time-plus." And to top it off, Laurie regularly watched her agency bid out projects for freelancers who were doing the same work as her but getting paid way more for it. She thought, "I would like to make more money for the same work I'm doing now."
Emily Holt, a graphic designer and brand strategist, found herself in the same boat. "Being the sole mind on a design project inherently means better rates," she says. "The ability to pick and choose clients and balance my financial books between projects with bigger budgets and giving lower rates to non-profits has been incredibly rewarding."
But what about those of us who aren't writers, designers, or consultants? I spoke with Maggie Kuyper, who co-owns a residential and commercial painting business with her husband. Six years ago, Maggie worked as an athletics director at a local school while her husband worked as a project manager for a construction company in town. Both of them came from families of entrepreneurs and were constantly thinking about ways to forge their own paths. They started their company with just three painters; after 18 months, their number of employees quadrupled—and their revenue exploded.
Getting there was no joke, Maggie says. "There were times I had to take my eight-months-pregnant belly to job sites and bids. We were doing everything we could to bootstrap the company and develop enough cash to confidently become self-employed."
When I asked how much they're making now, Maggie is demure. "Let's just say we can donate at tenfold the rate of our previous earnings."
Each one of these business owners says they left their previous employment in order to bring more flexibility into their lives so they could enjoy the things that mattered, whether it was spending more time with their children or traveling to see friends around the world. Each also states that they can't get enough of the intellectual freedom and opportunity available to them now—being able to solve problems their own ways and take on the work that really interests them. And each is more than happy to provide some tips and tricks to fellow rule-breakers out there who are ready to go rogue.
Here are their top three tips to maximizing your income by becoming your own boss.
Have at least three to six months' worth of living expenses in your savings before you make the break.
Laurie Williamson says it best: "Create a financial plan to protect yourself, and follow it—including saving up three months of income ahead of time, and getting clear on how much money you need to earn each year, and each quarter, and each month, to cover all your expenses. Don't forget healthcare and taxes, things that may be covered by your employer now. If you have that safety net, you will find it easier to ramp up to making the same or more money working as a self-employed individual. You will also be less tempted to take the first full-time offer that comes your way, luring you back into the corporate life."
Ask for what you're worth.
In the beginning, it's tempting to take any work that comes your way. "Taking assignments with laughable rates at the start taught me that people and companies who offer the least often expect the most," says Katy McWhirter. "Avoid them!" Laurie Williamson encourages creating a growth plan, one that allows you to consistently raise your rates over time, and sticking with it.
Hire good help.
"I definitely should have started working with a CPA sooner," Emily Holt says. "They make tax season so much less stressful!" Katy McWhirter agrees. "Find an accountant that understands self-employment." Maggie Kuyper goes one further. "Find a good counselor," she says. "Being self-employed can be a crazy ride, one filled with fear, head trash, and self-doubt."
But if there's one thing these self-employed bosses have in common, it's the willingness to bet on themselves and see no regrets in the rearview mirror.