I have been self-employed for almost a decade. During this time, I had the privilege of meeting many people who have taken the step into self-employment. Many have succeeded, but many have also failed. It was surprising to me that the same patterns often led to failure. That’s why I want to summarize the most important ones here, so that others can learn from them and not make the same mistakes. Because at the end of the day, self-employment is an incredibly fulfilling thing, and I wish everyone success in taking the step into self-employment.
1. No Financial Reserves
Before becoming self-employed, one should have a certain financial cushion. The reason for this is that self-employment usually doesn’t take off from day one, and a certain amount of time is needed to get things up and running. Ideally, one should have saved enough money to privately and professionally make ends meet for at least two years. Therefore, it is good to assess one’s own financial situation before taking the step into self-employment, to carefully analyze private expenses, and to calculate the business expenses for the first two years. In all these calculations, a buffer for unforeseen events should always be included.
2. Lack of Focus on Customers
Self-employment is not primarily about pursuing a passion, but about earning enough money. Otherwise, it’s considered a hobby. To generate sufficient revenue, it is essential to put the customer at the center of attention. Because only if you can interest potential customers, convince them, and then delight them, can you build a solid and sustainable business.
3. Overly Optimistic Calculations
All beginnings are hard. That’s why one should calculate conservatively. Because the more optimistically you calculate, the greater the risk that the plan will not work out and self-employment will fail. Moreover, it is much more motivating to achieve one’s goals than to have them consistently seem unattainable.
4. No Differentiation from Competitors
There are few companies that are not exposed to competition. Most self-employed people even operate in rather dense markets. This is not bad, and sufficient business can still be generated there. However, it is important to distinguish oneself from competitors. One should therefore ask: What can I do better than others? What can I offer that others cannot? How can I specialize and create my own niche?
5. Selling Below Price
There is no reason to sell oneself below price at the beginning of self-employment, if you have the necessary know-how or an excellent product. In addition, when calculating prices, one must consider that you have to cover taxes, external costs, ongoing business expenses, administrative expenses, and reserves for turbulent times. If you do not do this, you run the risk of working a lot, earning little, and being thrown off track by the smallest crisis. For this reason, the hourly rate as a self-employed person is many times higher than in an employment relationship.
6. Not Trusting Experts
As a self-employed person, you cannot be good at all business disciplines. Therefore, it is often beneficial to hire external experts if you do not have the necessary expertise yourself. This saves time, reduces risks, and leaves you with the necessary energy and time to focus on your own business.
7. Wasting Money on Inefficient Advertising
Unfortunately, there are many swindlers who promise that you can do a lot of business in a short time with their advertising method. It often sounds good, but usually costs a lot of money and brings nothing. To be successful with advertising, it is important to reach the target group as precisely as possible and then convince them of your own offer with the right arguments.
8. Constant Complaining Instead of Tackling Problems
In self-employment, you are directly on the front line and are confronted with all sorts of problems on a daily basis. Instead of constantly complaining about this and waiting for the problems to solve themselves, you have to tackle the problems yourself and find solutions. Self-employment is ultimately like a game where you have to find a way to move forward.
9. No Reserves
After the initial start-up phase, successes will eventually come and you will often earn more money than ever before. However, one must not forget that self-employment not only has successful times, but also has to navigate through stormy times. That doesn’t mean you shouldn’t enjoy success. But you should make sure to build up sufficient reserves so that you can still hold out when things get uncomfortable. Reserves are ultimately freedom that you buy as a self-employed person. The more reserves you have, the freer and more independent you are. And that is a really great feeling.
10. Aimless Working
Many supposed coaches preach that you should listen to your gut feeling and live day by day. In self-employment, this approach rarely works. It is important to have a plan on how to achieve your goal and to also plan the intermediate steps. Along the way, you should continuously evaluate whether everything is functioning as planned, whether you are on schedule, whether the numbers are correct, and where you may need to make adjustments.
11. Lack of Concentration
Building your own business requires concentration and a lot of energy. Those who try to do too much at once or waste time on unimportant things will be held back, make mistakes, and risk failure. For many years, I myself have been working in deep dives, during which I work very focused on a single solid task until it is completed, and I take the time it needs. During these working phases, I avoid distractions and allow myself breaks in which my thoughts can roam freely. This way, I progress faster and actually have something concrete accomplished at the end of a work session.
No one can work 16 hours a day continuously. Sooner or later, this leads to a crash. The body and mind need breaks to recover. Time-outs and breaks are important to prevent burnout. Because whoever burns out risks everything they have built in their self-employment and also risks their health.
13. Living and Working Beyond One’s Means
Leasing a Porsche in the first month of self-employment, renting an office, and ordering Italian office furniture usually ends badly. Until you have built a solid and stable business, you should remain modest. This way, you reduce financial risks, have more options to invest money in growth, and can survive longer dry spells. Unnecessary expenses are a burden and can lead to significant financial risks.
14. Lack of Flexibility
Self-employment is a strategic game. To be successful, one must be flexible enough to change plans, seize suddenly emerging opportunities, and avoid dangers. If one holds too tightly to the original business idea, they cannot adapt to the market and conditions and risk failing.
15. Amateurishness Instead of Professionalism
Self-employment is not a hobby. Therefore, professionalism must be at the forefront. Be it in external presentation or in the service or product itself. Because professionalism creates trust, satisfaction, and efficiency – all important parameters when it comes to economic success. However, professionalism should not turn into unhealthy perfectionism, as that can be just as dangerous.
16. Hiring People Too Early Instead of Relying on Freelancers
Having your own employees can be a great thing when the business is stable and running well. However, hiring permanent staff is associated with considerable costs and potential risks. Therefore, at the beginning of self-employment, it is advisable to work with freelancers. They are generally associated with higher costs but, in return, offer greater flexibility.