It was about this time last year that I put in my resignation at my old day job. My mind was made up that I was going to go into business for myself.
I had enough money in the bank to tide me over for about 4-6 months, depending on how frugal I could be (answer: very) and if something should explode (thankfully, nothing did). Between several large projects early on this year and side income from a few pet projects, I’ve managed to sustain my lifestyle and enjoy some added tax savings by paying less for things that offered similar services, like health insurance and investment opportunities.
Frankly, it’s been a great year. I’m having a lot of fun working on projects that really interest me and being able to do innovative new things, even stuff outside my usual skill set, like teaching and organizing events.
My advice to people looking to open their own business, particularly in technology, is that you can’t be too careful and you can’t be too afraid. Be smart about things. I get it, I had a mortgage and a car payment. But, I wasn’t in debt outside of those things and I’ve managed to stay that way. In fact, I actually use less credit now. Because I get income in one day that normally would have taken me 4 or 5+ months to accrue, I can use my debit card and not worry if there’s enough money in there to cover the mortgage before the next paycheck. But, you have to be just reckless enough to take that leap and excel at what you do.
Also, when planning finances, it never works out quite like you think it will. I assumed a large portion of my income, even more than what I was paying, would be consumed by taxes. It is, but I pay less taxes now than I did before. Deductions are your friend, and practically everything I spend money on except groceries and Netflix are tax-deductible business expenses. It really lowers the costs of operating a business if you’re anal about it.
Naturally, this wouldn’t be possible without great clients. I take pride in picking up people who I think have valid business plans themselves and are passionate about what they do. It works out better for both of us in the end. Plus, it’s not hard to provide great service and fast turnaround for people you consider friends.
Here’s to 2011!