Making a transition from a day job to self-employment is stressful and self-employment in itself is a high-risk venture.
However, its rates have been climbing over the last few years (OECD data) likely due to the high rewards and other benefits offered by this occupation (Huffington Post).
Things that can facilitate this transition include extensive planning, setting up a business well before you leave the day job, time management applications, and an emergency money fund.
4 Tips That Will Help You Transition from a Day Job to Self-Employment
1. Plan for everything in advance
When transitioning to self-employment you will lose not only your job but also a variety of social benefits. The basics you need to plan for before quitting are insurance and taxes.
If you have an insurance policy not related to your employment in any way, you will only have to think about getting coverage for your soon-to-exist business.
In case you plan to become a home-based freelance writer or something like this, consider protecting your ‘work equipment’ with a separate policy from the one that covers your house.
Your tax payments will also change drastically due to the change in employment. Consult an expert to determine how you should file your reports in your new situation.
One of the benefits of self-employment is that many expenses can be deductibles, but you’ll need a professional opinion to identify them correctly.
2. Start a business before quitting your job
When you transition from a day job to self-employment you should have something to transition to.
You might not be able to launch your new business fully, but it’s essential to set up its basic structure to reduce the stress of the change.
For example, today you can setup a blog quickly. So you can set one up while still working and then focus on creating content for it.
Same for any website, and as any business today needs an online presence, creating a website can be the basic minimum that you should have before making your transition.
This will immediately give you something to work on when you aren’t realizing the rest of your business plan.
In essence, your goal is to have your days filled with work so that you don’t start slacking off and losing motivation, which is a major cause of failure for the self-employed.
3. Get helpful planning and management apps
One of the hardest adjustments that come during a transition from day job to self-employment is a change from having a structured work process to being your own boss. While that sounds nicely freeing, it’s also a huge responsibility.
Not planning your own work process both long and short-term can result in failure, so you have to get into the new rhythm as quickly as possible.
Some smartphone apps can help you with planning and managing your schedule as well as keeping you on track with every task. Tools you should check out include:
RescueTime (time management tool)
Toggl (time tracking tool)
Mind42 (mind mapping tool)
Trello (project management and optimization tool)
10to8 (appointment scheduling solution)
Jorte Calendar and Organizer (calendar and personal scheduling tool that can sync with note-taking apps)
4. Set up an emergency money fund and switch to ‘save mode’
When you transition from a day job to self-employment, you take a risk. And you have to be prepared that your new business won’t provide you with the same level of income right away.
In fact, you will likely spend more money than you plan in your budget because of various unanticipated issues.
Having the security of an emergency money fund that will help you get through the difficult times will remove a huge amount of stress from you.
If possible, set up two funds, one for your new business and one for personal needs. This will get you into the good habit of separating your finances.
So that’s how you can make the transition from a day job to self-employment smooth. Good luck!