Self-employment Tips: the Missing Manual

Normally when you start a new job, you get an employee manual that gives you rules, procedures and other useful bits of information. But when you’re self-employed, you get no manual. No one gives you tips for the newly self-employed.

Fortunately, we now have Google, and any specific problem (How do I register as an S-corp?) can be pretty easily answered.

The tricky bit is those things that Google can’t answer, because you don’t think to ask. Things that have changed from the world of other-employment, but no one told you that they changed.

So here I present my 10 most important self-employment tips: what I wish people had told me when I became self-employed.

“Productivity” is measured differently

This is really obvious when you think about it, but you have to stop and think about it.

When you were employed, someone else was measuring whether you were being “productive”. And just between you and me: I know that you weren’t always productive when you looked busy. At 3 PM on a Friday, you were just moving the mouse around, or fiddling with files, or writing useless memos. It’s OK – we all do it.

But there’s no need to do it now. Now you’re the one measuring productivity. And that means that you get to decide what counts as “productive”.

Surfing the web doing mostly useless internet “research”? Probably not productive.

Taking 30 minutes off to go for a walk / do some yoga / sip tea and contemplate the direction of your business? Probably productive.

Resources for Further Reading: What is Productive?

More is not always better

It’s easy to feel like you’re not doing enough. Like you’re not good enough. Like you can’t be charging very much for this, because somebody else does it “better”.

Odds are good that your old employer was intent on being everything to everyone. On shipping products with hundreds of features, that did everything you could possibly desire. Back in the days when a single doodad could cost a week’s worth of wages, and nobody could reach customers except through mass markets, that kind of thinking made sense.

But now you can make profitable products that cost as little as 30-seconds worth of wages. And you can target amazingly specific markets, like people who have WordPress blogs and want blue backgrounds with dark blue text or people who think that pictures of cats with misspelled captions are the very pinnacle of humor. So the one-size-fits all product doesn’t make sense any more. Their products are not better. They’re just bigger

Resources for Further Reading:
Opportunity cost: More Is Not Always Better
Who’s the Best?
Risky Compared to What?

Don’t sell to everyone

This is a corollary of the above. If there’s no one definition of best because everyone has their own opinions about what’s important, then there are some people for whom your product is the best. There are also some people for whom your product is not the best.

Ignore those people.

There is no obligation to try to sell to everyone. There is no benefit to trying to sell to everyone. It wastes your time and annoys the prospects. Don’t worry about people who don’t like your product; focus on finding the people who do. Everyone will be happier.

(Side note: it also follows that you’re allowed to fire customers. When you were an employee, your employer got the to make the decision about which customers were worth dealing with, and you had to work with whoever they sent to you. Now that decision is yours. Someone aggravating you so much that you don’t want to work with them? Say, “I’m sorry, but I don’t believe I’ll be able to meet your needs, so I’ll have to decline. I hope you’re able to find someone who can help you.” You don’t have to work with anyone.)

Resources for Further Reading
Target Market: Who are your clients?
Target Market: Segmentation
Target Market: Getting to Know Them

You’re now in sales

OK, actually, lots of people told me that. I even, at some level believed them. But not deep down. I still hoped that, somehow, people would just show up on my doorstep without being asked.

I don’t expect that my saying it again will convince you any better than anyone else’s has, so I won’t try. But when you wake up one morning and say “OMG! I’m in sales!”, here are some resources for you to browse.

Resources for Further Reading
The Hardest Thing You’ll Do
You’re Great at Sales
Are Marketing And Sales Unethical?
Do You Suck?

The decisions you’re making now aren’t actually that important

This attitude probably actually came from school; at least that’s where I got it from. In the US school system, you’re given one try. One essay on Pride and Prejudice, one guess on the history test. If you get it wrong, you fail. So making the right decision becomes hugely important. Your employer may or may not have had this sort of culture, but odds are good that they didn’t do much to discourage it.

Which is sad, because the real world works almost NOTHING like that. In the real world you get almost infinite guesses. There’s nothing wrong with guess-and-check: it’s called testing, and it’s recommended by every intelligent marketer, SEO, and business coach.

Experiment with your business’ name. Experiment with your products’ names. Experiment with your business model. Experiment with your web page. Experiment with your sales techniques. Experiment with your prices.

Don’t know what to do? Pick something and try it. You can always change it later.

Resources for Further Reading
Flickr used to be an MMORPG
Play it safe.. and experiment
Picking a name
This ain’t middle school

Lack of instant success is NOT failure

This is a corollary to the above. We got our definition of failure from school, where, if you’ve failed the first time, you’ve failed forever.

The real world, as noted above, works nothing like that. You try something. It doesn’t work as well as you’d like. Maybe it doesn’t work at all. You have not failed. Your first try failed. You get as many guesses as you want.

I mean, imagine you’re in math class and the teacher says that on this test, you can retake it as many times as you want, and whichever you want to count towards your grade will be the one that counts. Furthermore, you can have your previous graded tests with you when you take the text the next time. How could you possibly fail? There’s only one way, really, and that’s to quit while you’re behind.

That’s how the real world works. You cannot fail except by choosing to give up and stop trying. Hey, wait, other people have already said that.

I know that seems obvious at this point. That’s ‘cuz I’m very persuasive. After your first failure, it won’t feel so obvious. All the cultural and educational conditioning will kick in, and you’ll feel like a pathetic, suicidal, good-for-nothing loser. But that perception will be wrong, so try to remember that, and come back here if you need some inspirational reading.

Resources for Further Reading
Lack of instant success is NOT failure
Think You’re Not an Expert?

Your definition of risk has changed

The philosophy of US educational system and of US corporate culture can be pretty well summed up as follows: Don’t Make Waves.

We’re trained to shut up and keep our heads down. Write the same tired essay about how the fall of the Roman Empire was due to decreased democratic principles. Don’t nag the teachers about obvious exceptions to the broad statements they’re making. That’s how you avoid failing.

That doesn’t work here. Your biggest risk is not that you’ll irritate someone. Your biggest risk is that no one will realize you exist. That no one will think your product is good enough to bother with. That every single competitor will be a better choice than you are for some reason.

If you do something crazy, you have a chance of being awesome. If you do nothing crazy, you’ll drown quietly in a sea of mediocrity.

Resources for Further Reading
Who’s the Best?
Risky Compared to What?
Dangerous or Gutsy?
When More Volatile is Less Risky
Examples: When Predictable is Risky

PLAN!!!

In every organization, there must be someone who knows what’s happening and why. Employees can simply rely on the Strategic Planning department of their company, but your organization now consists of you. No more just muddling along waiting for someone to tell you what to do. It’s now your job to decide what to do, how to do it, and then to get it done.

So you really need to start planning. I don’t care if you plan your days out in a little hour-by-hour grid — that sort of planning seems to work well for some and horribly for others, and I trust you to make your own decisions. But you really need to have some idea of what you hope to accomplish in (a) your lifetime, (b) this year, and (c) this month. It serves all sorts of useful purposes: it helps you define “productive”; it helps you decide who to sell to; it helps you identify opportunities vs distractions; it helps you assess risk. It helps you actually to be productive. There’s really no substitute for it.

Trust me on this. Plan.

Resources for Further Reading
Annual Planning: What do you want to accomplish this year?
Monthly Planning

No Kamikaze Pricing

Hey, odds are good that you were getting paid a lot less per hour at your last job. “Standard market price” feels like a heck of a raise. OK, so it’s what your boss was charging for your time — which is part of why you decided to become self-employed — so you were always worth that much, right? But it feels like a lot, and maybe you don’t quite feel like you’re worth that much, and anyway if your prices are lower, you’ll get lots of customers, right?

Well…. no.

There are several problems with that:

  1. You can’t profit at that price There’s a reason your boss was charging that much for your time: it’s what they had to charge in order to buy supplies, pay overhead, and still pay you. By the time all the business expenses are paid out, you’ll be making basically the same amount as you did before. Did you really want to take a pay cut?
  2. Customers will think you’re sleazy If you’re significantly below market price, customers aren’t going to look at your prices and think Wow, what a bargain!. They’re going to look at your prices and think Wow, how is this guy staying in business? Is he staying in business? Maybe it’s just a scam; he’s going to take my money and skip town. Or maybe he just does shoddy work, so he doesn’t have as high of costs. Either way, I certainly can’t get anything good for that price. I’ll stick with the big-box corporate competitor.
  3. You’ll be locked into price wars If you do manage to make sales, you won’t have gotten them on the basis of your stellar workmanship or awesome customer service: they’ll be based on your prices. If you raise your prices, you’ll lose all your customers. You’ll be stuck forever at the bottom of the barrel.
  4. You’ll get the worst customers There are always customers who are willing to risk shoddy worksmanship and sleazy business in order to save a few bucks. But they’re not the people who will happily pay for good work. They’re the people who resent every penny they pay you. Who will ask for discounts on above-average work. Who, when you give them a 10% discount, will ask for 20%. Who will complain about your prices and your work. Who will demand refunds on “faulty” products that aren’t faulty. Who will put off paying you until you’ve asked politely 3 times and less politely another 4. Easiest way to avoid those customers? Raise your prices.
  5. You can’t out-WalMart Walmart The big box stores can always be cheaper than you can; they’ve got better efficiencies of scale. So all you can do is trigger a price war that you’re guaranteed to lose.
  6. Charge what the market will bear. No kamikaze pricing.

    Resources for Further Reading
    Are you using kamikaze pricing?

    Most businesses fail.. but most jobs succeed

    When you decided to become self-employed, or possibly when you very first brought up the possibility, some “friend” said to you: “You know 95% of businesses fail in their first 5 years, right?”.

    Subtext: Who the hell do you think you are? How dare you think you’re good enough to move out of the employment hellhole? Stay here and suffer with the rest of us, like a Real Man!

    The statistic is accurate, but the conclusion drawn from it (that you should just give up now and not even try) is entirely false.

    First off, we use definitions of “failure” for businesses that we wouldn’t use for anything else.

    Secondly, “failure” of a business doesn’t mean that the owner went bankrupt and starved on the street: it means that the owner had to make another guess and try again. Remember the infinite math tests?

    Thirdly, many “failed” businesses supported their owners & their owners’ families for years before they “failed”.

    Fourthly, that statistic conflates true “Business” ownership with being self-employed, and so the 95% failure rate is a purely meaningless number. It’s not only lumping in apples and oranges but also bananas and pears and pineapples in an attempt to scare you out of making an intelligent, challenging, fun, and generous choice.

    Maybe you can’t do this. But maybe you can. Don’t let some loser scare you off with an invisible mallet.

    Resources for Further Reading
    Most Businesses Fail… But Most Jobs Succeed
    80% of New Employees Fail Within the First 5 Years
    You’re Not In It For the Money
    The Invisible Mallet

    What do you wish someone had told you when you became self-employed?