In March 2015, I quit my cushy, low-stress job as an in-house copywriter at a tech company to try my hand at entrepreneurship. After two and a half years of freelance writing and growing my personal finance blog on the side, I decided it was time to focus on those projects full time. Knowing how passionate I was, my boss was happy for me when I delivered the news (plus a month’s notice), and even offered to be my first client.
It was the dream scenario, I thought. What could go wrong?
While I’m ultimately happy I made the leap, the reality is that the past year of being my own boss has been littered with missteps and stress that I could have avoided if I’d taken some time to better prepare for what was to come. Here are four mistakes I made, and the lessons I learned the hard way (so you don’t have to).
At the beginning of 2015, I had two goals: pay off $8,000 of debt I’d racked up while renovating my first home and start my own business. Just 90 days into the year, I’d completed the first—by following a bare-bones budget and throwing all my “side hustle” money at my debt—and was so excited by the momentum that I put in my notice just two weeks later.
I’d been saving along the way, but not enough—I only had about three months’ worth of bills and other living expenses stashed when I left my job. While I’ve never completely drained that account, there have been more than a handful of nail-biting moments, leading to a lot of stress—like that time five clients paid late and I had a large tax bill due.
The Lesson: A better idea would be to stay at a full-time job long enough to continue saving—say, at least six months’ worth of expenses—in order to make weathering the landscape of uneven cash-flow easier.
I’d lined up a handful of clients for my writing services business before giving notice, so I had plenty of work to occupy my time during the first several weeks of solopreneurship. But instead, I indulged in a lot of catching up with friends, television and workout classes.
None of those things are bad—in moderation—but I was using these activities to avoid work. I told myself I deserved a break after working hard at a full-time job and on side projects for nearly three years. But I realize now that I was really suffering from burnout, which is not the right way to embark on a new venture. (Especially considering that when you work for yourself, lack of hustle means you don’t get paid. Period.)
The Lesson: Armed with the knowledge I have now, I’d recommend using your paid-time-off benefit to go on a real vacation before leaving your job and giving some thought to what a productive freelance schedule would look like before jumping in. These days, I have a routine that feels good and natural to me—a 10 a.m. yoga class, then a noon to 6 or 7 p.m. workday—but I wish I’d mapped out some options while enjoying the structure and security of office life before floundering those first several weeks.
I opened a business checking account about two months in with the best of intentions to segregate my personal and business money—but that didn’t stop me from occasionally slipping up and using my personal debit and credit cards for business reasons. Even though I’m diligent about saving receipts, it’s been very time consuming to compile and parse everything out for my accountant this year.
Had I separated business and personal expenses from the get-go, I would have saved myself at least 15 hours of reconciling expenses—not to mention many headaches—this tax season. Beyond that, it’s key to have a clear grasp of how your business is doing financially, which is decidedly tougher when your money is muddled.
The Lesson: With everything else you’re responsible for as a business owner, making your accounting as clean and simple as possible—ideally by opening one business checking account and using only one business credit card—may not seem like priority No. 1, but spending a little time to do it at the get go will save you a lot of time (and stress) over the long run.
In my corporate career, I never interfaced with clients. And even when I freelanced on the side, there was less pressure and much lower stakes, so I rarely had issues invoicing or being paid late.
This all changed when I became my own boss. My people-pleasing tendencies were often at odds with my rational brain when I felt like a client was behaving in a way that didn’t work for my business—and it was tough speaking up for myself, while also remaining polite and helpful.
Finally, I got so fed up with riding cash-flow highs and lows that I changed my approach.
Now I do a quarterly client audit: Anyone who is problematic or consistently pays late has to go. The beauty of this method is that freeing up that bandwidth and energy has enabled me to find even better clients.
The Lesson: As I like to remind myself, when running your own business, if you don’t stick up for yourself, no one else will.