Lessons from being self employed again

The beginning my talk at WordCamp Grand Rapids was a story of me hitting the rock bottom of freelancing. I was over committed, broke, alone, and emotionally drained. That was the start of my transition to focusing on products instead of services. Looking back that transition was the best decision for me. I’ve really enjoyed building and supporting products.

Fast forward to today and it’s been a little over a month since going back to being fully self employed. I’ve been busy working on client projects and new businesses. Have total freedom of schedule again has been great as well as the people I’ve had a chance to meet.

The last time I made this transition from employee to full time self employed was in 2008 when I left the bank IT job to build Magento sites. Back then I made several mistakes and over estimations that caused it to be a rocky transition. This time it has been a much smoother transition. Here are a few things I learned since the last time that made the transition better.

Being Broke vs. Runway

When I left my last job our family finances were a mess. We didn’t have an emergency fund and we had over $50,000 worth of debt. That debt grew larger before we were able to pay it off last year. The debt was a huge burden on me and my business because the bills were due even if client invoices weren’t getting paid. There wasn’t any buffer between me and falling in the red and this resulted in a lot of stress.

This time around I quit with a bit of a runway. The concept of a runway is that you have some cash set aside to pay your bills while you reinvest all of your money into your startup business to ensure it survives long enough to prosper. This time around we had a much better personal financial picture. We are debt free and have a few months of runway to get us going. We don’t have a fully funded emergency fund (6 months of expenses in cash), but are working on getting there quickly. We also have reduced our lifestyle to where our monthly household expenses are much lower than they used to be.

With a low cost of lifestyle and no debt payments to maintain we’re able to go further on less money. If you’re looking to quit your job to start a business the best thing you can do to ensure future success is get rid of bills and expenses and save a pile of money!

One Client vs. A Network

In Jan 2008 when I quit the bank job I was itching to work from home. I had been doing client work for about three months on nights and weekends and had a bad case of “the grass is greener.” I thought once I was able to sit in my home office all day the money would start rolling in. In reality I had one client who had a stream of projects, but not a long-term marketing strategy. When that one client’s work slowed down it was clear that the proverbial “eggs in one basket” were about to get cracked. Plus, I didn’t know any other developers to ask questions, share work with or talk to.

This time around I have a very strong network of people in my industry who I’ve met in person, interact with on Twitter and talk with on Skype. We are all in the same business and openly share knowledge, experiences and leads. I’ve received several leads from my community and shared leads back. I’m still a solopreneur, but I don’t feel solo because I am surrounded by a community of like-minded people which makes a huge difference.

All the Things! vs Niche

You probably know someone who has made the following mistake, or even made the mistake yourself: Trying to win every project imaginable. Because our finances weren’t very strong I would take on jobs that weren’t in my skill set. I saw myself as a ‘web developer’ and so I thought every project posed to me was just a few degrees of learning away from my knowledge. Believing this fallacy I took on projects where I would learn on the go. This turned out to be a very bad idea and I ended up over scope and late on deadlines with unhappy clients.

Having an inch of knowledge on an acre of subjects won’t hold you in a storm. But, having knowledge a mile deep on one or two subjects is a great place to be. Plus, you’re much more valuable to your clients.

This time around I am focusing on my core knowledge in WordPress ecommerce and building WooCommerce plugins. Having this focus makes it easy to pass on the projects that don’t apply to me and allow me to bring the most value to my clients.

Photo Credit: Justin Wolfe via Compfight cc