Millennial Money: Should you become your own boss?

If you’ve been thinking about taking the leap and working for yourself, there may be no better time to do it

NerdWallet-Millennial Money-Start Business Pandemic (Copyright 2020 The Associated Press. All rights reserved.)

Maybe you’re cringing at the thought of going back to an office. The seed of a business idea floats around in your head between work videoconference calls, after the kids are asleep or while you tend your pandemic garden. Or perhaps you were laid off during the pandemic and forced to work for yourself, and now you’re wondering if you should continue down this path.

“In 2020, there was an explosion in new business applications, reaching nearly 4.5 million by year’s end,” according to a February report by the Economic Innovation Group, a Washington, D.C., think tank. That’s an increase of 24.3% from 2019 and was the highest on record — 51% higher than the average from 2010 to 2019.

“COVID-19 was a social, cultural and emotional shock the likes of which we have not experienced for generations. Becoming an entrepreneur is a deeply personal decision, and the pandemic may have delivered the push for many to embrace it,” the report said.

Deciding if self-employment is right for you depends on your personality, your financial situation and your ability to adapt. Here are tips from people who became their own bosses.

SEE IF YOU’RE RIGHT FOR THE JOB

Many of us now appreciate the flexibility of working from home. As a freelancer or independent contractor, you would have the power to set your own schedule.

“Being in charge is very, very attractive to many people,” says Keith Hall , president and CEO of the National Association for the Self-Employed, or NASE, a resource and advocacy group. “The other side of that coin is that when you are in charge of your own destiny, you are also responsible for it.”

Evaluate your abilities as a prospective employer.

“Freelancers need to be self-motivated, work well independently, be organized, learn how to market their services well and be comfortable with a certain level of uncertainty,” CEO Sara Sutton said by email. She runs two companies focused on remote and flexible job opportunities: FlexJobs a job search site, and Remote.co , which provides resources for companies considering remote work.

Hall suggests asking yourself if you have the motivation to be in charge of your own destiny. “If you wake up Monday morning and decide to stay in bed late, that’s a financial loss. Nobody is going to be standing over you making you get out of your bed.”

MAKE A PLAN THAT FITS YOUR FINANCES

Before deciding whether to freelance, become a consultant or turn your side hustle into a business, take a close look at your finances.

Many cobbled together a budget during the pandemic. Revisit that plan to make sure you understand your hard costs, such as food, rent and day care. (The 50/30/20 approach is a quick way to divide your dollars into three buckets: needs, wants and savings.)

Isolate what you can put toward a business. Small costs like purchasing a domain name, buying the premium version of a software or membership fees for a networking group can add up.

Use your budget to set short- and long-term business goals, Hall says. “Know exactly what you need to earn to meet your family goals and translate that into a time schedule.”

EVALUATE YOUR TIMING

You may need to keep your day job for a while, but you can still build your business muscle.

“Being an entrepreneur was never a goal for me,” says Afenya Montgomery founder and CEO of iCAN Collective , a creative workspace and event venue for women entrepreneurs of color in Chicago. Montgomery, a registered nurse and health care administrator, started health care consulting on the side. Her hunt for resources and support inspired the idea of building a community for women entrepreneurs of color.

Montgomery and her husband were raising three children and had no business experience, so leaving her day job wasn’t an option. She spent four years learning the ropes of entrepreneurship before she felt confident enough to quit.

She hosted networking events, opened a business bank account and finally registered her business as a limited liability company . Taking small steps can make the process less overwhelming, she says.

SEEK SUPPORT

Between strategies, goals and budgets, the thought of working for yourself might seem daunting, but entrepreneurs say you don’t have to do it alone.

Laura Licursi, founder of Elite Virtual Assistants , an agency that connects employers with remote assistants, says the pandemic was surprisingly hard on her online-only business as clients cut back. Licursi, who works from the Cleveland area, navigated through the uncertainty with a mentor from SCORE, a network of volunteer business mentors that partners with the Small Business Administration.

“My mentor helped me work through the inner workings of the business when things were slow, which really helped when business picked up again,” she says.

Entrepreneurs have more resources available than they realize, Hall says:

● The SBA provides local resources to support aspiring entrepreneurs.

● The NASE offers a business development grant program for members.

● SCORE has mentorship resources, webinars and other online resources.

● The IRS website has information on the tax implications of self-employment.

This column was provided to The Associated Press by the personal finance website NerdWallet.

Amrita Jayakumar is a writer at NerdWallet. Email: ajayakumar@nerdwallet.com. Twitter: @ajbombay.

RELATED LINKS:

NerdWallet: Options to finance a startup http://bit.ly/nerdwallet-startup-loans

SBA Local Assistance Programs https://www.sba.gov/local-assistance/find