It's not often I make deals with the universe. But it's also not often I find myself trudging up the side of a mountain, drenched, with 50 pounds strapped to my back.
The year: 1997. The place: the Chilkoot Trail, a 53-kilometre hike that retraces the Klondike gold rush of 1898. The problem: nasty, bone-chilling drizzle and the unexpected discovery that I was afraid of heights. Crazy afraid.
"If I ever get off this #$*&! mountain," I vowed to myself that day, "I'm going to quit my job as a magazine editor and go freelance."
Jumping ship to become a writer-for-hire was something I'd been toying with for a few months. Particularly after I added up the invoices from my favourite freelancers – and discovered they were making more money than I was.
Joining the ranks of the self-employed should have been a no-brainer, but until that exhausting day climbing the trail, I was afraid to make the leap. How would I find clients? Could I really hack being alone all day? Would I be able to pay off my student loan? It was, after all, a whopper.
Obviously I did get off the mountain, so the first day back at work I gave my two weeks' notice, with no job to fall back on – and only $1,200 in my bank account.
"You'll be back," my publisher told me.
He was wrong. It's now more than 1,000 articles, columns, syndicated radio spots, three books – and 15 years – later and I'm still freelancing. Happily, successfully and lucratively. (Although, as I often joke, no one will ever approach me at a party and gasp, "You're a writer? You must be raking it in!") In short, I can't imagine life working for somebody else.
I'm not the only one, either. According to Statistics Canada, there were just over 2,670,000 people who were self-employed in this country last year, up from 2,280,000 in 2001. Some choose the lifestyle because it has always been their dream. Then there are those who have no other choice. They're laid off, they can't take their jobs another minute, or, like Jillian Bannister, founder of Ext. Marketing Inc. in Toronto, she had a baby, quit her job – and soon after, her husband walked out. Amazingly, despite the shaky economy two years ago, she decided it was time to launch a marketing company that targets the financial sector.
"People thought I was crazy. I had a newborn baby and no stability. Everybody kept asking why I just didn't get a nine-to-five job," she says now. "The bottom line is that any time is a good time to go be a small business owner if you have the right personality and know you want to be an entrepreneur."
It also helps to have a plan, advises George Dutch, a job change consultant in Ottawa who coaches people on how to make difficult career transitions. He left a federal government job 20 years ago to start his private practice. He had a strategy. Not only did he bank one third of his salary for 15 months in order to create a financial cushion, he took out local ads, appeared on local radio and rented an office on an hourly basis so he could meet clients there after 4:30 p.m. when his day job ended. He worked this way for a year.
It just made sense. By sticking his toe in the water, he could test the market, see whether there was demand and even determine whether he actually enjoyed the work.
"We have a secret wish that we will suddenly be struck by an ah-ha moment. Everything will just fall into place and the universe will line up. But that's not reality. You have to work to make things happen," Mr. Dutch says now.
So what's your plan? According to Joseph D'Agnese and Denise Kiernan, authors of The Money Book for Freelancers, Part-Timers, and the Self-Employed: The only personal finance system for people with not-so-regular jobs (Crown Publishing Group, 2010), there's no one-size-fits-all system. But there are some steps anyone should make before taking the leap.
"People who have been in a salaried position for a while go on autopilot as far as their finances are concerned. They know when the money is going to arrive and how much it's going to be," Ms. Kiernan says.
It's time to become a more active driver and track your spending, she advises. How much do you shell out for housing and house taxes, the car, sports for the kids, coffee, dry-cleaning, dinner and drinks? For a few months record every penny spent to get a true picture of how much money you need to live on. Don't forget to include retirement planning, RESPs and emergency funds. The trick is to determine not only how much money you'll need to earn to survive, but thrive. Can your business pay you what you need or are you in the position to scale back on living expenses until it does?
Even if you don't save a full third of your money, like Mr. Dutch did, start putting aside some money each month, even if just to get into the habit. Once you go the self-employed route, you'll want to throw a sizable chunk of your income into a second account to pay your taxes. Open a savings account with your bank now so when that first cheque comes in, you'll be ready to transfer some of the money into your "tax account."
Take a number
Sure, you don't actually need to collect GST or HST from clients until you start making $30,000 a year, but why not start right away? By listing your business number on your invoices, you're telling your clients you're successful, not small fry.
Line up customers
It takes time for people to know you exist. Instead of quitting your job and then hanging a shingle, network and line up clients before launching the business. Or see if your employer will give you work as a contractor when you leave. That's what I did. My publisher let me edit a few magazines from home at first. That arrangement saved my bacon until new customers started calling.
In other words, if you can, come up with creative ways to become your own boss. "Set the stage for independent employment," agrees Ms. Kiernan. "That's the best thing you can do."
That and making a deal with the universe you're determined to keep.