How to Become Self-Employed: 10 Steps for Taking the Plunge

How to become self-employed

You know that you would like to start a business and become self-employed, but where exactly do you start? Not to worry: we’ve outlined the steps that will take you from “thinking about it” to “doing it” in no time.

Here’s what you need to do to become self-employed:

Make the decision

This will be the first of many decisions you’ll have to make on your own. And it may feel strange at first, especially if you’re used to getting direction from your current boss, colleagues, or teachers. All that goes away when you’re self-employed, and you suddenly realize that you’re the person who has the final say on just about everything.

So the first step to becoming self-employed is to decide to do it. To quote Aaron Sorkin’s HBO drama Newsroom: “In the old days we did the news well. You know how? We just decided to.“

Do you know what separates all the people who want be self-employed from the ones who actually do it? Deciding to. So make the decision to make the leap. It sounds simple, but there’s nobody else who can do this for you.

Choose your niche and narrow it down

Google can afford to be in the business of just about everything—but you, as a newly self-employed person, won’t have that kind of global reach (at least, not at first!). That’s why it’s important to pick a specific niche.

Consider these questions: What will your area of focus be? What will your product or service solve? What kind of knowledge and experience do you already have that you could parlay into a business?

Once you have the answer, narrow it down even more: get as specific as possible about what you plan to do. Rather than limiting your options, being specific gives you more options because you can focus on addressing one slice of the market vey, very well rather than spreading yourself thin trying to do it all. And the more specific you can get about your niche, the better off you’ll be as you identify your target market and build out your advertising and marketing.

Get specific about your target market

Who are the people you will serve with your product or service? This is where a lot of self-employed people go wrong: they’ll say something like, “Well, I will serve anyone who would benefit from a product/service like mine!” That’s not a helpful answer, because it doesn’t give you any actionable insight into your target market.

Being successfully self-employed isn’t about putting your business out there and then waiting to see who it attracts. It’s about building a very specific solution for a very specific set of people.

So who are they? If you say “women between the ages of 25-35,” that may feel specific but is actually very broad. Dig deeper. What do they care about? Are they stay-at-home moms who want a little free time to themselves? Are they women pursuing a new career after taking time off? The more specific you can be, the better you can serve this market.

Set your goals so you have a blueprint for success

You’re about to pour considerable effort into being self-employed, so how will you measure whether the time you’re putting in is actually paying off? How will you know whether to keep going, and whether to pivot in a new direction or to call it quits?

Here’s the thing about being self-employed: you not only have to offer a marketable product or service, but attract those first customers (who aren’t your family and friends), explain what you do in a coherent and compelling way, market it all effectively, and transform all your time, effort, and energy into an income. Becoming self-employed and then just “seeing how it goes” is not a plan you can actually work with.

Instead, set specific goals and refer to them often. Consider this: how many items/services do you plan to sell in the first year? How will you generate those sales? Which marketing strategies could you try? How will you position your product? What will you do if you don’t sell? All these questions are waiting for you out in the real world. Take the time to consider the answers before you have to face them.

Take care of the administrative details

Next, you’ll need to get to the business of setting up a business. How will you structure your business—as a sole proprietorship or as an LLC? How will you register it in your state? Do you need any particular licenses or permits?

Because there are so many administrative steps to take care of when you become self-employed and set up your own business, we’ve written about how to handle the process from start to finish. For specific action steps, check out 6 Things You Can Do Right Now to Get Your Side Hustle Off the Ground.

Invest in systems that will work for you

How will you stay on top of the day-to-day details of being self-employed? For example, how will you price your products and services? How will you bill your clients and customers? How will you keep track of your profits and losses, so that you know where your business stands at any point in time?

Think of the systems you’ll need in order to run your business effectively, and test out the ones that look promising. For example, you could use a CRM system to keep track of your customers, an email service for your email marketing campaigns, and an online payments solution PaySimple to stay on top of client payments and billing.

Decide where you’ll get your best work done

One of the best things about being self-employed today is that you have so many options when it comes to how, when, and where you’ll work. If your business doesn’t require a physical space open to customers, you have a lot of freedom here: you can choose to work from home, cobble together work time at local cafes, rent a desk or an entire office at a co-working facility, or secure your own office space.

Think about where you’ll be able to get your best work done, and start there. For example, working from home may seem like a great option, but what happens when the details of home life—like laundry, dishes, and miscellaneous to-do’s—intrude on the details of work life? It may be difficult to separate ‘home’ from ‘work’, in which case a third space—like a co-working office—may be a better fit for you.

Make connections and build your visibility

Every business is built on connections: you not only need a great product or service, but customers who are willing to pay you for it! And you not only need customers, but people in the community, people in your network, and people in the wider world who can support you and help you along your journey.

We suggest getting out there and making as many connections as possible with potential customers—but also with potential mentors, other self-employed people, and the greater community. The more visible you are, the more people you’ll be able to attract to your business. For an actionable list of ideas you can try out right now, check out our tips for networking within your community.

Market your business

How do you plan to get the word out about your business so that you not only attract your first few customers, but wave after wave of new ones?  

Marketing your business is an ongoing process, and there are many ways to do it. To get your bearings and get started, check out our Ultimate Guide to Marketing for Small Business, which walks you through the basics, gets you started with SEO, gives you valuable insights into content marketing, email marketing, and social media marketing, and offers tips on event marketing, direct mail, and simplifying your marketing activities.

Be smart about your most valuable resource: time

As a newly self-employed person, you’re going to be busy—after all, there’s a lot that goes into starting and growing a business. And since there’s only so much time in a day, if you’re going to be effective you’re going to have to use that time wisely.

That means saying no to repetitive tasks and busywork, and automating as much of your business process as possible—whether it’s having automated emails ready to go or simplifying everything from client scheduling to client payments. It also means learning to use your time wisely, from giving up multitasking to prioritizing what matters with the Pareto principle.

Now that you have the tools to become self-employed, the only question is: what are you waiting for?

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