5 Mistakes I Made in My First Year of Owning a Business
I’m creeping up on the one-year anniversary of quitting my corporate job, and I can’t believe it’s come so fast! I quit my corporate job to become a freelance writer feeling anxious yet excited, and a year later I can honestly say it’s the best decision of my life. But in the same vein, looking back, there’s a handful of things I wish I did differently. Things that I didn’t know—even with all my research—or think about until after the fact.
While starting your own business is a huge leap of faith, I believe it’s one of the greatest things you can do for yourself—if you’re feeling that pull and are prepared. Hopefully what I’m sharing below will make your first year easier, or at least leave you with something to think about.
Saying ‘Yes’ to Everything
This varies depending on the type of business you own, but in general, it’s smart to only agree to work on (or sell, make, etc.) projects that you’re interested in. One of the main reasons you went out on your own is likely to follow a passion, so don’t let money or opportunity blind that. I said ‘yes’ to a few big projects with big payouts in the beginning, but found myself feeling uninspired—exactly how I felt in the corporate world. Focus on quality not quantity, even if that means waiting longer to find those projects or clients.
Not Saving Enough
Your first year of business is hard because you’re unsure of how much you’ll make—which is a struggle with owning your own company or freelancing in general. Though I hired an amazing accountant from the start (probably the smartest thing I did), it was still difficult guessing how much I’d owe in taxes. Many states tack on an extra 15% tax when you work for yourself, so it’s crucial to set away at least 50% of your income for taxes, to be conservative. After the first year, you’ll have a better idea of how much and when you’ll owe in taxes, but focus on saving as much as possible that first year—or before you go out on your own.
Having One Bank Account
I finally got another bank account, solely for my business, and wish I’d done it sooner. Having one account to track expenses (only use that card for things you can write off) and income makes all business-related finances easier. I decided on a checking account for my company, and transfer to my personal savings each month. So far this system is simple and effective!
Before I started my own company and was working in corporate America, I never felt over-worked. I was good about sticking to my 9-5 schedule (generally), and wasn’t attached to my email after hours. Mainly because I wasn’t invested in my job! That all changed when I went out on my own.
At first, it felt extremely rewarding and actually fun; there was something about being excited about work that made being busy seem invigorating—but that also eventually changed. After too many 12-hour days and weekends, I found myself stressed, tired, and being pretty awful to the people in my life (sorry friends and family!).
If there’s one piece of advice I can stress, it’s to stick to manageable hours and take breaks! It might mean delegating or making less money at first, but it’ll help with burnouts and overall happiness. Put the phone away, too!
Not Organizing Invoices
This is something I’m still struggling with, but it’s on my to-do list for June. It’s tricky to keep your tasks and expenses lined up for a client/project—especially when you’re not on salary. You should ideally have a system that’s quick but also assures that you’re accurately noting your hours. I’m currently using Google docs to keep track of my time spent, but am thinking about moving to Quickbook Self-Employed. If anyone has other systems that they love, please share!
Business owners, what did you learn your first year? Or if you’re thinking about starting a company, what are your biggest fears/questions?