Decisions When Self-Employed: Can They Come with Clarity and Bravery?

Image shows the title of the article laid over an image of window cleaners on the glass surface of a skyscraper.

Navigating decisions is difficult at the best of times, but I notice it's stepped up a notch for those of us who are alone in business. Not having a team to help weigh decisions with is a challenge unique to us self-employed people. Added to this, self-employment can feel risky in and of itself. This makes each decision seem even more high-stakes. Here are my recommendations for how to navigate decisions when self-employed.

When making a decision it's important to have a good strategy, as well as sound criteria. Let's explore how you're going to tackle the decision-making journey before getting into your criteria.

With any decision, give yourself time. If the offer is going to expire before you get a chance to sleep on it, it's not the right offer for you. Quick decisions can work, but they're also a tactic for pressuring those who are thoughtful. If you haven't already been seeking this exact thing and it's going to expire, then let it. Anything valuable and with substance will be there tomorrow and the day after. Paying the non-discounted rate is worth the peace of mind that comes from taking your time.

When taking your time, there are two key activities. The most important is to let it percolate in the back of your mind. You can also use this time to gather additional information. A well-informed decision is a better decision. But the key use of time is to ensure your subconscious has the time to sort through the decision.

For those especially high-stakes or nebulous decisions, talk to someone about the decision. They don't have to be in business at all. You just need a trusted person who is good at active listening. Bonus points if they can reflect what you're saying back to you. Talking it through is important because it gets it out of your head and formed into language. The other person will listen to confirm it makes sense, and ask for clarification where it doesn't. You don't need their advice, you need to be seen.

3 Key Criteria

While you're navigating your decision-making journey, there are three key criteria. These are easy to lose sight of, which is why I bring them up. They're also often misunderstood, which is why I'll explore them in-depth here. The criteria are: is it a good idea? Do you have the resources? Is the timing right?

A Good Idea

Here's a given: this decision before you seems like a good idea. You wouldn't be indecisive if it was clearly a bad idea. This is already evidence of good discernment! Give yourself some credit!

What you're actually trying to understand here is: Is this a good idea *for* *YOU*? Does this opportunity align with your vision for your life and business?

Oftentimes folks get caught up in the emotional riskiness of an opportunity. The feelings of failure that *may* come if it doesn't pan out. This is what's lead to the prevalence of the pro-con list. A Pros and Cons List will help you sort out the logically valid arguments for or against a decision. Examining this list helps you see through the emotional fear or ego-based concerns.

Resources

Every opportunity requires some investment of resources. Even if it doesn't have a price tag, you'll have to shift your time from what you've been doing towards this opportunity. What are you sacrificing in order to make this happen? Time and money are both finite, but what's the optimal way of allocating your time and money? I can't tell you what's right for you, but there is are rules of thumb for allocating your time and your money.

I use a rule of thumb that 20% - 30% of your time should be marketing/promoting/selling your business. This includes all the unpaid work you do to promote your business: sales calls, introductory sessions, website updates, social media posts, networking events, meeting with colleagues, etc. This does not include administrative tasks like bookkeeping, maintaining your CRM, renewing business licenses, etc.

Calculate this percent from the total amount of time you spend working, not 24hrs in a day. So, if you work a 40 hour week, then 8-12 hours of each week should be about promoting your business. If you spend 20 hours per week in paid client-facing meetings, then you'll promote your business in an additional 6 hours per week.

For money, a good ball-park number is 30% of your revenue going towards operating expenses. (According to the book Profit First, by Mike Michalowicz.) Operating expenses include everything that's not your pay or set aside for taxes. E.g. rent, insurance, computer systems, advertising, accountant, staff, etc. This means that if your business brings in $8,000 a month, your operating expenses would total no more than $2,400. (And in this scenario you'd set aside 20% or $1,600 for taxes, and you'd get paid 50% or $4,000.) If your operating expenses are already well over 30% then this opportunity is not right.

For us frugal lot it can seem wise to keep operating expenses as low as possible. But, operating expenses significantly under 30% can mean that you're starving your business. If the expense of this decision still keeps you under 30%, then it's likely to be a worthwhile expenditure.

Even when you're just getting started and working with small sums, the same policy holds true. If the business only brings in $1,000, then the business should be able to operate on only $300 per month. Yes, you may want to pocket the whole $1,000 for living expenses. And it's prudent to set aside $200 for taxes, and invest that $300 in operating expenses. While you'll only be paying yourself $500, the investment in the business will help it stay afloat.

When making a decision, examine how you're allocating your time and money resources. Sometimes we can redirect resources from somewhere else towards this decision. But if there are not resources for this opportunity, then it is not worthwhile. You can always come back to it another time when you have the resources to devote to it.

Timing

Take a lesson from a music teacher: the right note at the wrong time is still the wrong note. No matter how good an idea or rich an opportunity, if it's not the right time, it's just not the right time.

Likewise, don't try to find the *perfect* time for an effort. This isn't the castle in Mario. You don't have to dodge the flames with perfect timing. A better analogy is gardening kale. If you plant seeds when it's warm-ish and wet, they'll sprout into plants. If the timing isn't quite right, they might freeze or they might bolt, but you'll still have plants. Plus, worst-case scenario, you can plant some more seeds and try again. This is how decision-making works.

Self-Employed Decision Making

As the steward of a business, the best you can do is look at a decision and ask "is this forward movement?" and "is this a good time for this undertaking?" The risky feeling won't go away, and sometimes it'll work out, and other times it won't. At the end of the day, you will rely on your own resilience in the same way that you have even in situations that were beyond your control. I hope this helps you face your next decision with greater clarity.

The content of this article is summarized in this handy “Decision-Making Checklist” graphic.