I have been self employed for almost 40 years. I have started 4 businesses, all of them successful, some more than others. Three have been construction companies, one of which has been my source of income for the last 25 years.
Even though with my own efforts (I have only had a job working for someone else for a total of about 5-6 years) I have bought several vehicles, a house, have some tiny investments, etc. All accomplishments that are very modest when compared to my contemporaries. They are retiring with great retirement accounts, some with many hundreds of thousands of dollars in them, paid off homes and plenty of money to travel as they wish, eat out at expensive restaurants when they feel like it, and are looking for "new adventures" for the last years of their lives. They don't worry about the economy and its ups and downs unless it is in context of what it is doing to their investments.
My business takes care of itself. I don't advertise as my referral base is large enough to keep me busy. Still, when the economy tanks (as it did again just a few years ago) people put off everything they could to take care of their houses. And while my repair/maintenance arm paid my bills most of the time, I had no new bathrooms, kitchens or room remodels that make enough money to set some aside.
I do some business consulting, and I have to say that if I was looking at starting a company these days I would hope someone would stop me. Something like a knife is a complete luxury. When the economy tanks, what do you think will happen to your business?
The intangibles that have put my friends out of their multiple businesses throughout the years:
- The should have listened to me (and many others) and put three times the money aside they calculated
- The underestimated how hard it was to drag themselves out of bed every single day regardless of health issues, personal problems, family problems. Remember, no one cares if you get out of bed or not, and even the most motivated person has bad days. That doesn't relieve any self employed of their responsibilities
- They didn't understand quarterly tax deposits, other quarterly reports, and how to interface with the various taxing agencies
- They weren't nearly as good at money management as they thought they were
- They underestimated the toll on personal relationships. Your time is not your own. It gets real when you have to miss family time, miss important family events, miss get togethers with your friends, and then just wind up too tired to do anything other than get by
- They didn't understand how wonderful some clients can be to work with, and others just plain awful. (Would you want to read here "Has he gone out of business????? I emailed him almost 20 minutes ago and have heard nothing... I measured my blade on the new folder and it is almost 4 thousands off center!"). Then, there are clients that will never be happy. There are clients that are dishonest.
- You get no days off. Sick? Who cares? Not your clients. Plus, you don't get paid for sick days. Learn to enjoy the flu while you are working!
- You will find that most people are experts in running businesses (at least in their own mind) and are free with their advice. If they ran a cash register in high school they are customer service experts. If they made sure that the part time cleanup kid swept out the warehouse once a week they are employee management experts. (HINT: Take any advice from a non self employed with a grain of salt.)
You will learn more about yourself than you could ever imagine. Self employment is a life style more than anything else. Unless you are just goofing around with it as a hobby, it is completely consuming.
As far as knives go, this is easy. How many knives would you have to sell to maintain your current lifestyle? If you clientele is BF, then you would probably sell more expensive knives and have a mark up of about 20%. So a $100 knife (an average of about $75 to $175 with regards for selling more $75 models) would put $20 in your pocket. So, if you are used to earning $50K a year, then you would need to sell 2500 knives a year, or 208 knives a month, or 7 knives a day every day right from the start. Workable, except that you now have a web site to keep up with, not a hobby site. Your site must use modules that show your inventory, you need pictures of the knives (some supplied by the manufacturer/distributor) to show your wares, you need to be available for questions, and you have to have a "checkout" module that is secured to a bank in order to accept payment online. That isn't a horrible expense, but it goes on 24/7 including holidays. Oh yeah, you now have to pay ALL of your own Social Security, no contributions from your company. And health insurance? Hope your spouse has a good company policy. Cash flow, inventory management, what to do with a bad quality control batch of knives, and IRS/State/local tax audit (lasting from several hours to several minutes) just become part of your day. Sound like fun yet?
And why ruin your hobby?
I hope you follow up and let us know what you decide. It isn't impossible, but my question is, is it worth it to you?
Robert