Jul 09

Staying Steady In Unsteady Times

ssiuI’m heading into my fifth year as a sole proprietor, so the midnight money crazies aren’t as bad as they used to be.

But the first year was rough. I alternated between two modes of thinking about my self-employment earnings. In my euphoric mode, I couldn’t believe how easy it was to be successful and how many good-size checks showed up in my mailbox. I felt lucky and rich, or at least richer than I had been when I drew a regular paycheck. (This all took place when I was still confusing gross pay with net earnings.

My other mode was panic and desperation, when there were no checks in the mail. I thought I had sold my last article and would never make another dime or mortgage payment.

Four years later, I’ve calmed down some. I no longer think every check is my last, nor am I profligate with my big checks as soon as I get them. But my income–I’m paid by the article–can still vary by thousands of dollars from month to month, depending on what I’ve written and how quickly I’m paid. I’ve had to learn a few budgeting tricks for handling what I call roller-coaster income–a necessary evil for the self-employed.

Managing income through the ups and the downs is tough, both financially and emotionally. When income fluctuates, you have to learn a whole new method of cash management to make sure that, during the flush periods, you provide for the lean times.

Emotionally, the money you make is a measure of the success of your business, and irregular income can translate into cycles of exhilaration and self-doubt. Unless you learn to control those cycles, bad budgeting and self-defeating thoughts can jeopardize not only your solid credit rating but the growth prospects of your business.

KEEPING YOUR FISCAL BALANCE

Here are 11 ideas for handling irregular income:

Find one bread-and-butter client. Easier said than done, I know, but if you have even one client who will put you on retainer, give you regular work, and send you a check like clockwork, it makes self-employment much easier in all ways. So much so that it’s worth lowering your fees.

Be religious about your billing, urges Elaine Bedel, a fee-only financial planner who works out of her home in Indianapolis. “Even though I don’t like messing with the details of billing, I’ve set up a regular billing schedule and send out bills at least once a month or when the project ends,” she says. Many clients have their own internal schemes for handling invoices, so the earlier you can get the process going the sooner you will get paid. And since too many clients put single entrepreneurs at the bottom of their checks-to-write list, be good about sending late notices until you get paid.

Remember estimated taxes. Many experts recommend that you automatically deposit one-third to one-half of every check you receive into a separate business account to make sure you have enough for your quarterly estimated taxes. This is a sound path to self-imposed discipline, but it still doesn’t smooth out the rest of your income and expenses. However, it does prevent spring surprises, when you find you owe a few thousand dollars that you don’t have in taxes.

Pay yourself a regular salary. When Ross Levin, a Minneapolis financial planner, started his business, he put away a portion of every check for taxes and took what he needed for expenses from the remainder. But he felt uncomfortable with the income fluctuations. So after six months he started putting all of his earnings into one bank account and giving himself a regular paycheck, taking care to leave enough for tax payments.

Capitalize your newborn business with a savings reserve and a line of credit, suggests Robert Oberst, a Red Bank, New Jersey, certified financial planner, who borrowed $1,000 and drew it down $100 a week when he started his own business 20 years ago. Use that reserve for necessary business expenses and a regular salary. Even if you have to go into your credit line to keep your salary steady, do it, say both Levin and Oberst–though they caution that you should keep your salary to a minimum while you are building your business. Your willingness to capitalize your business with savings and borrow against it underscores your commitment to success. Says Oberst, “Without that [commitment], you might as well forget it.”

Use your computer. You can keep your business accounts in programs like Quicken and Managing Your Money (available for both MS-DOS and Macintosh systems), or you can tailor your own spreadsheets to do simple planning and cash-flow analysis. Use your computer to send out regular bills, to estimate how much you’ll need for taxes, and to plan a budget, so you’ll know how much you need to earn. Once you’ve kept figures on your computer for a while, you’ll be able to discern payment cycles. That can help you plan your expenses to coincide with your income.

Set monetary goals for yourself. Karen Maury, a Silver Spring, Maryland, real-estate agent, has been supporting her family for 14 years on commissions alone. She admits that while she ignores most of the sound budgeting techniques listed elsewhere in this article, she is firm about her financial goals. She keeps a calendar on her desk that has nothing on it but completed transactions. And she knows she has to have four sales a month to pay her bills. “It’s a kooky, silly trick, but it works for me,” she says. “When I have four marks on the calendar, I know I’ll make it. If I don’t, I work harder.”

Maury’s saving grace is that she’s careful about credit. She’s renovating her house a bit at a time, and she doesn’t borrow ahead to do what she needs. When she has a six-transaction month, she’ll use the extra money to fix another wall or replace a gutter. When she has a rare three-transaction month, she’ll put off any unnecessary expenses until her next transaction.

Turn down low-paying work. Avoid the urge to take too many low-paying fill-in jobs. Fill-in work is tricky. Sometimes it’s worth taking a lower-paying job for a period when you don’t have any other work. But if the job pays too little, or if you’re doing too much fill-in work, you might be wasting time that would be better spent marketing for higher-paying clients.

Financial planner Elaine Bedel recommends that you figure out exactly what you need to earn hourly to meet your overhead and provide you with a reasonable salary. “Consider the type of work you’re taking on and whether you’re taking the best advantage of your time,” she advises.

Take advantage of credit-card grace periods. Most financial planners would not endorse this tip, but it works in the real world. One professional writer knows the date when her bank cuts off charges for the monthly bill. So she can charge an expense, take advantage of the 25-day grace period until the charge is posted, and then pay it off in full without paying interest. Caution: Use this step as a last resort; it works only if you know you have money coming in that you haven’t seen yet. Charging when you have a check in the mail is “cash-flow management.” Charging when you don’t have the next client lined up is folly.

Market when you are busy. In my first year of freelancing, I sent out proposals when I didn’t have any assignments. Then I would get a flurry of assignments due all at once, and a few months later a flurry of checks. Then nothing, and I would market again. Now I’ve learned to smooth out the cycle by sending out the proposals when I’m in the middle of working on articles. I’ll take one day in a busy week to market. That way I always have proposals out, assignments in, and checks due.

Be good to yourself, in ways that don’t cost money. The seesaw income of the self-employed “is very destabilizing and stress-producing,” says Olivia Mellan, a Washington, D.C., psychotherapist who specializes in money conflicts for individuals and couples. “Be as stable as possible to offset that by setting up a regular work schedule, exercising regularly, taking walks, or paying yourself a salary.”

Says Mellan, “Try to separate your concept of self-worth from the money you make. And be very good to yourself, nurturing but not self-indulgent.”

Jun 04

Telephone Tricks That Work!

tttwAs an account executive at a large public-relations firm several years ago, I had great success using the telephone to secure media interviews for clients. When I resigned to become self-employed, my supervisor retired my telephone at a farewell party. “Nobody will ever use this the way you did,” he said, presenting me with the well-used, beige desk model.

I succeeded with my telephone publicity assignments for some obvious reasons–I was pleasant and not too pushy or overbearing, maintained a sense of humor, and was persistent. But during those years and several since then as a home-based publicist, I’ve learned additional techniques that can help any home-business owner use the telephone more effectively.

Whether you’re selling a product or service, researching a magazine article, conducting market-research surveys or collecting bills, the telephone is often a necessary tool. By using it effectively, you can reduce your phone bill, boost productivity, and minimize the frustration of telephone tag.

Here are tips that will minimize the amount of time you spend on the phone and help you reach people who seem too busy to take your calls.

Never underestimate the ability of a target’s assistant or secretary to help you get information quickly. A good relationship with an assistant can be valuable when you need a decision from the boss. Become friendly by learning his or her name and using it with each call. Share information with him or her; treat him or her as a peer.

One of my projects requires me to work with an executive vice president of the world’s largest modeling agency. His assistant is very good at her job–so good, in fact, that I place calls to her instead of her boss. She decides when she should act as the intermediary, or when I must speak to him directly. Because he respects her judgment, he accepts my calls quickly and I get the information I need.

Increase your chances of making that sale or getting a positive response by preparing and practicing a brief pitch before making your call. Renee Phillips of Information Communications, a home-based desktop-publishing business in Rochester, New York, says, “I’ve learned to get to the point quickly and clearly, but I still rehearse a brief sentence or two and practice my tone before picking up the receiver.”

Phillips makes sales calls as a follow-up to mailings for Fact Sheets, Plus, a fact-sheet publishing service she sells to real estate brokers. She has found that brokers respond best when she presents her call as an opportunity to answer questions rather than a sales pitch. She offers an example: “After introducing myself, I might say, `I’m following up on our recent mailing about our fact-sheet service. Have you had a chance to review it?’ If they haven’t, I offer to call back in a few days. If they have, I ask if they have questions.”

As a result, Phillips says, prospects are likely to call her when they need a special brochure for an unusual property or project.

Contact a hard-to-reach decision-maker when a secretary is most likely to be away from the desk. Call at lunchtime or after 5:00 p.m. At these times, a busy person working through lunch or into the evening is forced to answer his or her own phone. It could lead to a sale.

Connect quickly by being alert to the phone patterns of others and adjusting yours accordingly. After I tried to reach a book publisher recently, it became obvious that he returned phone calls around 5:30, when I’m often not available. But after leaving a message for him one afternoon, I made it a point to be at my desk when I expected him to return the call–between 5:00 and 5:30–and we finally did talk.

Make your message as complete as possible when it’s addressed to someone who doesn’t know you. This will improve your chances of getting a return call. A simple “John Smith called. Please call back ” can encourage the recipient to say, “I don’t know any John Smith,” and toss your message in the trash. Tell the message taker why you’re calling and you’ll get clues as to whether the person you’re calling will be interested in talking to you.

If you’ve been referred by a mutual acquaintance, make that clear. “Joan Johnson asked me to call” is certain to initiate a return call from the person you want to reach.

Make the most of answering machines and voice-mail systems. These are becoming increasingly popular because they allow the person you’re calling to hear your voice and exact message. Don’t be uncomfortable talking to these machines or computers–they can be your allies.

Jill Stewart, a public-relations project consultant operating out of her attic in suburban Chicago, is a pro at using answering machines. When she has information to share but doesn’t have time for a conversation, she’ll call when she’s pretty certain the recipient isn’t in the office.

“By leaving my message on a machine, I accomplish my purpose much more quickly because I don’t get sidetracked by a discussion,” she notes. An added benefit, she says, is the money she saves by making a shorter phone call.

When you want to leave a brief message for someone without voice mail, call the assistant or secretary directly.

Use a fax machine when requesting information to reduce the hours you spend on the phone. I do a great deal of work with a subcontractor in Colorado. During especially busy periods, I’ll often fax a list of questions or bits of information rather than call. This gives her the opportunity to find the answers before calling back, or to simply digest the information at the best time possible. It saves time and reduces phone bills for both of us.

Minimize telephone tag by including a “good time to call” with your message. My work hours vary according to nursery-school schedules, so I’ll often leave a message that says, “It’s best to call after 11:00 a.m.”

When all else fails, remember the tried-and-true ethic that most successful business owners use: Don’t hang up.

May 15

Get Clients NOW!

gbThe lead time for getting business in the door can be several weeks or several years. This is especially true if you’re working with large companies that must go through layers of decision making. So what can you do to prime the pump when you need business fast? Here are five stopgap ideas for getting instant business.

1. Get on the phone. The quickest, surest way to get business is to get on the phone and call prospective customers and clients. Begin with your past client list. Satisfied customers can be a good source of instant business. Then call contacts who have expressed interest in the past, but never bought. Finally, create a list of new names, using the yellow pages or an industry directory. Although most people hate cold calling, it does work. And once you get started, it’s not nearly as hard as you might think.

To conduct an effective phone campaign, you need to keep an up-to-date database of all past clients–including names, addresses, and telephone numbers–and what they purchased on which date. Contact-management software like ACT will alert you when you need to make a follow-up contact. This can be very valuable if you’re making a lot of calls and need to call back within many different specified periods. ACT also combines a variety of marketing functions, such as customer and prospect tracking, service records, and correspondence.

Set a goal to make a specific number of calls each day. And just go down the list one by one. Reward yourself for the number of calls you make, not just the number of sales. It may take a lot of calls to get a sale, so the more you make, the better.

To ease the process, use any of the following ideas as an entree into the conversation and as an added incentive for people to act immediately.

2. Make a special offer people can’t refuse. Virtually any season or event can serve as an opportunity to offer a special promotion. You can have a Spring Special, a New Year’s Discount, or a free initial consultation. If, for example, you have a word-processing service, you might offer every fourth page free, or free page layout and design.

A newsletter publisher used a similar promotion when one of his long-running weekly advertising accounts suddenly decided to take a three-month vacation. He called companies that had been hesitant to advertise and told them that he had a special one-time, one-month opportunity and he wanted to offer it to them first. He had three one-month specials sold in just two days.

3. Offer a pricing incentive. Some money beats no money. Offer a special price that’s so tempting that prospective clients simply can’t say no. Lowball pricing can be one of the quickest routes to new business. For example, a woman we know started her business promoting restaurants on the radio with this special-pricing strategy. She offered restaurant owners the opportunity to promote their restaurant on her show for half the standard rate. And she gave top-notch service for that price. She prepared the commercials, interviewed owners, and invited listeners to meet her at the restaurant as part of various publicity activities. This approach enabled her to break even immediately. Satisfied advertisers were willing to renew at the regular price.

A photographer offered an apparently absurd service to advertising agencies: a 30-by-40-inch color print in an hour for $150. Obviously, if two customers took him up on it at the same time, one customer would get his color print on time and the other would have his print two hours later. But the photographer knew the chances were good that no one would rush-order a 30-by-40-inch color print. The psychological impact was made nonetheless. The idea was not to sell quick 30-by-40-inch prints but to convince art directors that this photographer could deliver unmatched photographic services.

4. Subcontract or take overload. Your competitors can be an excellent source of quick business. Howard Shenson, author of The Consulting Handbook, reports that 11 to 21 percent of new business comes from the competition. So scout around and find out who’s busy and call to find out if they need backup or if they’ve had to turn away any projects.

One instructional designer was able to get business quickly in this way when the project she’d been working on was suddenly canceled by a hostile takeover. She called other instructional designers and told them her plight. Sure enough, one designer had just turned down a job that he didn’t have the time to do.

5. Volunteer. There’s nothing worse for morale than having no work. Therefore, doing some work beats doing none at all. Although volunteering is a last-ditch effort to create business, any work tends to beget work. Sometimes what begins as a volunteer effort ultimately becomes paid work.

GET STEADY BUSINESS

Ideally, you should plan your business so that you never need to scramble to find work. When you’re first starting out, line up several clients before you leave the security of your job. Never rely on one client as the primary source of your business. Even if you have to subcontract business out, build a base of reliable clients. If you must work with only one client at a time, make sure you set aside several hours each week to market for future business. To avoid sudden dips in business, keep your advertising, networking, and other marketing efforts under way during your busy times.

May 14

Your Kids Should Know Business; The Earlier The Better!

ykskbWhen are you two going to get jobs? Isn’t it about time you started pulling your own weight around here?” I sometimes ask my 7-year-old daughter and my 9-year-old son, whenever I spend a fortune on shoes, school clothes, or sporting goods for them.

They know I’m just kidding, of course, but soon they may be able to help in the business. There are some good reasons why those of us who are self-employed should hire our children.

Including our children in our businesses can be a good way to foster family unity, and it gives our youngsters a firsthand look at the daily routines in our offices. “When children work at home with their parents, they get to see Mom and Dad at work, overcoming obstacles and running a company–something many children don’t experience,” says Miriam Kohn, a child psychologist at the Chevy Chase Center for Psychotherapy in Washington, D.C.

FAMILY FEELING

Eight years ago Kohn hired both her son, David, and her daughter, Susanna, then 15 and 13, to help with her dissertation. “I felt very supported. It became a family thing: `Let’s help get Mom through this.’ ”

Susanna alphabetized Kohn’s bibliography, while David helped with the clinical observations of children placed in day-care centers. “I needed someone who would be responsible. If David hadn’t been available, I would have had to hire graduate students to do it, and I felt he was more reliable,” explains Kohn.

David developed a deeper understanding of his mother’s field, earned $5 an hour, and gained an enduring sensitivity to children through a more interesting job than most teenagers can find on the open market. Says David, 23, who now works as a newspaper photographer in Anniston, Alabama, “I got to experience different things and learn a little about the world.”

The secret of their success, says David, was that he and his mother both took the assignment seriously. “I did call her `Mom,’” he concedes, “but I worked hard, finished my work, and treated it like any other job.”

Would-be employers of children must carefully consider the children’s age and abilities, according to Washington, D.C., developmental pediatrician Patricia Quinn, who employs her 13-year-old son, Timothy, to do her photocopying. It’s also a good idea to ask children if they want to work with you, rather than assuming they’ll enjoy being employed.

Most children do not develop a solid, one-hour attention span until they are 7 or 8 years old; before that they are too young to have a formal job. Dr. Quinn suggests that younger children participate in simple work activities every once in a while–tossing packing peanuts into boxes or straightening bookshelves, for example. These informal arrangements, best left “off the books,” should focus on encouraging the child to participate in the family business.

As the child grows, hours and responsibilities can be added. An 8-year-old can do about an hour of work a day, if the tasks are varied and simple–such as distributing fliers, assembling press kits, discarding the trash, and overseeing the mail. “When children work in a family business, they learn at an early age what it means to take on responsibility,” Kohn says.

Parent-child employment relationships usually work best for kids who are 14 or 15, Quinn says. Young teens are able to work three or four hours at a time, can be truly productive, and are generally grateful for the opportunity to earn money. And children begin to understand the value of being paid for a job well done. “A plus is that youngsters learn the importance of meeting deadlines and taking a task from start to finish,” says Quinn. These skills sometimes carry over into academics and can enhance a child’s school performance, Quinn asserts.

Home-based entrepreneurs Jane Bucy and Jo Axum, whose St. Louis-based company, Sew Soft, makes curtains and other home-decorating items, began to integrate their children into the business long before the kids were old enough to be on the payroll. It is a process that has grown along with the children.

Jo’s daughters, Tawnia and Nicole Zollinger, 13 and 11, have already put in time helping with minor tasks like cleaning, stuffing pillows, and doing mailings. Now they are learning to sew shades, dust ruffles, and table skirts at a training wage of $2 an hour. Working three or four hours a day in the summer, the girls are scheduled to get raises as their proficiency grows.

Coming up in the wings are Jane’s 4- and 6-year-old daughters, who spend time watching their mother work. “One of them ran the vacuum through here the other day,” laughs Jo. “Maybe that’s a start.”

THE TAX BENEFITS

Hiring children can bring families closer and help you save money on taxes. “This is a wonderful way to shift income and set aside savings for a child,” says Washington, D.C., financial planner Susan Freed.

Children who earn their own money can file taxes separately and take their own standard deductions. As a result, part of the money is exempt from taxation and part of it is taxed at the child’s presumably lower tax rate. “It’s like setting up two zero brackets and two 15 percent brackets every year,” she says.

If you are a sole proprietor, your child’s wages are a deductible business expense that reduces the earnings subject to this year’s hefty 15.3 percent self-employment Social Security tax. Furthermore, children under 18 are exempt from paying Social Security taxes of their own.

It works like this: In 1990, the standard deduction of $3,250 effectively wipes out taxes on income up to that level. You can pay your child that much–it amounts to $62.50 a week–without the child having to pay any Social Security or federal taxes on that income. (Every state has its own tax regulations.)

A family in the 28 percent bracket can save $1,407 a year, including the money saved on the self-employment tax. And there may be additional state tax savings.

Furthermore, the child can earn up to $19,450 and still remain in the 15 percent bracket. For every $1,000 you pay a child over the $3,250 level, your family can save $283 a year in federal income and Social Security taxes if you are in the 28 percent bracket. If your family taxable income is more than $78,400 and is in the 33 percent bracket, those savings amount to $1,570 on the first $3,250, and $333 on every $1,000 thereafter.

KIDDIE IRAs

Seattle money manager Paul Merriman has gone one step further. His family business hired his grandson, Ben, as a catalog model when the boy was one year old. The $2,000 that Ben received in salary was not only tax-deductible to the business and tax-free to the child, but put into a tax-deferred Individual Retirement Account. Sure, Ben will have to wait 60 years for that money, but even at a moderate interest rate he will have a nice nest egg.

Setting up IRAs with your children’s wages also makes sense if your family has enough other income to save for their education and your own retirement; if they are making more than $3,250, it would be tax-free anyway, notes financial planner Susan Freed. Another advantage to establishing an IRA is that it’s tax-deductible.

USE IT, BUT DON’T ABUSE IT

Like the home-office deduction, the hire-your-kids tax break has high abuse potential and can raise eyebrows at the IRS. It’s important that a legitimate job–one in which the child is providing a service that relates to the functioning of the business–be at the center of the arrangement. “The wages must be reasonable and paid for actual services,” explains Freed in IRS buzzwords. There are no documented IRS criteria that define a “legitimate job” or “reasonable rates,” however. These are left to your discretion and the judgment of the IRS. “If you are paying your 5-year-old $20,000 a year, expect problems,” she says.

The key to keeping an arrangement like this aboveboard is to pay your children regular market rates for work they actually perform. Be professional and businesslike in handling the arrangement and the records associated with it.

HOW TO MAKE IT WORK

Here are some steps you can take to make sure your experience as your children’s employer is positive for everyone.

Offer parental guidance. Some parents make their children’s work arrangement contractual to show them what it means to honor an agreement. Children should understand that they have a responsibility to perform the job and that they will be paid when the work is done. If your child can’t fulfill his or her duties at any time, suggest that he or she find a friend who can fill in. Put the agreement in writing and post it in a work area. Or give your child a copy of the agreement to hang in his or her bedroom to imbue the work arrangement with an even greater sense of importance.

Be businesslike. Treat the arrangement professionally. Establish a payday and stick with it. Schedule specific working hours and duties. Don’t pay the child in advance and then nag about work left undone. Never forget to pay wages. Pay by check to help document income and to teach your child about the exchange of money.

Keep it legal. This means reviewing your state’s child-labor laws before starting a new arrangement. Most states exempt family businesses from these laws unless the work is hazardous, but that’s not true in New York, which will fine homeworkers who hire their own minor children.

This also means being aboveboard about paying your child a reasonable salary for the work he or she produces, and not overpaying children to suit your tax-planning needs.

Teach youngsters that earning can be fun. All of the money your child makes should not be squirreled away for the college-savings fund. Let your youngsters keep and spend at least a portion of their earnings on something they enjoy.

Let kids be kids. If your child really hates doing the kind of work your business requires, don’t force the issue. “The decision ultimately has to be the kid’s,” says psychologist Kohn.

Keep work and home life separate. Don’t say, “You can’t go out tonight because you didn’t do a good job on the filing.” If children are not performing their duties, talk to them during work hours about it. Don’t let irritations carry over. Make sure your child’s schoolwork doesn’t suffer because of excessive work demands. Arrange for adequate playtime.

Apr 29

Cutting The Cord To Get Your Business Going

ctctgThis morning an estimator from a moving company walked through my house, writing down figures as I pointed out, “That bed I’m taking, but this table is staying.” After we finished he asked, “Where should I send my estimate?”

“Box 202, Route 8 North. Oh, uh . . .” He stopped writing and looked up, probably wondering, “She doesn’t know her own address?”

“That’s my–that was my work address,” I explained. I told him my home address while feeling a sort of panic. It’s not so unusual for me to rattle off my work address by mistake, but now I don’t work there anymore. “Oh my god, I don’t have a job!” While my husband, Adam, studied law the past three years, my salary paid a majority of our living expenses. And I am the type of person who likes to work.

I was an associate producer and newscaster at a corporate broadcast TV studio in New Hampshire that produces PCTV, a television show about computers. That job followed a stint in radio news reporting, some freelance writing, and various video production jobs. I had paid my dues and was finally enjoying a solid and gratifying position.

Now that Adam was graduating, we wondered how we should handle this next phase of our lives. Should I keep my job and he look for work locally, or should we leave our Vermont home and move to a city? Our home in Sharon, Vermont, is like a “Bonnie and Clyde” hideaway. It’s rustic and isolated, with a 40-acre ridge behind it and a brook and field in front. The place fulfilled all our dreams of a country home, but country living isn’t simple. The nearest store that sells vegetables is 30 minutes away by car, and I was spending two hours travelling to and from work each day.

And what would Adam do around here if we stayed? A degree in environmental law isn’t suited for the country law offices of New Hampshire and Vermont. We decided to leave. Adam was offered a position in Washington, D.C., and he took it.

So now it was my turn. My exposure to computers at PCTV convinced me that working from home might be an option. As associate producer, I had helped executives from computer companies prepare for demonstrations in front of the camera. I communicated with them electronically through MCI Mail and learned about their products while I guided them through the preproduction process of television. As newscaster, I followed the latest developments in the computer industry through electronic news services, such as CompuServe and NewsNet. When you’re working with the fast-growing technologies of the computer industry, it doesn’t take long to see how powerful you can be with a computer in your own home.

I began to think that if I could replace my existing 512K Macintosh, which has an external disk drive, with an SE with an internal hard drive, buy a modem, and invest in a few programs to help me keep track of a small business–I could be in business.

“I’m going to work for myself from home, as a writer, producer, and video/TV talent,” I declared to a friend with false bravado. She said, “Take it easy, Sarah, you’re not setting sail to find the New World. Lots of people run successful businesses from their homes. You’ll be fine.”

“No. You’ll be fine!” I exclaimed. “You’ll be at the office schmoozing with your co-workers like always. I’ll become dull and fat, and develop agoraphobia, and never leave the house again.” As far as I’m concerned, I was looking for a new world. Choosing to stay at home and work is no easy decision.

My self-esteem relies heavily on what I do for a living. Of course, I worried about missing a weekly paycheck and other corporate benefits. But there is another advantage that isn’t so simple to describe. It’s being able to introduce myself when I’m doing business by saying, “I’m Sarah Steinman with [company].” Call it clout, or security–it’s the feeling I get from having a company structure behind me.

Yes, part of me did like leaving the company which used to rub me the wrong way sometimes. The type of world I want is one where I am challenged, enjoy what I’m doing–and have autonomy.

With my background, I thought, I can use my communication skills in the audio, video, and print media. I can write, produce, and act for video and radio, and write for magazines and newspapers. The only problem was my wavering confidence. Back and forth I went:

Do it.

What if I fail?

Finally I sat myself down and decided to just do it. I didn’t know as much as I needed to about running a business, so I took a trip to the bookstore, where I found plenty of good resources.

I chose several books: Your Home Business Can Make Dollars and Sense, Working from Home, The Woman Entrepreneur, and How to Write a Business Plan. The extra kick I got this time was keeping my receipt as a business expense.

Books on starting your own business are great for confidence building. They provide a steady stream of encouragement and solid business ideas.

“For those with creative business minds, working from home is the ticket to realizing their potential,” say Paul and Sarah Edwards in their book Working from Home. Here is another good one: “Even if you only have a 20-minute commute each way, working from home is like getting an additional two-week vacation every year.” My commute was almost an hour each way. That’s a full month spent in the car getting to work every year! Another statistic I’ve read in many different sources, about which I used to be very skeptical, states, “Most people who work at home find their productivity increases dramatically.” Well, I’m only in the beginning stages of working at home and I’m already a believer. To work for myself is a lesson in motivation.

While my new idea to pick up and strike out on my own is exciting and could be very prosperous, there is a difference between an idea and a business plan. I have promised myself I will read How to Write a Business Plan, and then actually write one.

The move to Washington adds some spice to this change. Contacts need to be made down there. Before I left my job, I copied most of the names out of my Rolodex. I have made hundreds of calls and sent reams of letters, just to tell everyone what I’m up to and ask if they know anyone in Washington. One woman, to whom I had spoken only a few times on the phone, set me up with one of my most promising contacts. So talk, talk, talk.

Stick with it, I keep telling myself. I received a somewhat encouraging letter from a man at the telecommunications department of the Smithsonian Institution. By “somewhat” I mean he wrote, “I’ll keep you on file.” But his projects sounded interesting to me, so I called to see if I could stop by and introduce myself when I was in town.

It went something like this: “Hi. This is Sarah Steinman. Mr. Jones and I have been conversing. Is he available?”

“He’ll write you.” Click.

Yes. I have days like that, too. But the secretary wasn’t telling the truth. I know that game. I called back.

“Hello. I think you misunderstood me. I’m thinking of doing a story on your new computer exhibit, and I’d like to speak with Mr. Jones.”

I spoke with him. I was able to do that because I had done my research and I knew they had a new computer exhibit, which I’m interested in. It gave me an in and gave us something to talk about.

I have also tried to make it easier for people to contact me locally in Washington, D.C., during my transition. I set up an electronic answering service. It makes it look as if I already have an office, and it costs only about $25 a month. Has anyone called? No. I’m the one making the calls right now.

As my Mom said when she called today, “You must have been sitting right on the phone.” I just happened to be near it, really. Then she said, “I’m not used to being able to give you a call during the day.” I never realized she hesitated to call me because I was at my corporate office. Lots of things are going to change from now on.