Self-employed persons or autónomos as we are accustomed to say here, are plagued with uncertainties and unpredictabilities that most would find hard to understand. Gone are the days of working a 9 to 5 job and awaiting a well earned salary that is paid at the end of the month like clockwork. No, for autónomos it’s a whole different ballgame but what are their main concerns and how can they be overcome? Well, this is exactly what this article is all about so sit back on your sun lounger and take note.
Finance: Since the recession, banks have learned caution when lending money, so much so, the well has practically dried up and the self-employed have a raw deal as in the banks’ eyes, they offer less security with repayment. Applicants are expected to provide quarterly tax returns, annual summaries and personal income tax returns as proof of income and to convince them not only that the money will be well spent but that it will be returned on time, plus interest of course so this isn’t a viable option for start ups. Where many fall short is by deliberately under declaring their business tax to pay less each quarter but this is a double-edged sword because it will affect you negatively if you want to secure a loan and you may be required to produce a guarantor. ICO is a an alternative as a state-owned bank offering investment and liquid assets to your business, check www.ico.es in English.
Debtors: You feel great because you have had a great day at work and have secured a new client but none of that means anything if at the end of it, that “fantastic” client who seemed a god-send at the time does not pay you for the services provided which means you’ll spend the next few weeks or heaven forbid, months, chasing your money. As demoralizing as it is, there are ways to ensure payment. For example, collect payment up-front or simultaneously with the service provided or if it is a larger project, request a 50% down payment on your services and the balance upon completion, however, if there are materials involved, the client should pay the full cost of these up-front as well. At least this way, the risk is minimized and the client is less likely to default on the rest of your fee. Another way is to approach your clients with confidence in your services, you’ll find people are more willing to follow your company policies. Have your clients sign a contract or a brief document outlining the services, payment method, time-scale and any other important information to show they accept your terms and conditions so if they do not fulfill the contract, you will stand a better chance in court of recovering your money. What people fail to realize is that default on payment has a knock-on effect; if the business owner does not get paid, they may not be able to pay others and so on.
Submerged or “black” economy: This situation is a staple in Spain since before the days of Franco! A business costs money to run legally especially if there are employees involved so when your unregistered competition operates under the table, they can afford to undercut your prices making you feel cheated. Worse still, some of these people somehow manage to con the system into paying them unemployment benefits too! On a positive note, by operating legally, you provide your customers with guarantees and a level of professionalism that these cowboy outfits are unable to do, giving you the upper hand. Not only that but you can go to bed at night without worrying about unexpected visits from tourist, tax, work or health inspectors as well as being safe in the knowledge that your hard work is making an important contribution to getting this country back on track financially. Remember, autonómos are the backbone of Spain’s economy and you are part of that. Never feel the need to lower your fees to compete with others especially those who work illegally as this will never work. Only you know what income you need to survive and cover all your business expenses plus, if you do good work and establish an excellent reputation, your customers will know their money is well spent.
Balancing work and home life: Keeping up with work, your home, your partner, your children and downtime… That was a mouthful. How much time can you dedicate to each factor of your life without going stir crazy? Even though as self-employed there are no set working hours as an employee, it is useful to set some boundaries so you don’t work at all hours. It is a balancing act but with some thought and discipline, it can be done. Other countries in Europe have changed their business model to work less hours a day ensuring those hours are maximized and at least 95% productive, so why not follow suit? No more 12 hour days to keep on top of things and try using a few of the millions of apps out there to help organize yourself better but don’t forget to schedule in some well earned holiday time too!
The future: Autónomos do not have the “luxury” to take time off when they fall ill because of the “no work, no pay” motto so the majority battle on and work even when their body is screaming at them to take a couple of days off resting on the sofa, watching bad daytime TV and sipping on hot lemon tea but no such luck. Another disturbing point at the back of their minds is what will happen to them when they are of pension age. Will all their years of contributing to Social Security compensate? Since these two factors are too extensive to compress into a small paragraph, I will write articles in the next issues to cover them properly.
This article may have raised what seem to be negatives but the truth is being self-employed is one of the most gratifying experiences you can have. Getting a business idea in your head, doing almost the impossible to get it off the ground and then watching it grow is priceless so please don’t feel deterred from making your dream of working for yourself a reality.