Time to connect with my target audience (since I’m also one of yours): Self-employed experts and solopreneurs 😊
Compared to employees or civil servants, self-employed experts and solopreneurs have rather completely different pain points and challenges.
When reading this article, you will recognise some pain points from your own experience for sure. Being a self-employed expert and solopreneur myself, I fully reasonate with your thoughts.
With this article, I want to help you addressing your 10 biggest struggles and providing actionable solutions – with a clear goal: investing for long-term financial stability and freedom.
Pain Points below are sorted by importance.
Pain Point N°1 (imho, the most important one): Retirement & Long-Term Planning
The bitter truth is: As a self-employed person you don’t receive a state pension. You have to take your old-age provision into your own hands.
But I personally think this should give you the necessary motivation. You are your own boss—but also your own retirement planner. Investing will give you the opportunity to build financial independence without having to rely on anyone else.
By investing wisely, you can retire on your own terms, not based on how many clients you can find at 65.
But wait a minute: “old-age provision”, “retirement”… I can well imagine that these terms might evoke negative associations and feelings in many people. That is completely understandable. That’s why I personally would prefer to rephrase the mindset focus in a positive sense. From retirement provision towards financial independence and freedom. For healthy financial circumstances during your active working life, and for a life in the moment.
The solution for those pain points is to build financial wealth and to create you own self-funded financial infrastructure that works to your advantage. In addition to your labour income, you create capital income.
For this purpose, you can compile a good mixture of accumulating/distributing ETFs, single stocks (e.g. undervalued stocks with or without dividend payments, growth stocks) or dividend paying REITs (Real Estate Investment Trusts).
Pain Point N°2: Irregular Income & Cash Flow Instability
Another bitter truth: Many self-employed experts and solopreneurs experience unstable income.
But also this pain point should no reason to despair. Instead, take this as a motivation. Your income may fluctuate, but your wealth doesn’t have to. With a well-structured investment portfolio, you can create passive income that works even when you’re not.
In this specific context, distributing ETFs, dividend stocks or REITs (Real Estate Investment Trusts) can provide steady capital income over time, balancing out the ups and downs of self-employment.
Thus, a focus on “passive” income can be a good solution (knowing that passive income is never “passive”, since it requires prior capital employed that has to be generated).
Pain Point N°3: Unpredictable Expenses & Financial Surprises
Let’s face the facts: Unexpected expenses create financial stress.
Unexpected expenses do happen, but they don’t have to derail your life. Your investments can serve as an effective financial buffer so you stay secure.
Also in this case, particular investments in distributing ETFs, dividend stocks or REITs will be a good safety net (while generating returns).
Additionally, please don’t forget to set up an emergency fund, for any urgent eventualities. Many investors keep that emergency fund in a bank account – which is fine. But you also could let your emergency fund grow wisely while keeping it accessible – for example via investing parts of your emergency fund in a Money Market ETF. ànoch naeher ausfuehren!!
Pain Point N°4: No Financial Safety Net (Emergency Fund)
A frightening circumstance: Many self-employed experts and solopreneurs have no emergency savings.
In this case, I would advise you to focus on raising your income (streams) in the first place. Once you successfully manage to generate a good flow of income, formulate a savings rate that suits best your current life circumstances, and keep raising your savings rate in the course of time.
Subsequently, you put parts of your generated money into a solid emergency fund on your bank account, and investment other parts of your money in some of the above-mentioned ETFs or stocks (depending on your risk profile).
Pain Point N°5: Over-Reliance on One Client or income stream
and
Pain Point N°6: Inconsistent Client Acquisition
Another bitter realisation: No steady stream of clients means unstable income. And losing a single client can destroy cash flow.
As I have mentioned in a previous article: Relying only on just one source of income is fatal for your own financial situation. You should always take a multi-track approach and build up several income streams from work (= a large number of clients) and capital (= investments in the above-mentioned types).
The primary goal here is diversification. Yes, it will of course take time and a lot of effort to build up several streams.
But you won’t have any nightmares as soon as you see how your individual income streams develop. Even if one source of income decreases or breaks away completely in the meantime, you will still have more than enough sources.
While you work on growing your business, let your investments provide stability in the background. With steady investment income, you don’t have to panic during slow business months.
Pain Point N°7: No Separation Between Business & Personal Finances
Time to deal with basic issues: Financial disorganization makes investing seem impossible. It’s essentially important to create a solid and robust financial infrastructure.
A solid investment plan starts with proper money management. You must learn how to allocate a portion of your earnings to investments – even with an unpredictable income.”
Setting up an automatic wealth-building system is key so that you don’t have to think about it every month.