How to take a pay cut and become your own boss

Anna Brech

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Top tips on how to take a pay cut and become self-employed – as shared by career experts and entrepreneurs who rolled the dice

It’s all very well daydreaming, but what does it take to make freelance life a reality?

First up, you need a healthy serving of courage – enough to stomach that initial stall in salary.

“I never thought I’d be someone to push myself so far out of my comfort zone,” says Kirsty Reid, 33, who took a £20,000 pay cut from PR to retrain as a purpose coach.

“It was obviously scary and I was worried about the future. But I knew if I didn’t try, I’d never know.”

Read more: Why to take a pay cut and become your own boss

Secondly, it’s worth bearing in mind that this “face the fear” moment is probably the biggest obstacle there is in the process.

By seeing it through, you’ll unearth a resilience that will fast become your strongest asset. Rather than looking back, you’ll likely wonder what took you so long.

“Ninety percent of those I interviewed said their major regret is that they didn’t figure out sooner what they wanted from their career,” confirms author Lucia Knight, whose book X Change: How to Torch your Work Treadmill charts the stories of dozens of midlifers following a major career change.

Here’s how to go about taking a pay cut as you move to the big bold world of the self-employed (or check out more reasons why to make the leap):

Listen to your instincts and take advantage of unexpected events

We tend to think of going freelance as a very planned move. But more often than not, it comes about as the result of an instinct that’s kicked into gear by some kind of change. Burnout is a typical example.

“Many of the people I interviewed experienced mental or physical breakdowns – a kind of forced pause – before they listened and took control of their careers again,” says Lucia.

Nicky Guymer of Someday Studio quit her £65,000-a-year job as a retail buyer to retrain as an interior stylist, aged 34. At the time, those around her perceived her to be successful, because of her “stable career, with good prospects”.

Yet, “during a year-long job I’d lost two stone of weight and had suffered from such extreme bouts of insomnia I’d been prescribed drugs for anxiety,” recalls Nicky.

Read more: Tackling burnout with an outback adventure

There are “a lot of warning signs” before you hit full burnout, says Dr Elena Touroni, consultant psychologist and co-founder of London’s Chelsea Psychology Clinic. “Fatigue should serve as a big red flag. Feeling tired most days or not having the energy levels you once did. Problems sleeping is another one.”

These symptoms are deeply unpleasant – but they can also be your cue for a much-needed shift of direction. So too is a forced circumstance such as redundancy.

“Although being made redundant was a blow, it was one of the best things that could have happened to me. It gave me the kick up the arse to move out of a role I’d been in for a long time,” says Kirsty.

If you can find the momentum to pivot on these seemingly “bad” setbacks, the advantages of finding that silver lining can be huge. And often, they’ll play to a gut feeling you previously lacked the conviction to act on.

After becoming increasingly dissatisfied in her full-time job, communications specialist Emma Heesom quit aged 30 and set up her own business, the You Say Agency

“I was yearning to do my own thing,” she says. “I started thinking of business names at 2am, friends kept saying do it. So I spoke to the bank of mum and dad and they agreed to cover mortgage and bills for three months if I needed it. I never did.”

Weigh up your finances and be prepared to live life differently

As Emma indicates, any decision to take a pay cut first demands a clear-headed assessment of where you’re at financially – and how this fits with where you want to be.

“Work out your minimum monthly spend exactly. Then save as much as you can to give you the freedom to figure out how do work that you might love more,” advises Lucia. “Talk to individuals who have made similar changes and learn from their mistakes.”

Business mentor and author Ruth Kudzi agrees. “Look at how much money you need as a minimum viable income, and consider if the pay cut meets these needs in the short term and long term,” she says. “Remember to think about the bigger picture. What you would gain from taking the pay cut, and does this outweigh what you would lose?”

Some level of sacrifice is inevitable, and it’s sensible to be realistic about how this will impact your lifestyle.

Read more: The big myth about changing careers in your 40s

“I can’t lie, I have really noticed the £20k a year pay cut,” says Kirsty. “However, when I was earning more, I was eating out and wasting so much money on unnecessary things that didn’t bring me happiness.

“As tedious as it can be, go through your bank statements and expenditures. What can you cut down on? That subscription you completely forgot about – get rid! Could you swap that swanky gym membership for a cheaper alternative that still has the same equipment and classes, but without the hefty monthly fee?”

This process is financial, but it’s also emotional: you need to “be ready to live life a little differently”, Kirsty says. “You will need to cutback, but consider what’s really important to you. You still have at least another 30 years of your working life to go. Do something that makes you want to get out of bed in the morning.”

Mould your career to adapt to your skills and needs

The best thing about becoming your own boss is the ability to work exactly how you want. So make sure you take full advantage of that freedom as you make the transition.

Begin by assessing the current landscape, and weigh up how your skills fit within that.

“As more and more people were becoming self-employed and trying to remain agile after the 2008 recession, I could see that the demand for virtual assistance services would increase,” says Rebecca Newenham who quit her job as a buyer for retail giants Superdrug and Sainsburys in her early 30s to found a virtual assistant company, Get Ahead VA.

“I also knew that my start-up costs would be low (just a second-hand laptop and a one-day training course) so I reassured myself that I would be able to turn a profit fairly quickly.”

“Figure out your ‘superpowers’ and design your future around those,” adds Lucia. 

Read more: Overloaded? Try an unstructured day of play

Make room, too, for the freelance benefits you’ve always craved.

“Take the best bits of employed life and make them your own, “says Emma. “I share an office space so I have people to chat to, go to lunch with and ask tax advice from.

“Remember why you did it. If it was so you could take Friday off, or learn a skill, you have to learn to say no.”

“Really consider why you’re taking a pay cut,” agrees Rebecca. “What are you trying to achieve and when? Put these on the wall so that you can look at them if times get tough as a reminder.”

This may involve a full shake-up of your working structure. For example, you could pursue a portfolio career, with multiple revenue streams.

“I now own a third of Circle of Spears Productions, Devon’s only independent audiobook production house,” says Mark Norman, who took voluntary redundancy from his management role at the University of Exeter four years ago, in his mid-40s.

“I also narrate freelance for Audible and, because creative work is variable, I work part-time for the library service (just to ensure that my family and I can eat!)”

That leap of faith is the hardest bit – everything else comes from that

Swimmers leaping into a lake

Seen from the outside, going freelance is a career path that’s rife with risk and uncertainty.

But invariably, people find the toughest part is that initial leap into the unknown. If you can face down that fear, you’ll set off a momentum that will just keep building.

Because even if you pivot or change direction from there, you’ll prove to yourself that you have the tools to survive and adapt.

“Almost without fail, the people I interviewed learned that they will never need to make one giant leap of faith again,” says Lucia. “They realise that a career where they are in charge means that they have to weave and dance more than in their old worlds. Rather than having a static plan, they are always assessing what’s working and what isn’t, and making changes along the way.”

Read more: How to make yourself fearless, in five key steps

Kirsty says fear of failure is one of the biggest obstacles her clients come up against, when considering a freelance move. But it’s also the very same force that propels them forward.

“This fear keeps them in their comfort zone, where they feel safe,” she says. “But once they start to understand that the world won’t fall apart if they fall flat on their face, then the changes they make give them the biggest buzz.”

If it doesn’t work out, you’ll handle it. As Emma points out, “You can always jump back to the 9-5”. But it’s likely that, just in taking that first giant leap of faith, you’ll conjure up enough verve and tenacity not to look back.

Remember, you may well make up the difference on pay

Over three quarters of the people I interviewed about a career change had taken pay cuts initially,” says Lucia. “But many earned at least as much as they used to within a couple of years and some earned much, much more.”

Additionally, she says, the pay-offs come “with work that matters more to them, or allows them to make room for life priorities”.

“Working flexibly shouldn’t have to mean any sacrifice of pay but in some cases, it still does,” adds Rebecca. “I think this will continue to change over time as flexible working becomes more mainstream.”

Read more: How to take a career break without quitting your job

Some people will always be constrained by financial commitments but for those who can make the choice, she says, a raft of personal and emotional benefits await.

“You only have one shot at life – do it,” Mark urges anyone considering a move to self-employment. “There is no reason not to, unless money is your be all and end all. And that would be a sad state of affairs.”

In the end, taking a pay cut to go freelance is a gamble. And like all gambles, you need to roll the dice first to see what happens.

Images: Shutterstock, Klemen Vrankar, Calum MacAulay and SwapnIl Dwivedi on Unsplash

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