I took the plunge and start my own consulting business 6 months ago (see my post summarizing my first full week as a freelancer:Three things I’ve learned on my first week as a freelancer ). It feels like it was only yesterday… time sure moves fast when you’re enjoying yourself, and it was sure a very interesting period for me. I will admit, it was not all fun, but I’ve learned so much, made lots of new connections and really feel I’ve made a significant progress in my career, that it was all worth it.
Through trial and error, and sometimes through good fortune of instinctively making the right decision, I’ve learned some valuable lessons I’m happy to share we you all:
- Choose your customers
this is a tricky one. As a first time freelancer it’s really tempting to take on any client that is willing to pay you. But in addition to making sure you are well compensated for your hard work and not stretching yourself too thin, you need to make sure you and clients see eye to eye. If not, you will constantly defending your work, or worse, apologizing. Two actionable tips I can provide here are to set the expectations up front, in writing, and be VERY SPECIFIC about what you are expected to deliver. The second is to trust your instincts. If your gut feeling is that a certain client will be a pain in the neck, he will probably be (telltale signs are clients who negotiate hard over your pay and insist on being hand-on throughout the process). It is better to forfeit an annoying customer in advanced than to untangle a contract halfway through.
- Price yourself right
a tricky issue. At first you will agree to dismal pay only to start rolling, but you must quickly adjust and resist “discounting” yourself in order to gain another customer. The reasons being that this client is most likely of the negative type (see first article), but more importantly, as a freelance consultant you are really selling yourself- your time and know-how. You cannot scale these things, so if you agree to charge less you are effectively eroding your own value, which, unlike in product sales, you cannot compensate by volume.
- Don’t over commit
at first, assessing how much time and effort a task will take is very difficult since you don’t have enough experience. But after you’ve gained sufficient experience, make sure you don’t load yourself too much. This serves 2 purposes: it makes sure you deliver the goods and that you don’t burn yourself- both of which are detrimental to long term business.
- Always be scouting
keep in mind that all your current, paying customer could be gone tomorrow, and actively look for new prospects. Some people estimate they spend 20% of their time looking for the next business. That may be too much, but make sure you divert at least some of your attention to scouting for new business. You can outsource this to a degree- ask others to offer your services to their friends and business associates, and ask your current customer if they would be willing to serve as a reference or even refer you to other companies in the field.
- Don’t forget that managing the business is part of the business
many people focus on deliver the professional output they are hired to deliver, and forget that they are, in fact, business owners. If you don’t negotiate, sign a contract, submit an invoice and make sure the money is wired to your bank you are effectively working for free. Do not compromise on any business aspect of your activity- submit all your invoices on time, check your bank account on a regular basis and make sure you plan ahead to maintain positive cash-flow. If someone fails to pay or delay a payment- stop all activities at once. Be polite yet determined- people need to realize you cannot be pushed around. This does become easier with time, and you learn to hedge yourself in advanced (take some of the money up front, insist on better payment terms and negotiate cheaper credit from your bank).
- Be frugal and agile
The beauty of starting an independent consulting business today is that you don’t need to invest much capital. All you need is a laptop, mobile phone, an accountant (which can be a virtual one) and you are good to go. Do not make any investments (like a new computer, latest iPhone model or car) until you are 100% sure you need it. I work from home, cafés, at the customers ‘offices, public library and other places and avoid expensive rent or fee for places like Wework. I use public transportation as much as possible and have not bought any piece of equipment. I’ve learnt to make do with much less than I had working in a corporate office, and happy I don’t have to pay and worry about long term lease and out of pocket expenses I may never be able to recuperate.
- Always deliver value- in the end, this is what matters. Clients won’t pay you (or would stop working with you) if they don’t feel they are getting their money’s worth. That does not mean they own your time, but it does mean they expect you to be responsive and attentive, deliver what you committed to deliver (and more, if possible), and help their business thrive. If you can deliver value in way they don’t expect- even better. I’m usually hired to help with marketing, but if I spot a business opportunity I try to help and make it happen, as I feel the client’s success would also mean my own. Clients sense this and are thankful for this.
- Remember the end game- Being a freelancer isn’t for everyone, and is pose challenges a full time employee might never encounter. So make sure you are doing it for the right reasons and occasionally ask yourself if this is still working for you. I decided to take this as a trial year and then decide if I want to continue this way, commit to a single customer or found my own company. I have not decided yet, but I feel at the end of this year I would have gained enough knowledge of my own preference and the industry to make the best decision.
And try to have fun! remember, you’ve started on your own because you wanted to rid yourself of pesky bosses and mundane 9-5 routine. This is your chance to test if this lifestyle works for you. Even though it’s not always easy, it sure is more exciting and motivating, so try to enjoy the ride!
I’ll check in at the end of the year, to let you all know how my first full year felt like.