Once you have reached a certain level in your professional career it might be a good option to become a freelancer or consultant. Working in this way offers higher pay, the flexibility to work when you want to, and the freedom from having to work for a boss. Professionals that have taken this step say they would never return to working for a boss and report higher levels of job satisfaction.
The main benefit is that you can work as much or as little as you want and reap the benefits of your skills and expertise. It gives you the option of working from home, resulting in a better work-life balance, and means you can limit your travel and meet with clients on your terms. The use of freelancers and independent consultants is also becoming popular with businesses giving them the advantage of being able to tap expertise as they require it without the expense of a dedicated employee.
Following are some issues you’ll need to consider when you decide to become a freelancer or consultant.
Decide on Your Industry Niche
As a freelancer or consultant, you’ll need to be able to provide a service that is in demand or be able to solve a particular problem for your clients. This means that you’ll need several years of industry experience so that you know their needs and make solid recommendations based on your experience. Often consultants identify a specific niche that is a pain point for clients and focus on providing a tailored solution.
Know Your Worth
There are many ways to price the services you provide: an hourly rate, by project, by cost savings achieved, and so on. The most important aspect of pricing your services is to know how much they are worth to a business. An hourly rate might be fine when starting but can be limiting when your efforts can result in huge cost savings of which you may want to charge a percentage, for example. The best approach is to price your work based on the value that it brings to businesses you collaborate with.
Decide on Your Business Format
Becoming a consultant or freelancer means you have freedom on how you want to work with clients. It is a good idea to establish this right from the start and decide, for example, whether you want to work on-site with clients, offer one-on-one consulting, provide group training or a coaching service or sell an online program. This will determine the resources you’ll need and the approach you’ll take to providing your services.
Have Administration in Place
Organizing administrative functions, such as email, invoicing, agreements, and the like, in advance will save you time in the long run. Though it may seem boring and insignificant having these functions in place will allow your business to operate much more smoothly than otherwise. In some cases, you may want to consider using project management software to help track multiple clients, deadlines, and invoices and even seek expert help if needed. This is a particular risk if you become successful and are juggling many clients and projects where some administrative tasks can fall through the cracks leading to loss of business or unhappy clients.
Write a Business Plan
Success in running a small business doesn’t just happen by chance. You’ll need to decide how much to charge for your services and get this right – too much and you won’t get clients, too little and you’ll be losing money or selling yourself short. The best way to avoid this is to write and follow a business plan that sets out the following:
- Who are my customers and what industry do they operate in?
- What services do they require or problems they need solutions to?
- How much will I charge for my services?
- Who are the competitors in this space?
- What is my unique selling point or how do I offer value?
- How will I market my services?
- What are my business costs?
- What professional indemnity will I need?
Protect Yourself If Things Go Wrong
Freelancers and consultants can get sued by unhappy clients just like anybody else. Over 40% of small business owners have had to deal with lawsuits or have been threatened with legal action. Even if you provide the right advice and are not negligent, a client could potentially accuse you simply because you made an honest mistake leading to losses or they are unhappy with your work (sometimes, sadly, because they don’t want to pay). When something goes wrong and the client blames you for it, fairly or unfairly, you could be liable for damages or incur expensive legal fees in defending yourself.
This is why it is crucial to have appropriate insurance in place before they start their business. Publicliabilityaustralia.com.au wrote an article talking about the most important insurance a sole trader should have – public liability insurance. It’s also advisable to get general business insurance and professional indemnity insurance. Some providers offer packages that include all three, but the bottom line is that you need to protect yourself from legal issues since they can be potentially catastrophic for you if you are found personally liable.
