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Going Solo for Fun or Profit?

Sara Horowitz has serious chops. Independent herself, she started Freelancer’s Union way back in 1995. Back then it was tougher as a freelancer. Through her great efforts, we’ve all benefited.

So when I saw she’d published a guide called “Freelancer’s Bible”, I was quick to grab a copy. And the book doesn’t disappoint. I wish this book had existed when I got my start way back when I first moved to NYC in 1996.

A budding freelancer

As a budding freelancer, you’ve got a ton of new skills to pickup, where to start? Flip to Part 1 and you’ll get a quick hitchhikers guide, with advice on setting up your office and organizing your time, to pitching to prospects, networking, and building a portfolio of different types of clients to keep your workflow steady. You also learn how to package your services, and the myriad ways to set fees from hourly, to project based and day rates to packages.

[quote]Network & market yourself, package & price services, communicate well and manage timelines, deliver, bill and finally get paid. Each step is outlined here in easy to read bullets, and helpful “Ask Sara” sections. Easy layout, and a pleasure to read.[/quote]

As I was reading these early chapters, I thought it would be nice to have a chapter on social media. Turns out I spoke too soon, as I flip through the pages, chapter 9 is all about marketing and social media, online tools to build your reputation and influence. Also I like that she appeals to the practical approach. For example Sara emphases that you let go of strategy, and experiment with different options, and methods. This is exactly what I’ve done over the years, and it’s the best way to find out what works for your personal style, as well as your industry. Trial and error!

I’ve written a guide on this topic myself. Take a look at my three part Guide to independent consulting 101.

Advice for Seasoned & Growing Operations

I’ve been working as a freelancer for 17 years now, and I’ve certainly learned a lot. So when I flip through the book, it confirms many of those lessons. But I also found material that I could use. For example chapter 7 Troubleshooting she has examples of situations where you and your client are out of sync, and offers “triple-a communication” solutions to those problems. This is the type of advice you’ll definitely need, as these scenarios are inevitable in freelance work. Also I found Chapter 10 Ways to Grow very helpful. Her list of “How do you know it’s time to grow” outlines some surprising and helpful thoughts on what to do if you have too much work. I’ve started dabbling with subcontracting and hiring additional help, so these chapters I’m finding very helpful.

Criticisms

There are a few things that I’d differ with Sara slightly on. Here are my thoughts.

Avoiding Contracts and Lawyers

I don’t get to heavy with lawyers and contracts. I know I know people say this is crazy, but over the years my method has served me well. It starts with a simple premise – I never intend to go to court. What do I mean? It costs too much, both in real dollars, time spent, but most of all stress. If you’ve ever been on jury duty you know what I mean.

With that, you pull the perceived safety net completely out from under yourself. So I am careful and cautious as a result. My *contracts* are simple emails, in which I outline what I’ll do, what the client will do, and who will do what when. I do all this in plain language, without any lawyer-ese. What I do get though is a confirmed *yes* in an email. This email thread is above and beyond verbal conversations and phone calls. It allows clarification down the line if you and the client have differences.

I also insist on a deposit of some kind. It doesn’t have to be a lot, but it is a hoop that you ask your client to jump through. This is very important. So-called dead beat clients will fail this test. If they are very very hesitant to provide a deposit, they are either uncomfortable with you, or are short on budget. Either case should be a red flag. Managing this relationship is very very important, when you plan never to rely on legal recourse for differences.

Who’s Played? Get paid!

On page 195 she talks about the Freelancer’s Union Client Scorecard, and “outing” clients who don’t pay. I personally think this is a bad road to go down. Why? Well there are a few reasons.

1. There are two sides to every coin

When a company hires an outside resource, they don’t have control over day-to-day operations, and overseeing what the person is doing. And yes, sadly there are many levels of work quality. So there can be differences. In my experience all those differences can and should be worked out. Communication is key and I think if you follow all of Sara’s advice on triple-A communication, you’ll avoid these situations. I do feel though that these ***

2. You can ask for an insurance deposit

Asking for a deposit from a new prospect is an important step. Without a past history of paying, and paying timely, this is a hoop you’re asking them to jump through. It proves that the budget exists, it proves that the team or director that hired you has communicated that to AP, and simply that you’re in the system. In my experience after the first check, things tend to go smoothly. If you’re experiencing trouble with this step, ask yourself – Are we on the same page? Where is the disconnect? Is the client confident you’ll deliver, and complete? Where is the hesitation?

3. It could hurt you in the end

Lastly these type of “outing” boards might hurt you in the end. If you gain a reputation for creating bad publicity or press for one firm, others may not want to work with you. I also think they are a distraction from communicating and resolving issues, and/or finding other work.

[quote]Apply all of Sara’s advice, especially those around Triple-A Communication, and you’ll likely do very well as a solopreneur. Let’s avoid becoming part of the 44% of freelancer’s who’ve reportedly had trouble getting paid![/quote]

Don’t undercharge for Services

Another point I’ll underline is charging for services. There is some talk in the book of wage wars, and 44% of freelancers not getting paid. In my experience being a freelancer is more like being another corporation. Corps fight with each other all the time. They have differences, and duke it out. It’s a bit dog eat dog out there. If you’re not prepared for that, you may be in for an uphill battle. Over the years I’ve certainly had differences with clients, but I’ve never not gotten paid. I *have* however turned away work, if I got a bad feeling about the client.

I wrote a critique of John Greathouse’s Beware the Consultant that might interest readers here. Take a look at my article Beware the Client.

That said you should be charging more than your fulltime brothers and sisters. Let’s give an example. Say your fulltime job would pay 75k/year. This theoretically is about $37.50/hr (40 hours x 50 weeks). However as a freelancer you must also pay for benefits like health insurance, retirement funds, downtime when you’re not billing, overhead of networking and meetings. You also have some additional taxes to pay. I my experience at minimum you should be charging roughly double this amount just to break even. If you’re not, it simply won’t make financial sense to stay freelancing. More likely you should be charging roughly 3x this base hourly amount. If you’re not, you may over time drift back towards fulltime employment.

I wrote another article on this topic Why do people leave consulting.

All of this should be part of educating the client. It’s often forgotten when firms look at outsourcing to get projects completed. So you should explain all of these costs clearly, and compare yourself to larger firms and agencies. These folks tend to be a *LOT* more expensive than a solopreneur.

All together now…

Sara’s bible is one every freelancer should have a copy of. It is the most complete book for a solo operator I’ve seen. Besides a few criticisms I have, it is a superb book and sure to be a reference you’ll turn to again and again.

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All Consulting CTO/CIO Scalability Startups

Why do people leave consulting?

Join 12,100 others and follow Sean Hull on twitter @hullsean.

As a long time freelancer, it’s a question that’s intrigued me for some time. I do have some theories…

First, definitions… I’m not talking about working for a large consulting firm. Although this role may be called “consultant”, my meaning is consultant as sole proprietor, entrepreneur, gun for hire or lone wolf.

1. Make more money in a fulltime role

I’ve met a lot of people who fall into this trap. They take a fulltime role simply because it pays better. That raises a lot of questions…

o Are you pricing right?

You could be pricing to high to get *enough* work. You may also be pricing too low to cover benefits, health insurance and so forth. Or perhaps you can’t sell to your rate. You can be smart skills-wise, but do you feel your clients pain? Are you good at being a businessman? Consistent?

o Can you sell, and put together an appealing proposal?

o Can you execute to the clients satisfaction?

o Can you followup consistently while accounts payable gets tied up in knots?

o Can you followup if your client executes past their spend?

Running a business is complicated, and a lot of expenses can be hard to juggle. You will find times when a client may have spent a little faster than their revenue, and have trouble finding money when the invoice arrives. Followup, patience and persistence is key.

Read: Why high availability is so very hard to deliver

Want more? We wrote an in depth 3 part guide to consulting.

2. Make a consistent paycheck in a fulltime position

o Are you networking enough?

If you take a longterm gig and get comfortable, your pipeline can dry up. And your pipeline is the key to your longterm strength, and regular business. You must get out there, and let people know about you, your services, and your availability.

If you don’t network regularly, post across the web, engage on social media channels, blog regularly and so forth, you’ll likely just land a series of 6-12 month fulltimeish gigs through recruiters or headshops.

Related: 5 ways to evaluate independent consultants

[quote]Being a freelancer or entrepreneur involves wearing many hats. Finding business involves networking & marketing. Delivering to their needs involves emotional intelligence. And actually getting paid on time is a whole artform in itself. Leave a good taste in their mouth and your reputation will spread quickly by word of mouth.[/quote]

o Do you really *LIKE* being an entrepreneur?

Are you consistent? Consulting is like running a marathon, if you burn out you may give up!

Have a large web property or application which is experiencing some growing pains? Take a look at how we do performance reviews. It may be just what you’re looking for.

Related: MySQL interview guide for managers and candidates alike

3. Do you like the lifestyle of larger corporate environments?

o Fulltime roles allow for much more jedi sword play. Maneuvering up the ranks involves relationship building as much as consulting, but with a more well defined ladder to climb.

o Sometimes you’ll find pass the buck and pointing fingers quite common.

o There are roles involving managing people and processes. These less often lend themselves to short term or situational consulting arrangements. If you lean towards those roles

Trying to hire top tech talent? Here’s our MySQL DBA hiring guide & interview questions

[quote]Working as a sole proprietor for a couple of decades has taught me to be very entrepreneurial. It is every bit about building a real-world startup[/quote]

4. Want to do more cutting edge & at the keyboard work

Consulting can and often does allow you to bump into the latest technologies, and get your feet wet with what cutting edge firms are doing. However in a fulltime role you can more completely immerse yourself in the technology, and those long term solutions.

Also: Why devops talent is in short supply

o You can take part in R&D – Google’s 20% projects, for example

o You can build hypothetical projects

o You can work in more idealistic environments, operations and even lectures & training

Though you can certainly do all of this as a freelancer, you have to build enough capital, and so forth to make it work.

Juggling job roles as a consultant isn’t easy. What a CTO must never do.

5. Don’t like running a small business

Consulting as a sole proprietor and staying in business for almost twenty years, I’ve learned that it is every bit about running a small business or startup.

A. Acquiring customers, networking, marketing
B. Understanding their needs and delivering to improve their position
C. Pricing in a your customers understand
D. Offering value to your customers, at a competitive price
E. Managing relationships so your brand or reputation precedes you
F. Making sure payments and invoicing isn’t a hurdle, followup
G. Pacing yourself like a marathon runner – keep doing what you’re doing right

Read this far? Get our scalable startups monthly newsletter. We cover these topics in detail, year in and year out.

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All Business Consulting Startups

Consulting essentials: Building your business

In the last two posts on how to build a successful consulting business I shared advice and tips on closing deals and managing and completing your engagements.

This post will look at where to focus your efforts in order to sustain your consulting business, and build skills.

Focus on your subject matter expertise

Being a subject matter expert takes years of education, and professional experience to build. It’s your most valuable asset. Build it, and use it. This is not to say there isn’t great value in being a generalist as I’ve emphasized in blog postings. But don’t get distracted trying to do things others can do better. Web-based newsletter managers can do it better than you can, professional invoicing solutions as well. Though you might be able to do a bit of HTML and graphic design, if that’s not your expertise, hire someone to do your website in WordPress. You’ll save time and money in the long run, and their professional experience will surely include a few surprising nuggets of value that you wouldn’t have known yourself.

Manage your business with online tools

There are a myriad of online tools to help you run your business better.

Google Analytics – Get insights on what parts of your site your customers find valuable. Learn to convert those visitors with downloads, newsletter signups and ebooks for sale.

Freshbooks, Zoho or Paymo – There are many online invoicing solutions, so best to evaluate them for your specific needs. The point is, using a solution will save you money in the end, and make you more professional in the process. It’ll help you track monthly & yearly, send reminders, and summarize things for you all in one place.

Mailchimp – Newsletter creation can’t get any more fun than with mailchimp. With endless video howtos, documents, and great support, plus templates for your newsletter that come in every shape and size, these guys have really thought of everything. What’s more the graphs and campaign reports will give you insight into what topics are popular, and what resonates with your audience.

Google Docs and Calendars allow you to share your schedule and work with a small team. So whether it’s communicating things with your clients, or your subcontractors, these tools are essential.

Dropbox – Another indispensable tool for collaboration, share documents easily across the web.

Don’t Be a Commodity

If your prospect is asking you for a resume, and comparing you to some outsourced resources provide, you’re not going to get very far as a consultant. Don’t be a generic resource that sits at the keyboard and churns out code.

What’s the alternative? Learn about business, talk to business stakeholders, listen to their concerns, and learn to speak their language. Use stories, and analogies. Reach across the table to speak in terms that everyone can understand. Your value is in symplifying complex technology.

Be Hungry & Don’t Give Up!

Being hungry means continuing to improve on your weaknesses, experimenting with different rates until you match the market demand, managing multiple projects and always networking widely. Spend less than you make and build up six to twelve months cushion. This will allow you much more freedom to take only the projects you want. Learn to pick and choose.

Further Reading…

There are lots of other areas you’ll lean about, running a successful consulting business. Here are a few:

  • managing cash flow
  • paying quarterly & yearly corp taxes
  • paying subcontractors
  • managing & accounting for expenses