Comments on: Fifteen Things to Do to Make Jumping into Freelancing/Self-Employment Financially Successful

By: Greg at Start My Consulting Business

Greg at Start My Consulting Business — Mon, 20 Jun 2011 19:35:32 +0000

I don’t agree with requirement of having a huge nest egg before starting a consulting business. A large emergency fund is great, but saving for it typically takes a long time, sometimes months or years.

Instead, I think a better way is to start your consulting business on the side. That way, you can start small and build it up to a full-time job. As you do that, you’re making sure that there’s enough demand in your niche, and that your hourly rate and monthly revenue are enough to pay all your bills if and when you switch to full-time consulting.

I talk more about the side-hustle approach to starting a consulting business on my blog (http://www.StartMyConsultingBusiness.com).

In addition, I think that most consulting businesses don’t need a detailed business plan. Something short is typically sufficient, so long as you’ve identified your niche, how you’ll get clients, etc. Spending too much time on a business plan is time that you could better spend on actually starting your business and getting clients.

By: Thibaut Allender

Thibaut Allender — Mon, 29 Jun 2009 21:58:37 +0000

I really don’t agree on the “sell your car” advice. As a freelancer, I’ve got meetings, you have to go work here and there, you probably need a car even more than before.

Plus, don’t forget you can deduct your car as professional charges. At least this is the case in many countries. Maybe, on the contrary, it’s time to get a new shiny reliable one.

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Mon, 29 Jun 2009 02:48:59 +0000

Solid advice!

Many people should start building their businesses while still working for the man . . .

Learn to crawl, walk, and run . . . then make the leap.

By: April

April — Thu, 25 Jun 2009 23:47:04 +0000

I just started blogging about starting my own consulting business and a friend sent this post to me – SO HELPFUL! I’m linking to it in my blog today!

By: Tommy Kirt

Tommy Kirt — Thu, 25 Jun 2009 05:21:38 +0000

As a small business owner myself, I can thoroughly recommend the importance of creating a functional bank balance large enough to carry us through the quieter months. In fact, it should be the first priority of every new business.

Only ever pay yourself a minimal wage when starting, and let the bank balance accrue to create working capital which is sufficient to maintain your optimum wage throughout the quieter times.

By: Bill

Bill — Wed, 24 Jun 2009 22:37:02 +0000

Great writeup. There’s a lot in your post that I’m sure most start-up entrepreneurs don’t think of.

By: tammy

tammy — Wed, 24 Jun 2009 22:03:23 +0000

I didn’t start my business with a financial net and wish I would have.
I’ve also found staying small and nimble (I’m a solo PR gal) allows me to take advantage of trends and opportunities at the drop of a hat. I highly recommend learning to live on less if you’re in business for yourself. Frugality is the way I manage to stay afloat in good times and bad!

By: Prashanth

Prashanth — Wed, 24 Jun 2009 13:50:48 +0000

Excellent post! And a whole lot of good comments too! I would totally second deRuiter’s comment about having your pal try out what he loves doing on a part-time basis to build up that buffer you have so frequently mentioned in your post.

I have been thinking a lot about starting a photography business myself, however, the thought of generating income from a hobby is a little scary in itself. I don’t want to defeat the purpose of my hobby, which is to enjoy it. So my thoughts right now hinge on what you have exactly outlined in this post, i.e. to keep my day job while exploring the possibility of generating some income which might actually pay for the gear I buy.

Thanks for another excellent article Trent! And thank you for those commenting on these articles. I am really learning a lot just by reading these thoughtful and wonderful comments.

By: Mike

Mike — Wed, 24 Jun 2009 03:52:48 +0000

Hi Trent, good article! The more I work for other people, the more I want to work for myself. I was laid off in January, lost my house, and all my savings are gone. And with my house went the shop that I could’ve worked out of.
I’ve been at a new job for almost two months, and I like it, but I still want to work for myself. I bought a trailer because that was all I could afford, so no more shop, and all my tools (woodworking/carpentry) are in storage. I’m a manufacturing engineer and would like to start my own shop, but that will take a huge amount of start-up money, and just as much to keep going until things take off. Any advice or ideas?

By: Harry

Harry — Tue, 23 Jun 2009 16:49:00 +0000

Thanks, these are very good points.

One thing I might add is to get yourself more goal oriented. Without goals to focus your energy, you will easily get lost in myriad things to do everyday.

You may also want to try a web-based goal tracker, http://www.goalsontrack.com

By: Melody

Melody — Tue, 23 Jun 2009 14:22:43 +0000

Cyllya – Yes, yes yes! I’ve had that happen several times. And honestly, even if you do get payment and it clears you bank, it could be yanked-out a week to several weeks later if it does not clear the customer’s account after two attempts! So having a cushion can be essential.

Yes,Lars, good call! Even if you don’t have employees, if you have yourself setup as anything other than a sole proprietor you might find you need to pay yourself a ‘check’. Even if you are a sole proprietor, save for the taxes you need to pay on your income. If you don’t do well, maybe it won’t matter the first year-or-so, but saving that money somewhere (putting it into a deferred account before Dec. 31st, for example) will increase your savings and create a valuable habit.

Take it from me – we’ve made every single mistake imaginable with our business! It’s work, it’s hard but if you persevere, it can be very rewarding!

By: Rebecca

Rebecca — Tue, 23 Jun 2009 12:22:22 +0000

Wow. This hits home especially this morning as I start down the path to regain my real estate license. I’ve tried to be someone elses employee for two years and it just won’t work. Your article hit the nail on the head with just about everything. Get yourself a good accountant / tax preparer to save yourself money at the end of the year and to navigate around all the govt red tape come tax time. They’re worth their cost IMO. thank you for a terrific article!

By: Lars Hoel

Lars Hoel — Tue, 23 Jun 2009 12:18:34 +0000

Don’t forget taxes and FICA! As a self-employer, you have to pay the Social Security contribution your old boss used to. In effect, double FICA. You also must now file taxes quarterly … and be hit with interest and penalties if you procrastinate. One good rule of thumb: take one-third of every check you earn and earmark it for taxes and Social Security.

By: Clair Schwan of Sensible Small Business Ideas

Clair Schwan of Sensible Small Business Ideas — Tue, 23 Jun 2009 12:07:40 +0000

Having a good and realistic concept to start with is paramount. Many people jump into something that appeals to them, but not the marketplace, and they find this out after they have jumped in with both feet. That’s why a good business plan is essential.

Also, starting your own enterprise in parallel with current work activities is also important. This allows you to test the waters safely, although it can be a bit demanding on your time. Once you’ve landed some work that is steady and encouraging, then you can leave the “mother ship” and get out on your own.

The idea of a mentor is a good one. It’s also a good idea to serve as a manager of an enterprise first, then leave to manage your own enterprise that is similar or related. This makes you your own mentor and experience base. It also gives you a full appreciation for what it’s like to run the business.

Last but not least, it helps tremendously if you’re a comfortable part of the marketplace you’re going to serve. That familiarity brings confidence and potential customers. It makes you a known and gives you a nice network to deal with.

The bottom line is there is no such thing as “stacking the deck” too much in your favor, so do it and do it well. Your success depends on how well you plan and think things through.

Clair

By: Technology Slice

Technology Slice — Tue, 23 Jun 2009 11:28:19 +0000

I think living on less and creating a realistic budget are where people trip up the most.

By: Clark

Clark — Tue, 23 Jun 2009 10:36:49 +0000

In addition to an emergency fund, you need to maintain a retirement fund. There’s no guarantee that your business will take off – you need to make sure you’ll have a modicum of security in your old age no matter what happens.

Paul Gyford wrote an excellent beginner’s guide to freelancing that I still go back to from time to time. It goes into great detail about the multiple hats you’ll be expected to wear as a self-employed person. I would recommend it to anybody who’s thinking about striking out of their own.

http://www.gyford.com/phil/writing/2006/10/26/a_beginners_guid.php

By: deRuiter

deRuiter — Tue, 23 Jun 2009 10:31:26 +0000

Your friend who wants to quit his job to be a freelance caterer might consider starting that catering business part time to test the water. There’s no mention of a catering kitchen (a must for anyone catering for a living), people who would act as staff, doing food prep, serving, clean up, business plan, emergency fund, insurance. What if the business flops? In an economic downturn there’s less disposable income and more people who are slow to pay or do the job themselves to save money. A year of part time catering ought to help fatten your friend’s emergency fund and allow him / her to know if it’s possible to earn a living this way, or whether catering part time is a better plan.

By: Dave

Dave — Tue, 23 Jun 2009 09:43:35 +0000

…get the $$$, get the clients, get the plan…all advice that was good 50 years ago for starting a business and still valid today despite all the technology changes.

By: Viviana

Viviana — Tue, 23 Jun 2009 08:32:51 +0000

Great post! I also find time management something to contend with when you are a freelance worker at home. I sometimes find I can spend more time than I should on Twitter and the like, so I have put a timer on my computer to stop me wasting too much time.

By: Theresa

Theresa — Tue, 23 Jun 2009 08:05:01 +0000

I’ve been reading your blog for a while – I really like it when you do this kind of writing – drawing from your own experiences – helps to pr5ovide a framework for my own thinking around ideas that interest me