Contract or Bust

Introduction

You’ve just had another row with your plonker boss and you have decided enough is enough. In 2007, you are going to become a contractor, and begin earning the big bucks you know you deserve, and having all the free time you want. There is no doubt that contracting can be a great lifestyle but there are other dimensions that you need to think of as well. What about having no regular paycheck? What happens when you don’t have work. Yep, it’s not quite as rosy as you think but nevertheless it can be brilliant!

Well, before you hand in your resignation here are some pointers to think about.
1. Don’t resign…yet
2. Watch and link
3. Be a business from Day 1
4. Customers and pricing

Don’t Resign…Yet

Unless you are very lucky, you can assume that it will take about 12-18 months before work begins rolling in effortlessly. That means that before you hand in your notice you need to have a supportive family and/or 12 months’ living expenses in the bank to ensure that life does not get unbearably stressful. Many contractors begin by doing nixers outside work time. (Note I said outside work time!). This allows for building up your contacts and seeing if there is actually enough customers to sustain a business.

Watch and Link

Observe what trends you see emerging around you. For example, in Ireland, with ever rising house prices., more and more people are investing in their gardens and adding extensions. This trend seems set to continue. The Internet is here to stay, so what are the implications for you. Check out websites like www.amarach.com to see what trends are emerging. Look at your business and see how you can link to one of these trends. You can learn a huge amount by simply observing…
Be a business from Day 1

Fake it until you make it. OK, at this stage you are only a baby in business terms. But act as if you have a proper business. Register your name with the Companies Registration Office) . (You can register on line at http://forms.cro.ie/) When you have done this, open a business bank account. Contact your local bank for details. Note that you must have a certificate of registration to open a business bank account. Check out the excellent Revenue Commissioners’ website (www.revenue.ie) for details of the forms you need to register. Get to grips with a computer and see if you can design some letterhead to use for invoices. Begin tracking expenditure and revenue by either using a simple spreadsheet or investing in an accounting package such as QuickBooks or Sage. Get a good accountant. He/she should be able to save you enough money to cover their fees.
Customers and pricing

If you enter the contracting world, you will no longer have a boss, you will now have many bosses: your customers. This will be particularly true in the beginning. So when you begin, how do you charge your for your product? In some cases, you may have little choice, you will simply be offered the going rate or whatever the company is offering similar suppliers. In other cases pricing may be up to you. A good idea would be to research similar services in other areas (people may be more likely to tell you if they feel you are not a potential competitor) and charge a little less. Remember at the beginning, people don’t know you and therefore probably need to have some sort of incentive to do business with you. You also need to build up your customer base as well.

How could you get customers? (You will never forget your first customer!) Advertise in local shops. Contact companies that you think might use your services. Get an interview with a local paper. Consider setting up a newsletter to everyone in your address book telling them about the service you are offering. But get your name out there! The best way to get customers is word of mouth and you get that sort of free advertising by doing a really good job and being a delight to work with! Can you do that??

So, let’s say you have found the work flowing in and you reckon it’s time to go for it. You have built up a financial reserve, enough to tide you over that first crucial year and it looks as though there is enough business on the horizon to keep you going. So you hand in your resignation and go for it! Here are some issues you need to consider once you get set up.

1. Create your own space
2. Build your own network
3. Manage your customers
4. Handle the money, honey

Create Your Own Space

You will probably begin by working at home and I do consider it really important that you create a work space to create a clear division between home and work, otherwise it’s very easy for the lines to get blurred. And if you think your plonker boss was a slave-driver wait until you begin working for yourself…(think self-employed and working for a lunatic!). So from the beginning create a clear work/home division. It is as important to block off time for doing non-work things as for doing work things.

Build Your Own Network

If you thrived on the social interaction of the office, it’s very important to begin creating links with other self-employed people. This is for a number of reasons. First of all, there is the solidarity of being with others who are self-employed and who understand what it’s like. Secondly, as you begin to understand what it is you do best, it’s very important that you have a network of people you can refer potential customers onto. For example, if you are a web designer and people ask you about training, (which you don’t do) you are adding great value to the customer relationship by giving them someone who can help them. Here are some places where you can begin building your network: your local Chamber of Commerce, Business Network International (www.bni-europe.com) Network (which is for women).

Manage Your Customers

One of the best things about being self-employed (particularly as a freelancer) is the warm glow that comes when you see a happy customer. This customer wants to work with you again and refers people to you. Ask any successful freelancer and they will tell you that their business has grown by word of mouth and by referrals. But what happens if you find that your customers are running your business? What do you do with the customers from Hell? You know the ones, they don’t pay, they don’t respect your time, skills or expertise. They are usually the ones you put in most effort with and get the least in return. When you start out as a freelancer, I do think the best policy is to work with as many people as possible. You need to build up your customer base. But if you find that these horrors are draining your energy, consider letting them go. You can simply tell them that you won’t have time and if possible, refer them onto someone else.

Handle the Money, Honey

When people say to me rather wistfully that it must be great to be your own boss, one of the things I always point out to them is that unless I work I don’t get paid. (Now there ways around that, but that’s for another article!). And secondly, that it’s not for everyone. Financially, prepare for feasts, famines and overdrafts! There will be no more steady cheque at the end of the month. Instead you will have months when you realize that you have never actually had this amount of money in your account before and other months when you realize that you when you write this cheque that you will be exceeding your overdraft again. A way around that is to set up a separate (not easy to get to!) deposit account and set up a standing order into this both for savings and for those nasty lump sum payments like car tax and insurance.

Conclusion

It can be a real roller coaster to be self-employed but with thoughtful planning and building of networks and reserves it can also be one of the best things you will ever do! Enjoy!


Anne Walsh is a life coach (contractor in a former life!) based in Galway Ireland. She works with held back high flyers who want to give themselves permission to excel and in 2001 she was a finalist in the Galway Young Entrepreneur of the year competition. She can be contacted at anne@annewalshcoach.com. You can also check out her website at www.annewalshcoach.com



Contract or Bust - To learn more about this author, visit Anne Walsh's Website.

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