I have been out on my own in business for about five years now as a freelance trainer, consultant and coach in the Further Education sector of the UK and the sole trader life is an addictive blend of excitement, creativity, fear, freedom and pressure. You have immense and liberating scope to make choices about your work, but the sense of accountability and risk can be sobering. If your business model is faulty, if you don’t meet client needs, if you don’t have a long-term communications strategy, you can find yourself under great strain, both financially and psychologically. Having said all of that, the opportunities, variety and personal development that can come from setting up your own business make it a hugely exciting adventure. So, how can you put yourself in the best position for creating a successful business?
- Know your target audience and what you can bring to them.
It sounds trite but it is a fundamental part of the initial business modelling. You need to know who you are aiming to work with, what they are interested in or worried about and also what they are looking for. As a freelancer setting up a business, I focused it on a sector where I had worked for over twenty years, where I had an in-depth understanding of issues, concerns and needs. This really helps me to connect with clients as an insider; it means I can pitch language, style and content much more effectively than I could in an unfamiliar setting; it gives me confidence that I can bring relevant support to their work as I really understand many of the constraints and ways of working in that context. I just wouldn’t connect so effectively with a load of bankers!
It can also be helpful to refine your thinking about exactly what you can offer to the target audience. This involves analysing your own experience, expertise, skills and resources so that you see where you have the most to bring to clients and making that as clear and precise as you can in your mind and business model. For me, I look to match my areas of strength and experience with current concerns/hot topics in the sector, so that there is a natural fit in the work. Freelance work requires a huge amount of self-motivation and application, so it is much easier to enjoy the work when you have interest, passion and engagement with it.
When freelancers start out they can feel under pressure to offer all things to all people in order to simply get work. The danger here is not providing a great service for everyone you work with because you are doing work for which you are not truly suited. I don’t think this is a positive professional behaviour. It is part of forming your freelance identity to work out what you are going to be and feel strong and confident and competent in that, directing your energy towards securing related work. There is something about professional ethics and personal integrity in this.
Being clear about what you are going to offer in business also means knowing what you won’t offer. This means that you sometimes have to have the strength and bravery to say no to business that you are not best suited for. I regularly turn down consultancy work that is about preparing colleges in England for inspection by Ofsted or training work on developing learners’ maths skills. These are topics where I have little expertise, passion or motivation to bring to the table, so I take a deep breath and say no thank you. This is a hard step when you are starting out, but I think it protects your reputation and also shows that you have professional values in not just accepting any work irrespective of your competence/confidence to deliver it.
- Work out the practical details of your business model.
Fact-finding and networking can really help you to identify the best way to shape your business into a workable financial model. You need to know these kinds of details, as opposed to guess at them:
- How does contracting work in your sector? What kind of timeframes are involved between negotiations, contracting and payments? On average for me, it can be 4-6 months from an initial conversation with a client before I deliver work for them and get paid. This means that in the start-up phase, I needed to have a buffer of cash and a structured plan to get work into my pipeline.
- How do payment structures work? For example, in my sector in England, there is almost never a payment for work in a college at the point of contracting – the training/consultancy is delivered and then the full payment is made up to two months after the delivery date. This has obvious implications for monthly cash flow!
- How does the amount of freelance work fluctuate in your field? In my world, there are lulls in work due to college holidays (6 weeks in the summer, 2 weeks at Xmas and 2 weeks at Easter) and there are spikes when everyone wants work done (early in Autumn term, July CPD weeks) Being aware of this rhythm means I can plan my materials design, communications and administration time effectively.
- How much do you charge for your services? I think this is a combination of looking at charging scales in your market to get a sense of what is appropriate and working out a rate scale that makes the business model workable over a year. All the freelancers I know talk about feast and famine, with either too much work coming in or too little, so an unpredictable income is inevitably part of the lifestyle. However, bad business choices can make your freelance work unsustainable, e.g. repeatedly accepting tiny amounts of work that disrupt a series of working days and prevent you from being able to accept a full day of work if it is offered. The work has to make sense for you as well as for the client.
- How are you going to keep business records?
In England, the national tax office (HMRC) provides lots of helpful advice and guidance, to help you log all the relevant information in the right level of detail. I have Excel sheets that show me work that has been agreed, work that has been invoiced and work that has been paid, so that I have a great helicopter view of the situation at any time. If you are not organized with your personal paperwork and don’t have an eye for detail, you may need to build your skills with this side of the business or see if you can find someone for support.
It can be challenging to keep on top of the administrative side of the business when you are busy out with clients. It helps me to plan administration slots into my diary and use the services of an accountant on occasion during the financial year for specific tasks, e.g. VAT returns and yearly self-assessment return. Other trainers/coaches find an administrator or a business manager on a more permanent basis once their business is established.
- Beware expensive outlay on marketing and communications but have a marketing/communications plan
In the start-up phase of the business, I think you have to be so cautious and thoughtful about spending on IT, marketing and communications. Free marketing can come from:
- Using your contacts network
- Attending business networking events and conferences
- Presenting at events
- Writing articles for journals or professional publications
- Case studies and testimonials that you may have gathered about your work
- Using social media platforms such as Twitter
- Using business networking platforms such as LinkedIn
- Creating your website for free – I find Word Press gives me all the functionality I currently need with no costs at all, for a simple business like mine
If you are going to invest cash at this stage, it helps to be really clear on benefits and how that investment will help you generate income over time. Careful research and exploring a range of options should enable informed choices.
You and your business need to be visible to the client group you want to work with, so it is worth planning out how to get in front of those people, e.g. Is this via a pitching process? Is it by using contacts to recommend you? Is it by harnessing social media? Is this through a publicity mailing?
With some preparation around these areas, the initial phases of the business start-up stands more chance of being successful, I think. All the best with that exciting journey if you are about to make it!