Becoming an independent contractor may sound great, but perhaps you don’t feel ready just quite yet. Being confident in your decision is important, and luckily there’s a lot you can do to prepare for self-employment so you feel completely informed in your choice. Building a strong networking base, preparing financially, and establishing the unique services you bring to the table will help ensure you begin your independent career ahead of the game. Follow these five steps to set yourself up for success. 1. Make Sure Independent Consulting Really is Right for You
Self-employment offers many perks including the ability to be your own boss, control your own schedule, and do what you love. However, successfully managing your own business venture does require dedication, passion, and hard work. Make sure that independent consulting is the right path for you before deciding how to proceed and prepare. 2. Build Your Network Networking to grow your business is one of the most effective ways to get a pipeline of clients in place before you start work. Honing both your networking and skills as well as your elevator pitch is helpful to build confidence, practice speaking about your services, and get advice from other industry professionals. Consider attending networking events in your industry to learn about the latest trends and to learn about what other consultants are doing and offering. Finding a mentor is another way to obtain valuable business-related guidance and advice. A mentor can be especially valuable when you’re first starting out because they can speak from experience, and provide recommendations on the steps you need to take to start your business. 3. Show off Your Skills on Social Media Creating a social media presence is helpful to stay in touch with your network, establish yourself as a trusted authority within your industry, and market your future business. Use LinkedIn as a virtual resume and as a platform to network with people you are interested in working with. Twitter and Facebook can also be used to maintain professional relationships and share interesting articles. Blogging is another way to showcase your knowledge. Starting a blog may be helpful to practice writing about topics you are considering centering your services around. Blogs can be used to educate and engage a target audience and can even lead to connections and future work. 4. Develop Your Personal Brand The public will perceive your future business through your personal brand, so developing a strong brand is an essential part to preparing to become self-employed. From your brand, future clients should be able to quickly and easily ascertain exactly what you do and what services you offer. When building your personal brand, think about what will make your business unique, and what type of messaging might be helpful to showcase those offerings. Building a brand goes hand-in-hand with marketing and developing a social media presence, so be sure to incorporate your branding and messaging across all social media channels. 5. Prepare Your Finances If or when you decided to transition to the independent workforce, you’ll want to make sure you’re in a good financial position to do so. Saving now can help you be prepared for when you start your business. It’s a good idea to have a cushion of several months’ income so when you do start working you have some time to secure future projects. Thinking about what your bill rate might be before you start work can help you set financial goals and expectations. Your bill rate is the foundation on which you’ll build your business, so determining this amount ahead of time will provide peace of mind. With these resources in hand, you’re well on your way to becoming a successful independent consultant. If you have any additional questions such as how to structure your business, how to handle tax withholding, or what retirement and health benefit options look like, MBO Partners is a great resource. We have answers, so don’t hesitate to reach out to us with your questions!
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Tracking and billing time is an inevitable task for independent consultants. Whatever billing method you choose, you want to present a reputable, professional invoice to your clients.
Billing Policy Establish billing policies and procedures for your solo business. Your billing policy should include: rates, billing method (paper or electronic), timing of invoicing (weekly, monthly, at project end), time to pay, preferred payment method, and late fees. Having a standardized set of rules will simplify your billing and help as you evaluate client contracts. However, even with an established policy some client contracts may differ. In addition to having your own, it is critical to understand your clients' billing policies. Make sure that policies are outlined up front so that you can present a bill that is compliant. For example, some clients may require a paper invoice and a longer time to pay than your standard billing terms. Knowing that in advance, will allow you to make the appropriate adjustments or negotiate the terms with your client before you bill. Client Friendly Process Remember your audience when preparing invoice. You may or may not know the client contact reviewing your bills. In some cases there may be multiple levels of review or invoices may be processed by a third party vendor. Avoid the use of industry jargon or abbreviations in your descriptions so that anyone reviewing will understand what is being billed. Track Your Time Even if you bill by the project or month, it is always a good idea to keep a record of time spent on client tasks. As a best practice always record your time immediately. This will ensure that your records are both up to date and accurate. You can track time using time and billing software, apps for your smartphone or even a simple notebook. The Invoice The detail of your invoice may vary by industry or client requirements but it is important to include:
To avoid billing conflicts, always have a signed agreement on file that articulates the billing process and terms. In some countries you are required to use the words "Tax Invoice." Be sure to confirm invoicing requirements with your local tax authority. Billing Methods When it comes to preparing professional invoices, you have a number of options. You can create a simple invoice template using Word or Excel. This is an easy, low cost process. Alternatively you can use time and billing software such as QuickBooks or cloud-based services such as Freshbooks or even PayPal to prepare and send client invoices. Many programs also offer apps that allow you to manage billing and payment from your mobile device. Banks and credit card companies today also offer invoicing services for their small business customers. Whether you choose to bill by paper or electronically, remember that every client touch point reflects your brand - including your invoices. Always present invoices that are accurate, timely and free of errors. Tracking and billing time is an inevitable task for independent consultants. Whatever billing method you choose, you want to present a reputable, professional invoice to your clients.
Billing Policy Establish billing policies and procedures for your solo business. Your billing policy should include: rates, billing method (paper or electronic), timing of invoicing (weekly, monthly, at project end), time to pay, preferred payment method, and late fees. Having a standardized set of rules will simplify your billing and help as you evaluate client contracts. However, even with an established policy some client contracts may differ. In addition to having your own, it is critical to understand your clients' billing policies. Make sure that policies are outlined up front so that you can present a bill that is compliant. For example, some clients may require a paper invoice and a longer time to pay than your standard billing terms. Knowing that in advance, will allow you to make the appropriate adjustments or negotiate the terms with your client before you bill. Client Friendly Process Remember your audience when preparing invoice. You may or may not know the client contact reviewing your bills. In some cases there may be multiple levels of review or invoices may be processed by a third party vendor. Avoid the use of industry jargon or abbreviations in your descriptions so that anyone reviewing will understand what is being billed. Track Your Time Even if you bill by the project or month, it is always a good idea to keep a record of time spent on client tasks. As a best practice always record your time immediately. This will ensure that your records are both up to date and accurate. You can track time using time and billing software, apps for your smartphone or even a simple notebook. The Invoice The detail of your invoice may vary by industry or client requirements but it is important to include:
To avoid billing conflicts, always have a signed agreement on file that articulates the billing process and terms. In some countries you are required to use the words "Tax Invoice." Be sure to confirm invoicing requirements with your local tax authority. Billing Methods When it comes to preparing professional invoices, you have a number of options. You can create a simple invoice template using Word or Excel. This is an easy, low cost process. Alternatively you can use time and billing software such as QuickBooks or cloud-based services such as Freshbooks or even PayPal to prepare and send client invoices. Many programs also offer apps that allow you to manage billing and payment from your mobile device. Banks and credit card companies today also offer invoicing services for their small business customers. Whether you choose to bill by paper or electronically, remember that every client touch point reflects your brand - including your invoices. Always present invoices that are accurate, timely and free of errors. Summary As a business-of-one, you will incur fixed costs that cannot be billed back to a client. You also may need to take care of expenses that used to be the role of an employer, like health care expenses, retirement funds, etc. Each of these fixed or variable costs drain income, and managing them well can lead to opportunities to write off expenses against your income bringing more money back into your pocket. ** Properly managing business expenses is not just good business, but also a good income strategy for a solo professional. As a business-of-one, you will incur fixed costs that cannot be billed back to a client. You also may need to take care of expenses that used to be the role of an employer, like health care expenses, retirement funds, etc. Each of these fixed or variable costs drain income, and managing them well can lead to opportunities to write off expenses against your income bringing more money back into your pocket. Let's talk about the categories of expenses you should make sure you are accounting for. These are all areas you should make sure you are keeping records and receipts for either through a business process outsourcing partner like MBO, or via your own accounting strategy. Coming Right Back At You: Costs of Communications:
Pay Yourself Back for Learning On The Job: Tuition and Training Dollars
Put Those Meals and Entertainment On the Books: Business Development Dollars
Promotion Pays: Marketing and Advertising Expenses
Taking the Hit out of Healthcare: Expensing Private Insurance
Home Alone: Get the Benefits Of Buying & Maintaining Home Office Equipment:
Running A One Person Show: Misc Office Costs
Keeping It Above Board: Write Off Against Professional Fees
At MBO Partners, our business managers help our consultants properly track and account for these expenses and see the income benefit at each paycheck, not just at the end of the year. That's worth it for busy solo businesses, and sure beats a 12-month pileup in a shoe box. ** Article extracted from MBO Partners official website.
Posted this article over LinkedIn, however it is more relevant here given many interactions are with friends who are following similar path:
Differently than my usual post, talking about applied technology for Big Data and Cloud Computing, I am calling for introspection while looking into my different life, a life after corporate. (I have a blog where I explore some aspects of my new life and offer insights for those considering freelancing on IT Consulting space: The Misfits Lair). If you read this through, please consider the text as a visit to my own experience rather than any intention to offer advice or teach you best practices. A literature exercise if you will, to tell the tale of a technology and applied science corporate professional turned into venture capitalist, angel investor, independent consultant and entrepreneur. First off, the transition For context only, my original plan was a different path but the deviation was forced by personal matters, one of those things that Corporate America does not necessarily is willing to wait for the resolution, even when one dedicates the best twenty years of one's life. Or, when the going gets tough, the tough gets going. Then, I talked to the wind And my words were all carried away. But the wind did hear me and brought me back the answer in the form of one word: passion. I have always been passionate with "things". I do what I like and I like what I do. I do my best to avoid or move away from doing what I do not like to do, and it is not different at work. Since I was searching for me, instead of looking everywhere, I decided to start looking inside to answer the "what now, what to do next" question. So come inside the show's about to start, guaranteed to blow your head apart. Rest assure you'll get your money's worth, come inside the show's about start your're gonna see the show, it's a dynamo, come and see the show, it's rock'n'roll! A man with many interests and many passions There is a risk. For a person like me there is a tremendous risk to lose focus due to my broad variety of interests and passions. Let's see:
Short term and "low hanging fruits": sharing the knowledge and sowing Consulting seeds Friends and network. Decades of accumulated experience in Consulting Services and Support Services, always in support of the core business, helped me to build an extensive network across the globe. My long international experience building technology solutions, delivering IT projects and solving business problems propagated the sound of many ringing bells throughout my network, and specially with those involved with projects with governments, involving Big Data and Cloud Computing. That gave me a solid backlog and produced many fruits to succeed on the "freelancing" space as an independent consultant and, later, as an incorporated entity, a vehicle that enabled me to build a pipeline of projects (this is the topic I explore at The Misfits Lair). More important, it gave me time to invest in expanding my academic transcript with Big Data and Data Sciences grad, and also to explore opportunities. Diversifying the portfolio: stock exchanges and start ups Now, what to do with my Estate? I am allowed to invest in different stock exchanges, which is fantastic to maximize gains, and also to maximize gains while minimizing risks when managing the potential of different funds and stocks from different countries. This scenario enabled me to build a new bucket, one that would make me become an Angel Investor under my own incorporated trust. My objective: skin in the game and partnership. The choices for applied sciences aimed at making impact in people's lives, combined with those opportunities where I could voice my ideas instead of just being a passive investor. This vision would also create boundaries marked by discipline and focus. I could never lose control for adrenaline or greed, but also would allow me to move quick if I considered so. The main outcome of this is the long term approach and the solidification of my Estate. At the same time I can fill up my schedule with clear roles, responsibilities and deliverables. Making money with hobbies: why not? At the same time that I can continue to go to auctions, to explore Estate sales for those rare, weird, vintage or antique designer items (I am addicted to Tiffany's rarities), I can capitalize during the process instead of just accumulating and I can fund my projects ... This is possibly the best combination so far. While I relax with my hobbies looking for those rare pieces, now I trade and profit, a profit I use directly to fund a couple of risky projects and start ups of my own. Many interesting outcomes besides the funding opportunities. The "incorporated hobby" gives the formal, official aspect of the funding for legal and accounting purposes. Further the "business" grows also on assets with tremendous flexibility, enabling the registration and use of trademarks, putting out the name of the main business, among others. Building an eCommerce platform that will generate organic traffic as the main business mature and goes public. Not to mention the relationship and perception of the financial institutions that are so important to enable growth. For sure to be self funded is major to avoid debt or giving away equity for investors, there are moments where you need financing though. Your banking manager will do it very nicely, explaining that unfortunately over 90% of the new businesses fail in two years and that reality prevents them to give you business loans, so on, so forth. For this scenario, I can have a well established business for the period or more, I can have a steady cash flow, growing revenue, a brand, assets, in other words, a real serious business. Conclusions and lessons learned from an incorporated life Fun, flexibility, focus and discipline. A wide range of options and opportunities to explore, while the machine runs efficiently. Higher quality of the direct engagements, being on projects or other types of contracts. Strategic partnerships so that both personal and business accounting, tax, legal and finances are always compliant and protected. Every activity can be "professionalized" and you have the channels and vehicles to make them happen officially. All the world's a stage! When I first started this blog, one of my first posts addressed the importance of building a solid pipeline of Projects and consequently a backlog of service hours to build stability and give room to consider growing, expanding, investing, among other opportunities Investors/Consultants pursue. I have an old personal interest in Supply Chain Management, never had much time to study deeper or gain much knowledge. I came up with this article by Dr. Muddassir Ahmed where he talks about something as important as building your repeat-project client base: customer lead time. If we do not pay attention to this, either when participating in a project or delivering a product from another business, it will be fatal, even resonating to other potential customers. Copyright and references after the article. Also, links to blog's pages, personal information, and other embedded into text. The article was written and publish by Dr. Muddassir and all rights belong to him. September 10, 2017 by Muddassir Ahmed | Supply Chain Management Researcher Customer Lead Time is unquestionably a buzz word in today’s fast paced business environment, and everyone involved needs an in-depth understanding as to why it is important. Customer Lead Time can be defined as the time it takes from the instant an order is made by a customer, till the moment it reaches the hand of the customer. The term ‘Expected Customer Lead time’ is commonly used in many fields like Manufacturing, Material Requirement Planning & Enterprise Requirement Planning (MRP & ERP), Project Management, Supply chain Management, Supplier Management, and so on. Ideally, every business has a Customer Lead Time. The promised Customer Lead Time is the promised customer wait time for an order. The Expected Customer Lead Time is the actual wait time (a random variable) experienced by the customer. One of the key factors, which form the basics, is understanding what the term means and why we apply it to the various field we find ourselves. The explanation of Expected Customer Lead Time varies in each field and is dependent largely on the nature of operations carried out by the business. In Supply Chain Management, every professional knows how important it is to lessen the time interval taken from when an order is made until the time it gets to the hand of the customer. Below are some major reasons why it is important to understand Expected Customer Lead Time:
1. Competitive edge for Product and Services Agile Lead-time provides a competitive edge for Product and services offered by firms. Let assume a scenario where the Customer Lead Time is Two weeks, then the distribution of such goods to customers is delayed by a whole two weeks. This can bring about a high level of dissatisfaction among customers. To remain as competitive as other brands in the market, you need to have a better Customer Lead Time. From this standpoint, you can deduce it is a critical element of any selling strategy by reducing your Lead Time as well. 2. Different Customer Lead Time Expectation for Different SKUs This is one significant point that should not be overlooked, and Supply chain professional should be able to understand how different lead-time expectation comes at different prices. Some customers might want their orders delivered earlier than usual time agreed. Customers usually prioritize one of two factors:
For example I have seen business we offer 3-5 days for high running A-items (Made-to-Stock), offer 10-15 days lead time for B-items (Assemble-to-Order) and 30-60 days for C- items (Made-to-Order or Purchase-to-Order). By doing that they cannot only maintain the inventory at right SKUs (A & B items), but also achieve high On-time delivery performance. Which do you a favor, faster delivery or steady, dependable delivery? 3. Customer Lead Time Plays a Significant Part in Demand Forecast When you have High Customer Lead Time, delays experienced in fulfilling orders become relatively less too. With this, any supplier management system put in place can accurately forecast which is necessary in most cases. Some companies have a very robust supplier management system who rate the suppliers and keep back-ups to serve for any reduction of inventory at the precise time. So, the higher the Customer Lead Time, the more precise your demand forecast would be. If you have a Customer Lead Time that is less, say a few more days or the demand exceeds your forecast; the delivery time of your product would be delayed. 4. Direct Influence on Customer Satisfaction Customer Lead Time has a direct influence on customer Satisfaction. If you have a poor supply lead times your customers would in no time take up other alternative products. Customer Lead Time needs to be regarded as a general measure of proficiency of the entire supply chain KPI by the Supply Chain Management of any firm. It is not to be confused with Processing Lead Time or Production Lead Time, as they are both parts of Customer Lead Time or Total Lead Time as it is occasionally called. Furthermore, recognizing a pool of suppliers with support activities, rating them, and also giving advice and response at suitable intervals is an important task. Many leading firms understand this and treat suppliers as their prolonged group. Educating suppliers on important procedures is important, so that they can know the value of their services in the value flow. 5. High Customer Lead Time Leads to Rising in Inventory This reason is quite simple just like the old saying goes “Time is Money.” The inventory always stirs up the storage cost. The better the Customer Lead Time, the higher the inventory becomes. Customers are more motivated and willing to buy from businesses whose products and services tend to have the least Lead Time. In the end, such customers would always try to look for a supplier who has the least lead time. It is, therefore, a needed factor for any Supply Chain Management to keep refining their Customer Lead Time to stay TOP of the market. 6. Provides an Alternative Overview of Business Performance For Supply Chain Management, Customer Lead Time is commonly denoted as a supply chain Key Performance Indicator (KPI) that can be broken down into different parts that can demonstrate the performance of quite a few components of the firm. They make an excellent alternative to checkmate your business performance. This may be more beneficial in assessing and refining operations in regards to expansion and better products to ease customers satisfaction, which is what the customers deserve. So, from the minute the customer makes his or her order there are three main parts of time until he or she accepts the order. The three main parts that make up a Customer Lead Time includes Order Processing Time, Production Lead Time and Delivery Lead Time. CONCLUSION To manage Lead time beneficially, one needs to understand the components of Customer Lead time. This delay in time is characteristically the sum of the time a supplier takes to distribute goods once an order is made, and the restructuring delay, which is the time taken while waiting for an ordering opportunity to arise again. To lessen the gap between requested and actual delivery, you need to be able to evaluate actual Expected Customer Lead Time to check whether it ties to your real requirements and also map out your actual operations process, and try to improve your materials management competencies to meet customer expectation. Also, regulating the operative processes and documentation will aid in reducing misunderstanding among personnel, benefit easy learning and expand reliability in production. Expected Customer Lead Time reduction is a great way to improve productivity and increase sales. About Muddassir
Dr. Muddassir Ahmed is a Manufacturing Operations, Procurement and Supply Chain leader from international multi-site manufacturing experience in Electrical, Hydraulics and Internet industries. With considerable experience in deploying Continuous Improvement best practices in Europe, Middle East & Africa, Dr. Muddassir Ahmed considers himself as intrapreneur with a strong desire to become an entrepreneur. Dr. Muddassir Ahmed has received a Ph.D. in Management Science from Lancaster University Management School, a MSc. in Management of Production from Chalmers University of Technology, Göteborg, Sweden and a B.E. in Textile Engineering from NED University of Engineering and Technology, Karachi, Pakistan. Muddassir is a Six Sigma Black Belt and has founded muddassirism.com – a source for all things to do with Supply Chain Management, Procurement and Leadership. Prime focus is to assist readers in “gaining knowledge” in operations world and help them making decisions and assist them to drive “Continuous Improvement” in the jobs and business they are in. By providing tools, training courses, mentoring and virtual consultancy. Topic for a future post: what are the motivations that take a technology professional (for the case of the author of this Blog, Computer Sciences, Electronic Engineering, Operations Management) to become an independent Consultant, even more being in the Corporate life for many years?
Potentially, we will find more corporate professionals that are driven to opening their own businesses or independent consulting career than similar professionals opting for this type of career from the get go. Do not have any data on this. Anyway, we are getting ready to engage on Consulting given any motivation or opportunity. How ready are we? Not unusual to respond to an opportunity given a necessity. We find ourselves in between jobs and receive invitations to participate in a project, we hear from a friend about a good opportunity, we receive an invitation from an agency for a temporary job. It is OK. Gives is time to think what we want to do, how much more we want to give our body and soul for one company, or have the flexibility to do what we want, when we want, and have a variety of activities of our interest, at our own pace. While we decide, a few things are important to get ready: (1) Lay the foundations for your family's life to navigate smoothly (health care, life insurance); (2) Lay the foundations for your future and retirement (Social Security Tax, Investments); (3) Lay the foundations to operate professionally (isolate your personal life from your professional life to protect the family and your state from liabilities, have professional accounting and legal services, consider to open an LLC, have your LLC structured with its own bank and credit accounts); (4) Lay the foundation to always operate professionally (business activities, including bank expenses, clearly separated from personal activities, pay yourself a salary and make formal reimbursements instead of using company's resources for personal matters, always have contracts with clear terms and conditions for any engagement). Take the opportunity to understand how to build your pipeline of projects and activities. Quite often Consulting engagements take long time to develop and to close. If we do not prepare ourselves the frustration is fatal. Putting all sources together (friends, agencies, temporary, applications through LinkedIn, Development Aid and similar, among others) will produce results at a very low rate of return. It is important to invest a lot from the beginning to enable you to have a pipeline of projects and engagements and then a backlog of deliverables and invoices. Between now and the day where we have a solid pipeline and backlog, the investment is very significant and time consuming with little to now resources. At the same time, it is the opportunity to invest on the "low hanging fruits", for example, freelancing engagements from sources like Upwork and similars. Certainly lower hourly rate, smaller engagements but good complements for the early periods where we are starting up on this profession, and also for the future where a more comfortable pipeline exists, gives us room for quick wins and for constant flow of income. It is highly possible that you ask yourself whether or not your freelance lifestyle can give you what you need now or in the future. Being a Misfit by necessity, coincidence or accident is what your professional career stage brought you.
Doubts and concerns apart, let's face it, the Misfit life gives you perks. A lot of them. You are free, you master your own schedule, the magic word "no" is always on your side. Let's consider the perks of the work routine cycle of a Freelance Professional:
mis·fit
ˈmisˌfit/ noun plural noun: misfits
We freelance, we are nerds, we are geeks, we explore, we are on the fringes of corporations. We are The Misfits. I will certainly explore motivations and necessities that pushed independent consultants, freelancers, developers and other IT professionals to become a Misfit.
Frustration; independence; the preference for working 80 hrs a week to avoid working 40 hrs a week ... for someone else; opportunity; better income; better working conditions; curiosity. The list goes on, and it is not different than most professionals who decide to open a business out of eBay or an eCommerce site to sell her invention or craft. Misfits? How to define technical professionals with tremendous passion for technology and sciences; with in depth skills in different computer technology platforms; with solid experience and proven expertise; with certifications spamming from Project Management to CISCO, Linux; plus serious University degrees; leadership and management roles over the years; Nerds; Geeks; mostly introverted; pragmatic; objective; problem solvers? |
The AuthorI dedicate my life to science, technology, music and to bringing people together. And I do it my way. Archives
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