Are You Building A Business Or Are You Self-Employed? | Two different ways of starting your consultancy ... |
Posted by Jacky Sherman on 03/04/2024 @ 8:00AM As you can imagine I meet an awful lot of people who are making the transition from employment to setting up their own business. A great many of these are planning to sell their own expertise ... Building a business or self-employed; it's entirely up to you! photo by 'štefan štefančík' on unsplash This will be as either a consultant or some form of outsourced support service. It’s a big decision and not for the faint-hearted. Despite all the blog posts and advice that is available, the failure rate for new businesses of this sort remains stubbornly high.
"My observation is that those who start out with a clear vision of what they want to achieve are the most likely to succeed!"
After all, if you don’t know where you’re heading, how can you plan how to get there? Yet it’s one of those blindingly obvious things that many people never do.
I suspect the reason is that most people’s previous experience of a business vision was, at best, imposed on them by an employer and, at worst, they didn’t even know it existed so never inspired them.
This week I’m going right back to basics and exploring what type of business you want to run. Not the industry type or specialism you offer but answering a far more fundamental question.
"Do you want to set up and run a business or
simply be self-employed?"
If you are clear on that, then you can define what you will need to put in place, what new skills and knowledge you’ll need to be successful and who else is going to be involved. And most importantly, does this match what inspired you to set out to work for yourself in the first place?
Let’s look at both options and some questions you will need to answer to make decisions.
Building a business
This implies that the business has a value in its own right. In other words, you could sell it one day when you’re ready to retire or move on. It means you can scale your services up to whatever level you wish and potentially earn a great deal more money. So how large do you want to get?
It does mean the value needs to be explicit and formulated in the products and systems and processes of the business and not in your head. It also means that other people work in the business.
Are you planning to be the sole owner or go into partnership or become a limited company with other shareholders? How will others work with you? Will you have support staff, premises etc.? Who will actually deliver the services? Will you have employees, work with associates, licence your product or franchise the business model? Who will generate the clients you need to support this. You personally or will you have a sales and marketing team?
A major implication of all this is that the larger you grow, the more your personal time will be spent in leading and running the business and less in client facing service delivery.
Self-employed
Maybe you want just to go it alone and generate enough clients to earn a reasonable salary through your endeavours. Here the major choice is whether you generate your own clients or freelance by working for other businesses as an associate delivering services to their clients.
Generating your own clients gives you more freedom to choose who you work with, when you work, and how much you charge. However, as you are delivering both the service and generating the clients, you may be limited in how much you can earn in the time you have available. More about how to overcome that in a later blog post in this series.
Working as an associate for larger consultancy companies means that once you have established those relationships, you don’t have to generate clients yourself. If your service is mainly for larger organisations, then this may open doors to work that would not be easy to get as a sole practitioner.
On the other hand, you don’t 'own' the client so never build a robust client database and are limited to the type of clients and work that the consultancy company targets.
I thought I’d finish this blog post with two short stories about how clarifying these points impacted two people in different ways:
Firstly, a graphic designer realised that if she were to generate enough income while delivering and marketing her services herself, she would have to position herself differently in the market so she could raise her prices to earn enough to live on. Secondly, a HR consultant was quite clear she just wanted a few regular clients to earn enough to supplement her pension and stop her getting bored. She quickly achieved that with some strategic networking.
Until next time ...
JACKY SHERMAN
Would you like to know more? If anything I've written in this blog post resonates with you and you'd like help defining your vision and planning out your route to success, it may be a great idea to give me a call on 07970 638857. Let's have an initial chat over a coffee and see how I can help you. More blog posts for you to enjoy ... | | | | | | | | |
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