6 Tips for Starting Your Own Independent Business

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Originally posted by Bryan Peña on business.com. Link to original article

The way work gets done is undergoing a fundamental change. We are seeing more companies shift toward project-based work that is outsourced to individual experts – the independent workforce.

The independent workforce is composed of more than 41 million people working as contractors, consultants, freelancers, side-giggers and more. These independent workers provide specialized expertise to companies looking to bring staffing flexibility and in-demand skills to their business. Nearly two-thirds of senior executives today say their external workforce is essential for operating at full capacity and meeting demand.

While there are many benefits for companies that engage independents, there are just as many advantages to starting your own independent business. You get to be your own boss, decide when and where you work, and effectively have limitless ability to earn and pursue a career you are truly passionate about. If you’re thinking of joining the independent movement, use these six simple tips to build a successful business.

1. Identify skills you can build a business around.

The first important step you’ll want to take is defining the services your business will offer. If you don’t already have an idea of what you want to focus on, think about what you like and don’t like to do at work and in your free time. This will help you narrow down your niche and find your individual, sellable talent.

Next, take some time to research the industry you want to focus on. What skills are in demand? How can your unique services be configured to meet the unmet needs of potential clients? As a newcomer to this market, you may need to expand your education. As you grow your business, consider looking at online courses, professional certifications or classes at a local college that can lend credibility to your expertise.

2. Write a detailed business plan.

Creating a business plan is a valuable exercise for anyone starting their own business, because it requires you to think through all aspects of your future business. Many independents find it useful to create both a 12-month roadmap and a longer-term plan for the next three to five years. The shorter plan can focus on business basics, monthly profit goals and target clients, while the long-term plan should focus on future goals, growth strategy, and the overall identity and purpose of your company.

When drafting a business plan, consider including the following topics:

  • Your target audience
  • A marketing strategy
  • A plan for landing your first contract
  • What your competitive advantage is
  • How you will price your services
  • Why, when and where you want to work
  • Goals for income and personal development

3. Get your finances in order.

There’s no way around it – launching an independent business requires financial preparation and forethought. A good target to have in mind is enough startup capital to keep your business running for at least six months. For example, you probably won’t invoice your first client for at least 30 days. Then, many net payment terms can stretch out to 60 days – or even longer for some large organizations. That means a full 90 days before you see any money come in.

When thinking through finances, consider initial startup costs like internet and utility bills, computer technology, and additional project supplies, as well as hard ongoing costs like office space if you choose to work outside your home. You’ll also want to decide on a business structure, as that will determine your federal and state tax obligations. The U.S. Small Business Administration (SBA) is a good resource that provides information about taxes, licenses and permits, and business insurance. Setting the right billing rate is key to ensure you charge the right amount for your services to cover your expenses.

4. Be prepared to be the boss.

Yes, being your own boss is great, but make sure you are in the right mindset to handle everything that comes with running your own business. As an independent business owner, you’re not just responsible for completing the work outlined in a contract – you’re also responsible for finding that work. You’ll need to use your network to land new clients, remain confident during contract negotiations, and push back on clients who are late with their payment or are poor communicators.

Because running a business can be so time-consuming and complex, many independent business owners automate tasks, engage other contractors, or use outsourced services like an accountant to free up their time so they can focus on high-value tasks. By outsourcing back-office activities that aren’t in your wheelhouse, you’ll be able to pursue what you really want to be doing every day.

5. Set goals and consistently evaluate your progress.

As your business takes off, it can be easy to get caught up in the day-to-day of project work, client communication and securing your next contract. But it is equally important to take time to give yourself a performance review a few times a year. During these reviews, revisit your goals, evaluate your progress, and make a plan for improvement. Consider what success means to you and how you can create measurable steps to achieve it.

Remember, not everything you do will work out perfectly. It is okay to re-evaluate both personal and business goals and adjust your strategy accordingly. As industries and technology change and evolve, so will your business.

While there are many benefits to starting your own business, the path to independence requires preparation and hard work. If these tips sound overwhelming, you may consider initially testing out your business on a part-time basis while keeping your current job. This is a great way to try out business ideas and get a feel for what running a company is like with a safety net in place. As you build your network, confidence and portfolio, you can then transition into a full-time independent business.

6. Establish the basics.

To start your business, you’ll need to establish concrete items to operate compliantly, particularly if you wish to engage with large enterprises as a qualified independent professional. At a minimum, this means a business structure, which can range from a sole proprietorship to a more complex C corporation.

You’ll also demonstrate that you’ve “hung your shingle” by developing basic marketing materials, such as a website, business cards and a presence on professional networking sites like LinkedIn. Not only can these materials help you get new business, they demonstrate that you are actively soliciting work and serve as a sign to some businesses that you are qualified to work independently.

You’ll also want to secure business insurance. Many organizations will have specific qualifications, but at minimum, you’ll likely need general liability insurance.

Speaking of qualifications, you’ll also want to be sure you have a contract with your client before beginning work. This includes a process for payment – ideally with favorable terms – as well as a defined contact within the organization for day-to-day questions, both about your project and about questions that may come up regarding your engagement. It also includes a written scope of work for each engagement that includes the services you’ll provide as well as the deliverables the client will receive.

After you’ve agreed upon terms with your contact, the contract will likely need to be approved by other departments if you’re working with a large organization. You’ll want to make sure that this process is complete before you begin work

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