By this time next month, I will have been my own boss for just over two years. It was March 2013 when my last company was acquired, freeing me to set up shop as an independent marketing consultant.
Because I’ve been at this for a while now, I’m often asked for advice from folks who want to do the same. Rather than give advice, I respond with questions that will hopefully push them to think about what they truly want.
Although the questions are tailored to would-be freelancers and solopreneurs, I hope they’ll spark some thoughtful consideration for potential small business owners as well.
Don’t quit your day job — until you can thoroughly, and decisively, answer the questions below.
1. What is your salary expectation?
For me, this answer was simple. I wanted to make at least as much consulting as I did in my best year at my previous job. It’s true that I could earn more by taking another corporate gig. However, I was willing to take a pay cut to have the personal freedom that comes with being my own boss. Are you? If not, what do you need to feel safe and happy?
Remember that a solopreneur’s dollar doesn’t stretch nearly as far as a corporate drone’s dollar. Why? Because the corporate drone’s dollar isn’t chewed up quite as badly by HR costs like insurance and paid time off – not to mention the dreaded self-employment tax. Plan accordingly.
2. Speaking of personal freedom, what perks do you want?
Corporate perks are one size fits all. A Friday afternoon beer cart. Maybe a discounted gym membership. Bagels and benefits. There’ll be some variability in health plans, but if you don’t have a pet that pet insurance subsidy is useless.
As a solopreneur, you choose your own adventure. Maybe you want to work from home instead of an office. Maybe you prefer to work only with companies with a conscious mission. For me, it’s all about summers off and the ability to work from anywhere that has Wi-Fi. Did you know that there’s Wi-Fi in Yosemite National Park? Yeah. Perks rule.
3. How many hours per week will you work?
In Corporate America, a 40-hour workweek is considered the standard. As a consultant, I’ve found 40 billable hours per week to be an unsustainable goal.
The 9-to-5 world accounts for mental breaks, water cooler chats, wasteful meetings, and useless email threads. Plus, you don’t have to be your own IT guy, your own billing department, and your own marketing arm. That’s why productivity hacks like Inbox Zero are so important.
Meanwhile, consulting is more mentally taxing because you’re only doing what you’re best at. There’s less mindless grunt work that you can knock out while plugged into your earbuds. For me, 32 is the new 40.
4. Are you taking on anchor clients, or just projects?
One of the biggest reasons that a steady 40 hours per week is unrealistic is that every business has peaks and valleys. You will not be employed at full capacity year round. That means you’ll have to work far more than 40 hours some weeks to average out at that total over time.
A great way to smooth out the peaks and valleys is to take on anchor clients and recurring projects. Once I’m comfortable with a client, I’ll give them a discount on my services in return for committing to a monthly allotment of work. They’re worth the discount, because they don’t require any investment in sales and marketing. As long as I do a good job, they’re there every month.
5. So, what should I charge per hour?
The question from colleagues that most often triggers these responses is, “What should I charge per hour?” And, unfortunately, the answer to that question truly is, “It depends.”
To find your hourly rate, you can’t just divide your desired salary by 52 weeks and 40 hours per week. For most of us, 40 is simply not realistic and it doesn’t account for the hard costs of health insurance, taxes, and computers or the soft costs of time invested in non-billable tasks like marketing and billing.
The mathematics of being a solopreneur suck. But, when your office for the day is the Yosemite Valley, the perks of the job can’t be beat.