Leave yourself a financial safety
net. While creditors require you to pay
promptly, most of your own clients
won’t rush to compensate you. Even if
you write “payment due in 30 days” on
your invoice, it’s a rare client that sticks
to that time frame. Schedules of 60 or
even 90 days are all too common.
Complaining about tardy payment or
imposing a late charge could drive
business away. To minimize tensions
while you wait for the work to come in
— and then wait to get paid — set aside
enough money to cover six months of
expenses (a year is even better).
Do what you know. Don’t waste
savings on buying an existing business
or a franchise. Instead, get ready for
what Arlington Heights, Ill. new-
business consultant Jeff Williams has
dubbed the “scratch startup.” Williams
counsels “desperation entrepreneurs”—
laid-off employees who aren’t likely to
get back into the corporate world. He
tells them to sell a skill or a product
they already know.
Ken Proskie, 59, is a Williams client who
was laid off in 2004 from his job as a
health and safety manager for a large
manufacturer. Working from an office in
his Evanston, Ill. home, he began
pitching his services to a network of
300 colleagues from professional
associations. After three years, Proskie
says, he matched his corporate salary
and today has more than enough work.
“Now I wish I had made the transition
five or ten years sooner,’’ he says. It
would have given him time to take on
employees and expand.
Don’t bet your savings on a long-shot
new venture either. New York financial
planner Karen C. Altfest says she has
one 70-year-old client who can’t retire
yet because she sank all her money into
a perfume business startup—in her 60s.
Although she worked very hard in the
enterprise for two years, going from
store to store, it bombed; turned out
not enough people liked her scents.
Find a comfortable workspace. It’s
important to choose a spot where you
won’t have a lot of interruptions and
distractions. Working at home avoids
the need to pay office rent and makes
you eligible for tax write offs. But you
must jealously guard your work time,
which means limiting trips to the
refrigerator, telling friends and family
you can’t chat during the workday, and
explaining to the UPS guy that you
won’t accept packages for neighbors. If
you find you are unable to be
productive at home, consider working
from another location.
Spend judiciously. New technologies
and social media continue to reduce the
costs of starting and operating a small
business. Put seed money towards
equipment that can help you embrace
technology: laptop, iPad and
smartphone. You’ll want to buy a
comfortable work chair, if you don’t
already have one, but there’s no need
to pay top dollar for other furniture.
With so many companies scaling back,
there are plenty of good deals on
secondhand equipment. Try auctions
(live or online), going-out-of-business
sales and used office furniture stores.
Create digital footprints. These days
if people can’t find you on Google, they
might decide you don’t exist. Build a
Web site. Then get busy online. Social
media like LinkedIn and Twitter, along
with the websites and Listservs of many
professional associations, make low-
cost networking and business-building
far easier. If you’re already using
Facebook for your personal life, think
about creating a separate page for your
business. While some business owners
limit their tweets to shop talk, others
use Twitter to develop a broader
persona. (See my post, “How To
Grandstand (Gracefully) On The Web
.”)
For professionals, there are a few sites
that rival LinkedIn. Write your profile,
join groups in your field of interest.
Then chime into the discussions. Being
the boss is not a job for people who are
shy about blowing their own horns, but
self-promotion shouldn’t be all you do.
As with networking in person, helping
other people is part of the game.
Present a professional image.
Answer all phone calls by stating your
name or the name of your business.
Avoid referring to yourself as a
“freelancer.” (Instead, use your
company name, say you’re a
consultant, self-employed, or in
business for yourself.) When you finally
meet in person, follow these tips to
make sure your body language
reinforces the good impressions you’ve
already made.
Go after more work than you can
handle. In the early stages, running
your own business is a lot like being a
lonely Maytag repairman who’s always
waiting for the phone to ring. Many of
your marketing efforts won’t lead to
business right away, and even
promising “nibbles” may not pan out.
So hedge your bets by pursuing many
avenues at a time. Once you’ve landed
an assignment, you can juggle
deadlines and delegate some of the
work if necessary.
Charge what the market will bear.
While eager to bring in work, you don’t
want to sell yourself short. Yet you
know that bidding too high could drive
away business. If you can roughly
estimate the time you’ll need to spend,
charge a lump-sum. Lump-sum fees are
potentially more lucrative, especially if
you’ve done the kind of work before and
don’t need to reinvent the wheel.
Another advantage is that clients don’t
know exactly how long the project takes
you. Therefore, they may be willing to
pay more, in effect, than if you charge
by the hour.
On the other hand, lump sums are risky
if you don’t know — or have no control
over — how much time you must put in.
Here, the risk is that the client may
demand more work (like endless
changes). What sounded like good
money when you bid on the job can
quickly turn into slave wages.
So if you’re unsure about the scope of
work, charge by the hour. To figure your
hourly rate, take your most recent
salary and divide it by 2,000 hours/year
(that’s 40 hours per week for 50 weeks)
. Increase that sum by 30% to cover
your expenses — most notably health
insurance.
Once you put your price on the table, be
open to negotiation. If the client objects
to the fee and you really want the job,
you could say, “I don’t want price to
prevent us from working together.
What’s your budget?” Meanwhile, ask
yourself whether there are other
advantages to the project. Your first
goal, especially the beginning, is to gain
experience and build relationships. Do
good work that keeps clients happy
and, chances are, they’ll send more
business your way. At that point, you’ll
have plenty of time to raise your rates.
Get help as you need it. By hiring
subcontractors when you don’t have
time to do everything yourself, and
bringing in consultants if your own
expertise falls short, you free yourself to
go after other money-generating
pursuits. Call upon extra hands
(including students and hourly workers)
for time-consuming chores. You can put
together a virtual staff to handle
everything from research to Web
design.
Build a support team. Exchange
ideas and leads with other business
owners in your area. Surround yourself
with people who believe in your ability
to be successful. Be prepared for the
inevitable downswings: you will want to
have an optimistic friend or family
member around who can be your
cheerleader during these times.
Keep in mind that there is no preset
formula for success. You may need to
modify your plans – and your
expectations – until you find what
works best. No matter what, though,
you’ll have the satisfaction of knowing
that you’re in charge. And when You &
Co. does better than you ever dreamed,
you’ll have yourself to thank.

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Nice write-up. Tnx. Keep it up