The financial burden of starting up as a consultant
When 30 days becomes 45 or more…
As a new consultant you will have to consider the financial burden of start-up costs. If you go straight from an employed position to a start-up, then the shock can be much bigger than you expected. It is going to cost you money, it can be emotionally challenging and it really is not as easy as it appears when you are on the outside looking in. This leads many consultants to subcontracting their services to others, and is a great solution. Consultancy firms both small and large rely on great freelancers to meet their business needs. In the world of the claims consultant, winning new business is very reliant upon strong relationships.
Being a self-employed consultant is not an easy option – on the contrary, some start up with the promise of work from one or two contacts. Rarely does this come to fruition and if it does, whilst you are delivering that you cannot prospect for new business.
Freelancing offers a good alternative – if the work is there and you are good at what you do, you will get it. The owner of the consultancy has the relationships and the risk – you just need the skill and the willingness to do a good job so that the lead consultant rehires you.
On the other hand if you decide to go solo, time spent setting up is unpaid, time spent prospecting for business is unpaid, time spent delivering is unpaid – until the cheque comes in. In most businesses your invoice will go into the system just like anyone else’s and will come out the other end as and when. Whilst you may state 30 days on your invoice – there is absolutely no guarantee that this will be respected. You need to be prepared for this event from your financial situation.
Jump into consultancy by all means, but think very carefully about the operating model – freelance for an established firm and you are still self-employed; it can be the best of both worlds. Freelance for yourself and you need to be sure you have the contacts and the skills to set up and run a business. Before you opt for consultancy – you need to be really honest with yourself about your motivations for doing so. Is it a passion or is it a panic?