Being self-employed is the most common way most contractors start, but even when they know what to expect, the hustle can still be surprisingly difficult. This makes the start of your journey quite discouraging and stressful, but it all flows better if you follow certain tips to both prepare yourself for challenges and overcome them.
If you’re starting out as a self-employed contractor, I hope that this article serves as a guide for these first steps that are often the hardest.
Don’t forget to check out the rest of our contractor blog, since we have hundreds of articles regarding other specific aspects of the job, such as landing jobs, writing contracts and estimates, as well as how to do self-marketing!
You’ll probably end up being your own accountant at first. It’s quite common to wear many hats when you start, and though it’s wise to hire help as soon as possible, it’s basically unavoidable early on. So what can you do to take better care of your finances?
Ensure financing first. It would be very hard to start your business or invest in it if you don’t have financing. Make sure you have enough for the first few months because those will be some of the hardest ones in terms of making profit, at least until you get the ball rolling.
The financing you secure beforehand will help you in these first few months, after which you should start landing more jobs and seeing more action. Even then it’s risky, so always keep a close eye on your finances.
Learn about finances. Managing finances is very time-consuming and involves a lot of complicated processes. The best way to handle these is to, first, learn how to do them properly if this isn’t something you’ve dealt with before, and find ways to speed up processes.
For example, learning how to set up a finances sheet or using a finances app will help you a lot in saving time and generating reports.
Have a business plan
Your business plan isn’t really a holy document that you must follow step by step, but a blueprint for (at least) your first year as a self-employed contractor. Your plan should cover:
- Your objectives;
- Your goals and milestones;
- The services you will offer;
- How does your business fair against competitors;
- Your main differential compared to competitors;
- Your marketing plan;
- Your possible investments;
- A backup plan in case your business doesn’t take off as expected.
There’s a lot more than that, but in short, this is a good starting point!
Self-employment is though
I’m sure you’re not surprised to hear, but self-employment is really hard. A wise man once said that for every hat you wear that’s 8 hours a day, but you only have so many to use at any given day.
So when you’re the one seeking out clients, talking to them, sending quotes, managing finances, planning your marketing, answering messages… it can get a little overwhelming.
Obviously it’s not supposed to always be like this. Once you get some momentum, the idea is to start hiring help, building a team, so that you have more time in a day to manage your company. But that first year can be rough.
And that’s another thing: a lot of contractors expect that their business will be booming in 3 to 6 months, but that’s hardly ever the case. Sure you’ll see progress, but almost anyone who started as a self-employed contractor and managed to solidify their brand on the market will tell you it takes at least one year, maybe more before you’re a bit more comfortable.
This might seem discouraging I’m sure, but it’s important to start with the right expectations. Now that you know what to expect, you know how to work around it and have more accurate plans for your future!
Make sure you’re legally registered
Your brand name is the first thing to register because it legitimizes your company and ensures no one else can take it.
Imagine you’re working for months and things are going well, but then someone finds out you’re not registered and out of bad faith -- or maybe even out of coincidence, -- attempts to register your company’s name as their own. They may end up taking everything you’ve worked for and since you’re not registered, you have little to no defence against it.
Then, be sure to set up a professional bank account as well. Legally it’s much safer, gives you a number of benefits (such as credit and financing options), and ensures your personal finances aren’t mixed up with your professional side.
Also be sure you have the required permits and licenses to operate as a contractor, as these can have different regulations depending on where you live.
Develop a marketing plan
It’s no use working very hard and not advertising yourself. You should have a solid marketing plan from the very start so that you have an idea of which methods to use for advertising your business, both online and offline.
Of course online marketing will play an important role given how much cheaper and far reaching it is when done right. Consider working on your online presence and building from there!
Hire and outsource time-consuming tasks
As mentioned before, this should be one of your main priorities. You’re probably going to be quite overwhelmed starting out and it’s impossible to keep that up for years without a mental breakdown – sure, you may be making profit and building your business, but what use is that if you have no time left to enjoy the fruits of your labour?
Consider hiring someone to take care of finances first, then someone to take your calls, and from that point onwards you should already have a much lighter workload, giving you room to think about your next steps with a clear head.
Take the first step towards growing your business today and start receiving leads that will make you money — Sign up with homeyou!