Although freelancing is not for everyone, some people absolutely love it!

Here’s a warts and all look the pros and cons of what you could be signing yourself up for (and a few useful tips along the way) by Viv Cole.

Based on my last 20 years of being self-employed and several conversations with other freelancers, freelance businesses tend to go through a recognisable life cycle, with particular highs and lows at each stage. I’ll walk you through what that life cycle is, the associated challenges and how you might level up to the next stage. I’ll also highlight some of the reasons why some people wouldn’t seriously contemplate doing anything other than running their own business.

Firstly, let’s recognise that whether new or established, freelance/self-employed businesses usually have these five persistent challenges:

1. Mountains and valleys of income/activity (whereas most household bills and family/social commitments are regular).
2. Lack of paid time off and benefits (leading to the temptation to overwork or neglect your wellbeing).
3. Accountability for all of the business (deciding which aspects to handle personally and having trusted suppliers for the rest).
4. Isolation (having no one to share the burden with or boss to escalate to).
5. Self-discipline and time management (spending your time on what’s important and avoiding rabbit holes).

Other challenges appear at specific times so let’s dive into the typical stages of self-employment:

Health warning: the life cycle is always not linear. You may spend time going around in circles within one stage, or you may start off with your first client and then go back to earlier stages to build the foundations that you need to continue. Your portfolio of services may also be at different stages e.g. your stable consulting service could be funding your fledgling coaching service as it gets up and running.

Taking the plunge

You decide that you want to go freelance. First up you need to decide your service proposition and have a plan that copes with short-term cash outflows from your savings before earnings come in.

Key challenges include:

1. Identifying your niche and service proposition (the sweet spot of something lucrative, you’re good at and like doing).
2. Maintaining belief in your plan (some days you’ll feel like it’s the worst decision you made and it’s time to give up).
3. Creating your first business plan (enough detail to be credible, but not a work of art that takes months to create).
4. Narrowing your main role (if you come from an in-house role, you need to be good at lots of things, as a freelancer you need to focus on one or two areas deeply so that you’re recognised as an expert at them).

Once you have a workable service proposition (tested with friends and/or advisors) you’re ready to move on.

Setting up and launch

You create marketing collateral and possibly a website as part of your first marketing plan. You also cover business admin, such as your main terms of business, business insurance, web hosting and buying the minimum IT hardware and licences you’ll need.

Key challenges include:

1. Focusing on the aspects of the business where you add value and getting the rest covered (e.g. reliable partners for accounting, legal, marketing as needed).
2. Having a good first marketing plan and executing on it (this takes confidence and persistence in the face of the setbacks you’ll inevitably experience).
3. Increasing your networking (and finding the balance of what’s sustainable in terms of time and energy).

Winning your first client(s) allows you to move on.

First clients

You fine tune or adapt your niche based on your experience in the market. By delivering projects well you get feedback, case studies and building recommendations.

Key challenges include:

1. Contract negotiations and pricing (do you work for project fees, day rates or a hybrid? and what clauses do you need to stay protected?).
2. Marketing and client acquisition (although you probably knew your first clients quite well, can your turn strangers into new business?).

By using the repeatable elements from your first clients that will have wider appeal, you can build margin and market share, making your ready for the next stage.

Business stability

As you win more projects you have worked towards achieving a diversified client base where you’re not overly reliant on a single client. There’s time to take stock and improve some of your admin processes that you skipped over earlier in the frenzy to get started, such as incorporating, VAT registration and getting marketing and/or accounting software.

Key challenges include:

1. Delayed payments (some clients will pay very slowly, so you need to manage your cashflow so that this doesn’t damage you).
2. Having trusted partners/suppliers who can take on overflow work (this means that you can sell more work than you can do personally and if mutual gives you access to work that your partners are able to sell).
3. Work-life balance (overcoming the fear that saying no to one project or client request will send your business into a fatal tailspin) Continuous learning and skill development (as you get busier, making sure you make time to invest in your own skills and keeping up to date).

Once you have built your reputation and profile you can take some time off the hamster wheel to move onto the next stage.

Scaling/leveraging your reputation

You have more choice as to which projects you take on and can spend a high proportion of time doing services that are highest value to you (both in terms of purpose and financially). Your profile means that your opinion gets valued in certain domains.

Key challenges include:

1. Finding opportunities to leverage your intellectual property and knowhow (the dream is income that recurs whilst you sleep!).
2. Staying current with technology and market changes (you need to counter the threats of new technologies and new market entrants).

If you want to move onto the next stage you need to make your business attractive to investors and successors.

Exit?

The fun and challenges of running your own business no longer feel so attractive (especially compared to a possible payout) so you are deciding when and how you want to exit from your business.

Key challenges include:

1. Transitioning the business so that it doesn’t depend on you (successors or buyers will want to see that the value is in the business, not your head).
2. Keeping up the momentum of the business to maximise its value.

There’s good news too

Throughout your self-employed journey here are a few things that will remind you why it was such a fantastic decision:

1. Freedom from office politics (although you still need to influence stakeholders, you’re not a threat to anyone’s promotion so you can get on with doing the right thing without the fear of a knife in your back).
2. The effort you put in is what you get out (whether you get a pay rise or a promotion is not at the whim of line management).
3. You don’t have to ask anyone if you want a day off (as long as you can still hit all your deadlines).
4. You can make up your own company policies (after years of commuting, one of mine was that no one has to get out of bed when it’s dark…unless there’s a client paying plenty to make it worthwhile).
5. Short chains of approval (feel like writing a blog/social media post? Go for it – no need to wait until next week to get a meeting to ask permission).

Here’s where the magic comes in

To go faster through the life cycle (or stay at one of the later stages) there are two key enablers that run throughout all the stages:

Community: Have a group of people with whom you can share with challenges, ideas, motivation, contacts and useful resources. Look no further than L&D Free Spirits.

Coaching: Identify your personal blockers and enablers and have a plan to propel yourself to success faster. Look no further than our own coaching wizard, Viv Cole who runs our members’ executive coaching.