An alternative to working for a consultancy is working as an independent consultant or a freelancer. Freelancing offers many benefits, but it is not for everybody. In order to be a successful freelance management consultant, first and foremost you must be a self-starter.
Pros and Cons of Freelancing
The upside of freelancing as a management consultant include
Better earning potential – there is no salary cap
Greater variety of work
More flexibility to spend a portion of time working on other interests (e.g. a hobby or entrepreneurial venture)
The ability to choose only those projects to pursue that are truly interesting· The ability to achieve a healthy work-life balance
Potential to experience diverse cultures and business approaches
Choosing where you would like to work
Choosing when you would like to work
Honing your experience for a future position in a company
Many tax benefits from working via a LTD
The downside of freelancing as a management consultant includes
Feast or famine syndrome – either you have so much work you don’t know what to do or so little work you worry about how food will land on the table
Difficulty in planning ahead budget-wise because of monthly cashflow fluctuations
A lack of a support network – i.e. no legal services, templates, etc.
No prospect of promotion – you are it
Too much flexibility in time (i.e. procrastinators and perfectionists beware)
No one to delegate to
No company benefits (e.g. you will need to pay for health insurance, pension etc)
Freelancer Earning Potential
Typical management consultant freelancers can earn between $80,000 and $145,000 (£54,000-£97,593) or more a year. The average hourly rate of a self-employed consultant varies between $35 and $400 (£23-£270) per hour depending on where they live and the industries they target to. At the same time, to get to this level of earning, a freelance consultant must first put in much time in building their business, networking, and advertising. Starting up a successful freelance consultancy requires consistency, dedication, and a lot of self-motivation.
What is the Right Time to Freelance
The best time to move to freelancing as a consultant is when you have six months to a year of living expenses in a savings account, when you have made a number of contacts through your consulting or industry job, and when you have sufficient education or experience to command a reasonable clientele within a short period of time. Without a reserve fund, there will be too much pressure and stress to create quality work for clients. Without contacts and a network, finding initial clients will be difficult. Without education or experience, signing contracts with those initial clients will be difficult. Some freelance management consultants begin their businesses when between jobs. It is important to remember to treat freelancing as you would a business.
How to Begin Freelancing
When making the move from working for a consultancy or working in industry to freelancing it is important to take the time to create a well-constructed business plan. This plan will include market research, annual goals, target clients, etc. Also, when freelancing, be sure to invest in good health, disability, and life insurance. Contribute regularly to a savings account and retirement account. This way, you can protect yourself in those famine times. You will want to choose an apt name for your freelancing business and set your prices.
Tags: business approaches, feast or famine, freelance consultant, freelance management, work life balance