If you’re a self-employed professional…when was the last time you took time off and still made money? What would happen to your finances if you got sick? Who will create, market, and sell your products or services?
Every person who makes a living off their skill or talent should ask themselves these three questions.
Why?
Because your answers will make a difference in your life and business. Your answers will also determine whether you’ll end up broke in the future.
Having coached business women for many years, I’ve identified 3 categories of people who call themselves business owners:
- Serious entrepreneurs who run their businesses professionally.
- Business owners who make just enough money to slide by.
- People who have expensive hobbies that they call businesses.
Those in the first category grow their businesses and end up having an easier time in business. The second group has the potential to turn their businesses around by working more strategically.
For the third group, life is really hard financially. They have high highs and low lows. Business is a struggle and they’re never sure where their next paycheck is coming from.
Many people I’ve met who make a living from their skills and talents land in the second or third categories.
How can you avoid this if your skill or talent is your main source of income?
A Common Challenge for Self-Employed Professionals
The only way to make this work optimally for you is to stop thinking like an employee and treat your work like a business.
If you’re a struggling self-employed professional, you probably have a system similar to the following one:
- You sell something (product, service or skill).
- You use this income for personal expenses and supplies.
- You’re broke once the money is finished.
- You wait to make another sale.
- The sale goes through and now you have money.
- You repeat this cycle.
This system will keep you trapped in a never-ending feast and famine cycle. You feast when you have money, and then go straight into a famine cycle when the money runs out.
When you do this, you’ve created a job not a business because you only make money when you’re actively selling or are in demand.
So what happens when you haven’t sold? Or if you get strong competition?
Here’s How You Can Succeed as a Self-Employed Professional
Below are some basic elements of a business. Note that some of these elements don’t apply if you’re working with an agent because the agent takes care of them.
(Read my article on how to create a business model if you want detailed instructions on how these elements tie up)
1. A marketable product, service, or skill
This is something that people need or want to buy. It’s something that you’re skilled at creating or doing. If you rely on a skill such as music or sports, this skill is your product.
2. A marketing system
People need to know about what you’re selling, and this is done through marketing. Unfortunately, letting people know about you is not enough. Your marketing should target people who:
- Want what you’re selling.
- Can afford to buy or pay for what you’re selling.
- Are willing to buy or pay for it.
These 3 points are critical because you can waste a lot of time trying to attract customers or fans who are interested, but they’re not willing or able to buy.
3. A well-defined sales process
Marketing and sales are not the same thing.
Marketing is telling people what you do in a way that makes them want to buy or get more information.
Sales is converting your marketing into income. If you do your marketing well, then you end up with a sale or sales.
A key thing is to first ensure that it’s easy for people to buy from you. If you’re selling something physical, determine where to sell from (e.g. shop, home, car boot, online, door-to-door, etc).
Also, have a way of providing receipts to customers. Receipts can be physical or virtual. If you use a mobile payment system to get paid, (e.g. MPESA Buy Goods or PayBill number), the customer can use the confirmation message as a receipt.
Finally, outline how the customer receives what they’ve paid for. This is critical and it must be visible in your marketing messages and on the sales platform.
4. A customer service system
Customer service begins before someone buys and continues after purchase. Return customers and referrals from satisfied customers will grow your income faster than any other form of marketing.
Your customer service system should also identify how you’ll handle orders, complaints, cancellations, requests for refunds, and returns.
5. A financial management system
How do you handle money? Does it go into your wallet or personal account? Or do all receipts go into a business account?
At the very least, register a solopreneur business and open an account in the business name. All income goes into this account and you pay yourself a salary at the end of the month. If your business cannot sustain a consistent salary, decide on a percentage of the income as a salary.
Work with an Accountant to set up your financial systems. You can also hire a part-time accountant to help you with your finances and statutory deductions.
Poor financial management can bring you down if you work with an agent or promoter. While these people care of marketing, public relations (PR), and talent growth, it’s your duty to manage your income.
It is always in your best interest to know and control how your money is being spent. So keep an eagle eye over your agent’s or promoter’s spending.
Have a lawyer review any agreements or contracts you create or sign. This includes legally binding from agents and promotes.
Lawyers and Accountants may not be cheap. But the money and stress you will save in the long term is more than worth the expense.
6. An administrative system
This will help you handle all the above functions. At the beginning, you’ll probably be everything in the business (creator/producer/performer/service provider, marketer, agent, secretary, accountant, CEO).
With time, you can hire people to take over some jobs while you concentrate on developing your skill or talent.
The best thing is that today, you can hire part-time freelancers online for some of these roles. But, remember to have appropriate agreements or contracts in place and to protect your intellectual property.
7. A growth plan
This is different from your goals. It’s a plan for moving from being a self-employed professional to having a business that runs without you.
Plan to hire and manage staff, create passive income, and for your financial investments. This growth plan can also double as your retirement plan.
Examples of passive income include (but are not limited to):
- Stock market investments.
- Rental properties.
- Having an online store for product/service-related merchandise.
- Writing a book about your experiences.
- Setting up an online course using your knowledge and experience.
- Hiring experts to run your business while you concentrate on the creative part of the business.
You can also expand by helping others:
- Actors, footballers and musicians can set up talent academies.
- An artist or sculptor can open a gallery and sell or showcase other people’s work.
- If you love striking deals and negotiations, you can set up an agency in your industry.
- A writer can start a publishing company to help others self-publish.
- A web designer can outsource work to others and get paid a portion of the sales made.
- Any coach can expand by hiring coaches to work with clients under your umbrella.
As your income and business grows, get expert advice for your investments and growth plans so that you don’t waste time, energy and money.
Your Way Forward
Luckily, being a self-employed professional and making from your expertise is easier today than ever before. On the negative side, you only get paid or make sales when you’re in demand.
Monetizing your skill and turning this into a business can also take time as you build credibility and visibility in the marketplace.
All things considered, when you plan carefully and start treating your expertise as a business, the more likely it is that the business will grow and exceed your dreams!
With time, this business will provide you with steady income at all times, whether you work or not. Isn’t that a goal that’s worth working towards?
Looking at the business elements outlined in this article, do you have a business or a lowly paid job? I’d love to hear from you in the Comments below.
And if you struggle with pricing your services, check out my e-course Profitable Pricing for Self-Employed Professionals. This 12-week online course will teach you the A-Z of pricing your services so that you charge what you’re worth and attract high-fee clients.
(Image credit: Pexels)
