At the forefront of the decision is your ability to grow the business while also growing revenue.

You need to consider multiple factors:

How many customers or clients can I serve?

Who will be my competition?

What is the market demand?

How will people find me?

How Many Customers or Clients Can You Serve?

If you have a service that you deliver in person yourself, the volume of business you can successfully support is most likely limited.

You probably cannot plan on serving hundreds of clients or customers per month. Realistically, you may only be able to work with five to ten or maybe even two to four clients per month.

With a limited volume of customers you can support, you need to consider higher pricing than the person who is able to contract with hundreds of customers per month.

Who/What Will Be Your Competition?

A big factor in your pricing is your competition. You need to know who else is doing the same work as you are doing, and if there is a form of technology that is competing with you.

Everyone who performs the same work is not necessarily your competition. You will set the standard for the work you do, and you cannot compete with people who deliver product or services that are inferior to the work that you create. They are not your competition.

Your competitors are the people who create work that is of the same value as your own.

You need to determine pricing by your standard of quality. This is hard because you need to have reached the point that you believe that you provide quality and not waiver from that belief when you are setting pricing or completing a contract.

What Is the Market Demand?

If your service is in high demand, you can have higher prices than you would if your service is not very popular.

However, this is also the opportunity to increase demand by using effective marketing.

Your marketing role is critical to the pricing structure.

If you can develop a service that people will contract for because it is so unique and they easily recognize the value from your marketing strategy, you can also control the pricing.

Jim Connolly, the marketing coach in the UK known for helping small businesses, suggests that you should consider becoming the person who solves problems in a more remarkable way than anyone else. He says, “Make doing business with you as interesting and rewarding for clients as possible.”

How Will People Find You?

If people cannot find you, they will not do business with you. As you consider your pricing strategy, consider how you will draw the people to you. With social media in play, many contractors have a reach that they never had before in history.

Social Media for Marketing

You can market globally with little expense by using Twitter, Facebook, LinkedIn, and other social media, but you must learn how to do that.

Jumping into social media without a plan will yield few results. At the same time, you need to be consistent in delivering that plan.

Many people get started in social media, some with a great plan and great skills, but then they get busy and they slow down or stop their marketing. When they do that, social media fails.

For social media marketing to work, you have to have a consistent presence.

As a solo entrepreneur, freelancer, or contract worker, remaining consistent on social media can be extremely difficult. You can consider using help from an agency, a virtual assistant, or even hiring someone within your company to manage and execute your social media.

This means you must be sure of your message and also make sure that those you hire are either helping you create a marketable message or executing your marketing plan.

In essence, you will be hiring contractors to help you market your contracting business. You need to be assured of their credibility and reliability as much as your clients or customers will need to be assured of your credibility and reliability.

Traditional Marketing

Traditional means of marketing can be considered, but they will be a larger investment typically than launching a social media campaign. Radio and television will have offerings for smaller entities, but you need to know who their marketing reaches.

Even in today’s market, you will be approached with multiple types of print media options, such as phone books, newspapers, restaurant place mats, and all sorts of name recognition approaches. It is easy to spend major dollars with little return. As you determine how to gain market share, make sure that you analyze costs and return for each endeavor.

Are you ready to make the leap into being a contract worker?

Bottom Line

Consider these factors as you consider your future. Even if you jump from one long-term contract to another one with a single client/employer each time, you need to understand your service, your competition, and your pricing. You also need to make sure your business “pipeline” provides a constant stream of revenue.

More About Contracting/Freelancing:

• Getting Started in Gigs/Freelancing
• Gig/Freelance Job Fields and Industries
• Landing Gig/Freelance Jobs: How to Market Yourself
• How Do Freelancers Get Paid? A Guide to Rates, Invoices and More
• Battle Unemployment by Freelancing/Gigs
• Part-Time Contracting Jobs

About this author…

Job-Hunt’s Freelancing and Contracting Expert Julie Walraven is a Certified Master Resume Writer and Certified Professional Resume Writer. She is owner of DesignResumes.com and has been helping people with their job searching since 1983. During that timeframe she has helped job seekers find employment as contractors, and she has acted as a contractor herself for many years, so she brings experience and a depth of knowledge to this topic. Follow Julie on Twitter @JulieWalraven.

The post Evaluating Gigs and Freelancing as a Business appeared first on Job-Hunt.

Then, you will start to doubt yourself or why you are even trying to launch a freelance or contract business.

Income Reality for Freelancers

Even if you have been freelancing for years, you will have those moments when the leads stop or the phone stops ringing. Perhaps you will feel a little crazy as you start to doubt if you are cut out for contract work.

How do I know? After more than 30 years as an entrepreneur, freelancer, and contract worker, I understand! I have lived it all.

Income ebbs and flows. You can do everything right from the marketing perspective, and, yet, the revenue faucet will suddenly turn off. Just as suddenly though, it tends to turn on again.

For some people, the stress of an unstable income is too much, and they rejoin the workforce as an employee. And that’s the right choice for them.

Perhaps though, you will be like me, and find freelancing is in your blood. You thrive working as an independent contractor. However, it does take some fiscal planning to face those income ebbs and flows.

Get Professional Advice

It’s a very good idea to talk with an accountant, like a CPA (Certified Public Accountant) as you establish your business, and accountants can be extremely helpful later, too. Depending on your business, you may need an attorney, too.

Accountants can guide you through some of the financial (tax) processes, in case you need to collect sales tax (not every business does), and help you establish a good understanding and process for your financial record keeping.

Hiring a good accountant is money very well spent. Do NOT avoid it! Being a freelancer is totally different from being an employee, and you must handle the finances correctly or pay a very large penalty.

If you think you might want to set up a corporation, typically a “subchapter S” corporation, talk with an attorney. Being incorporated has benefits as well as costs. Make an informed decision about incorporating, becoming an LLC, DBA, or some other legal entity by talking with a local attorney who helps small businesses where you will be doing your business.

Separate Business and Personal

Mixing personal and business expenses will make life much more complicated for you. So, don’t do it.

• Separate your personal finances from your business finances

  Have a credit card (or more than one) that you use ONLY for your business. If your business is a LLC or some other legal entity, also open separate checking and savings accounts for your business.

• Keep track of your business travel expenses

  Note the mileage, tolls, etc. when you are traveling for your business. You probably don’t need a different car for your business, but you do need to keep business and personal use separate, and document your business use.

• Keep your office expenses separate

  Note the expenses related specifically to your business like a business computer, business phone, business cards, etc.

• Keep track of all your other business expenses

  Other expenses like meals, chamber of commerce membership, professional association memberships and meetings, business cards, business website, etc.also need to be tracked.

The good news — you can “write off” most of your business expenses (deduct them from your revenue) in accordance with local laws and regulations. You will typically pay taxes only on the “net revenue.”

The bad news — you need to keep good records of those expenses as well as generating enough revenue to cover them.

Tax authorities can become very cranky if you deduct something that isn’t really a business expense or do something else that doesn’t meet the local requirements. So, pay attention, keep good records, and get professional advice.

How to Plan Your Finances in the Freelancing World

You have many tools available and many considerations.

Getting paid by your clients is much different from being a salaried employee, and you’ll need to make some adjustments. To learn more, read How Do Freelancers Get Paid? A Guide to Rates, Invoices and More.

In general (rules differ by government entity where you live), you will pay taxes on your “net before-tax revenue.” You get to your “net revenue” by subtracting the cost of doing business (your business expenses) from the revenue your business generates.

So, tracking your expenses and revenue is very important for your business. You don’t want to operate “at a loss” very often to run a profitable business, and a positive net income from your business will be the “salary” you pay yourself.

Develop Your Budget

Many people do not use a budget at all. They fly totally by the seat of their pants. Dangerous!

When you are an employee of a company that does not use a budget, the company has a hard time staying fiscally solvent. If you are a freelancer or contract employee, trying to operate without a budget creates chaos.

A budget is a plan for spending money, based on your business’s expenses and revenue. You must cover the “cost of goods sold” so that you don’t lose money on every sale (or if you do lose on every sale, you have a good plan for recovery).

Ideally, you have more revenue than expenses every month, hopefully generating a profit for you. SCORE (Service Corps of Retired Executives), working with the SBA, offers an Excel spreadsheet budget template to help you get started managing your businss budget.

I use multiple tools for budgeting. My main tool is an extensive spreadsheet that I started in 1996 and add a new page each month.

This tool continues to expand. It records revenue and liabilities, so I can tell at a glance how much debt we have and strategize plans to eliminate debt while projecting expenses and revenue.

Learn to Understand Financial Statements

In addition to the spreadsheet, I also use QuickBooks to record each transaction, and generate accurate financial reports for the business.

I also created a QuickBooks “company” for our personal side, too. This enables me to analyze our personal expense categories from multiple perspectives. This tells me if groceries are more this month than last, and how much to plan for utilities.

By developing systems for tracking rather than flying by the seat of your pants, you eliminate stress, and can focus on marketing and on completing your work.

Project Your Expenses

My budgets work very well on a month-to-month basis, but there are personal and business expenses that are due periodically.

By knowing when these expenses are due, you can schedule them into the correct monthly budget and not get blindsided.

I use QuickBooks for this, and add a note for expenses that only come up once a year such as virus protection programs or other infrequent expenses as well as the quarterly tax payments.

Save Each Month to Pay Your Taxes

Since you know your income is not consistent, develop your financial plan, and keep saving on a monthly basis. If you set aside money for taxes and other expenses, you will be ready when the bills arrive.

Taxes will not be withheld from your income because your clients are not paying you as an employee. So, you will be responsible for paying those taxes, and you need to have that money available. The IRS has guidance to help you determine your independent contractor status that is especially helpful when you are starting up.

As a contractor, you mostly likely will need to pay estimated taxes. Work closely with an accountant to determine what you need to estimate, and set up a plan to both save for the taxes and pay them on time.

Pay Your Bills on Time

Your credit rating is critical as a freelancer! You want to save, budget, monitor your budget, and pay everything on time.

Paying on time will enable you to keep your credit rating high. A high credit rating means that, if you have an emergency that goes beyond your savings, you should be able to get a loan or access a line of credit.

Establish a Reserve Savings Account

When you are just starting out, you should enter the contract world with a reserve savings account for the famine times.

Financial experts recommend 3 to 6 months of income set aside in general. This is very difficult for most people, but even having an emergency fund of at least $1000 will help you.

Bottom Line

The better you manage your money as a contractor, the more peaceful you will feel and the better you will be able to continue in the field of freelancing or contracting.

Laws and customs differ by country, state, and city, so take this advice as a starting point and food for thought — general guidance, not legal advice. Then, check with your local government, legal, and accounting professionals for the details on what is legal, acceptable, and best practice where you are.

More About Contracting/Freelancing:

• Freelance/Contractor Fields and Industries
• How to Market Your Freelance/Contracting Services
• Contracting and Part-Time IT Jobs

About this author…

Job-Hunt’s Freelancing and Contracting Expert Julie Walraven is a Certified Master Resume Writer and Certified Professional Resume Writer. She is owner of DesignResumes.com and has been helping people with their job searching since 1983. During that timeframe she has helped job seekers find employment as contractors, and she has acted as a contractor herself for many years, so she brings experience and a depth of knowledge to this topic. Follow Julie on Twitter @JulieWalraven.

The post Managing Your Finances When You Freelance or Contract appeared first on Job-Hunt.

A report by the Freelancers Union, “Freelancing in America, a National Survey of the New Workforce,” suggests that we have entered a new era of work, sometimes called “the gig economy.”

Some people who are unemployed view freelance jobs as a way to stay up to date while paying the bills. Others seek the independence of choosing when and where to work, including at home.

The articles I have been writing for Job-Hunt.org address the contracting industry, also known as freelancing. Freelancers work for an employer, but not as a direct employee.

Freelancing and contract work are project-based, independent, exciting, potentially risky, and rich with opportunities.

New World of Work

With a laptop, a cell phone, and Wi-Fi, your office can be anywhere, and you can be just as responsive to your employer as if you were down the hall from your manager.

The Freelancers Union report suggests that “the economic implications of this more flexible workforce are significant.” This means more versatility for businesses too because they have a unique pool of talent that they can access as needed without the obligations and expenses associated with being the direct employer.

As the global markets fluctuate, businesses can be more responsive without a commitment to a permanent expansion of labor.

The Freelancers Union report states that 57.3 million Americans are working as freelancers, representing approximately 38% of the U.S. workforce. It defines freelancers as “individuals who have engaged in supplemental, temporary, or project- or contract-based work in the past 12 months.”

This new style of work crosses many different fields and occupations, from consulting and IT to construction and trucking, including many professions and industries.

Benefits for the Freelancer

Many freelancers can locate jobs online with relative ease. The report states that “31% of freelancers said they can find a gig online in less than 24 hours.” Millennials represent the highest percentage of freelancers, at 38% for those under 35 and 32% for those over 35.

Flexibility in Work Content and Scheduling

Flexibility is huge for those people who prefer the contracting life. Though some roles will require above-average hours during a project, the flexibility of when the work is done is often left up to the freelancer, especially if they are working virtually or remotely.

Working From Home

The concept of working in your pajamas or outside on the deck is made possible by the ever-expanding opportunities provided by technology. The appeal of this flexibility can draw many people to jobs that are less permanent than a previous generation’s concept of work.

Combining Different Contracts to Increase Income

Some contract workers balance another job or a business with the contract work, which gives them flexibility to get that work done. Many workers will work very hard to reach their goals and create financial freedom for themselves or their families.

Avoiding Organizational Tension

Without the office environment, some contract workers feel less stress because they only have to produce the work needed without office politics concerns or potential workplace interruptions.

Paying Bills While Searching for a “Real” Job

Sometimes, freelancing is the best available option for someone who is unemployed or reentering the job market, providing an opportunity to build skills and networks while paying bills.

Other benefits certainly exist, as, of course, do disadvantages.

Benefits for Employers

A contract can benefit an employer in many different ways.

Project-Based Work

The project has a beginning and an end, which means employers can hire highly skilled contractors for a limited period. Many IT companies will contract for project-based skills or expertise that they can’t find locally; this enables them to get the project done with top talent.

Temporary High-Volume Needs

Work requirements can be met without the need to increase permanent staff. For instance, insurance companies can hire contractors to manage high volumes of claims with the intent of possibly retaining some of the workforce permanently for excellent performance.

The “Temp-to-Perm” Situation

The initial project can be a tryout for both sides. Does the freelancer like the organization, and does the organization feel the freelancer is a good fit for a “real” job? Time and experience for both determine the outcome.

Retailers and shipping companies add massive numbers of “seasonal workers” during the holidays when work levels spike dramatically.

Hospitals contract with traveling nurses and locum tenens (temporary) physicians to cover very busy times, such as high maternity levels, illness outbreaks, or simply high-volume periods.

Recently, I worked with a client who will be the owner’s representative on a $25 million school referendum project. He was selected because of his construction management expertise to represent the owner—the school district—during this upcoming project.

I have another client who does 35 days on and 35 days off as a security director for an oil company doing exploratory work in Africa.

The Bottom Line

Whether or not you are a good fit for contract work is a decision best made after considering the options and consequences. The increase of freedom is balanced with uncertainty in income. For some people, economic uncertainty is so difficult that they need the security of a “real” job. For those people who understand the risk and can plan ahead, the freelance world of work offers endless opportunities for personal fulfillment and work on their own terms.

About this author…

Job-Hunt’s Freelancing and Contracting Expert Julie Walraven is a Certified Master Resume Writer and Certified Professional Resume Writer. She is owner of DesignResumes.com and has been helping people with their job searching since 1983. During that time frame, she has helped job seekers find employment as contractors, and she has acted as a contractor herself for many years, so she brings experience and a depth of knowledge to this topic. Follow Julie on Twitter @JulieWalraven.

The post Time for a Career Change to Freelancing? appeared first on Job-Hunt.

Employers typically view contract work very positively.

Being a freelancer fills “the gap” on your resumes and LinkedIn Profile.

Contract work is also proof that you didn’t just sit around and hit the “Apply” button over and over again.

Instead, you are motivated, interested in working to keep up your skills as well as your bank balance.

Should You Accept a Contract Gig?

When you are unemployed, your focus is often on finding that next role, and you may be afraid to look at contract roles for fear that employers will look at that kind of work as less than desirable.

Contract work has changed dramatically since the early days when the only freelance work you could find was a role in the file room or answering phones.

Working as a contractor/freelancer may be your best option to generate income, and it could turn into your next career.

If you are a college graduate, you may have assumed that you “had it made” when you got your degree.

Sadly, many job seekers with college degrees and even those with advanced degrees, such as an MBA, may find themselves in a slow-to-hire mode because they lack experience.

Often, job seekers find themselves in long-term unemployment after their job is downsized due to merger acquisitions or economic restructuring. Since the target jobs for the individuals with college degrees are typically at a higher pay rate, they may see high school graduates landing new roles faster than they find employment.

Freelancing may be the best option.

Reasons Employers Hire Contract Workers

Today, employers are increasingly turning to freelancers and contractors.

They might hire a part-time/contract employee for any of these reasons:

• To fill the gap when they temporarily have a high volume of additional work to be done (like seasonal package delivery needs).
• To fill the need when it is not a long-term requirement warranting hiring permanent new staff (like working on an IT or construction project, planning a big event, or teaching a college course).
• To temporarily replace an employee on a long-term leave, such as maternity leave or rehabilitation after an accident.
• To have a cost-effective solution when the company is unable to afford a new permanent employee.

Sometimes, employers hire contract workers as they do temporary staff — a try-before-you-buy experience. Both the employer and the contractor have an opportunity to observe and evaluate each other before the relationship becomes “permanent.”

Before you accept a freelance job, knowing the reason the job is short-term is good information for you to have.

You’ll be able to better gauge how long it will last and the probability that it might become permanent.

[MORE: See Freelance/Contractor Fields and Industries for an idea of where opportunities exist most frequently.]

How Contract Work Impacts Your Income and Unemployment Status

You have bills to pay, and contract work can pay those bills. This is an obvious plus even when you are collecting unemployment compensation.

If you collect unemployment, you must report any income you earn from work during this time.

This reporting requirement applies regardless of your situation –

• Whether you work for a single day or several months.
• Whether the work is part-time or full-time.
• Whether you are an employee or working on a contractor basis.

In the USA, the employer will send you (and also the state and federal governments) a 1099 form at the end of the year instead of the usual W-2 form you received from your employer when you had a permanent job.

  Different States = Different Rules: Know YOUR State’s Rules  

Different states have very different rules about how income impacts your unemployment compensation.

If you are currently collecting unemployment compensation, you need to check with your state’s organization governing unemployment (in the USA) to learn how that impacts you. Do this before you accept any contract work so you can understand how it will impact you.

Your state’s unemployment commission will reduce your benefit payment for that week based on the amount you received in compensation for your 1099 work. The reduction may not be dollar for dollar.

• For example, in one state, you can earn up to 125% of your normal benefit amount before your benefit is eliminated.
• On the other hand, in another state, 80% of your freelance earnings are deducted from your unemployment compensation.

This is why it is so important to understand how your local government regulations apply to you and your situation.

  The Timing of Payments Matter  

With regular employment, you generally receive a payment at regular intervals — every week or every other week. Payment for contract work may be held until the job is complete. Depending on the job, you might receive several hundred dollars or many thousands of dollars.

In the case of contract work, you only report the money when you are paid. If you receive partial payment, you report that payment when you receive it, and report the balance when paid.

The timing of the payment you receive may have more impact on your unemployment benefits than how much you receive. Typically, as long as you meet the other requirements for collecting unemployment, payment for 1099 work reduces or eliminates your benefits only for the week you receive payment.

  Retaining Eligibility for Unemployment Compensation  

To be eligible for unemployment benefits, you must continue to actively look for work, and be available for work if you’re offered a suitable job.

If your 1099 position requires you to work particular hours at a particular location, especially if these amount to full-time hours, then you cannot meet the requirement for being available for work.

However, if you can fulfill the duties of the contract job on your own schedule, and you continue to look for full-time work, then you can probably continue to collect your unemployment benefits while completing the contract job.

Be sure to check with your state’s employment office to find out exactly what is required and what is acceptable in your state.

If you are interested in short-term temporary employment (days or a few weeks rather than months), read Job-Hunt’s Guide to the Temporary Work Option.

More Information About Contracting/Freelancing:

• How Contracting Battles Unemployment
• Freelance/Contractor Fields and Industries
• The US Department of Labor’s  Local Help/Unemployment Benefits Finder.

About this author…

Job-Hunt’s Freelancing and Contracting Expert Julie Walraven is a Certified Master Resume Writer and Certified Professional Resume Writer. She is owner of DesignResumes.com and has been helping people with their job searching since 1983. During that timeframe she has helped job seekers find employment as contractors, and she has acted as a contractor herself for many years, so she brings experience and a depth of knowledge to this topic. Follow Julie on Twitter @JulieWalraven.

The post Freelancing: A Good Option When You Are Unemployed? appeared first on Job-Hunt.