Freelancers – those individual specialist, sole proprietor kind of businesses are out there in droves. One study suggests that there are over 50 million freelancers out there in the United States alone making up over 30 percent of the workforce.
My business started as a sole proprietorship and evolved into a boutique consultancy with a small number of employees. In many ways, though, I still have the freelancer mentality.
If you are a freelancer, you get a lot of upside from running your own independent show, but you also face a lot of challenges, from getting paid in a timely manner to managing expenses and saving money.
In addition to that, at some point every year, you have to make a decision that impacts business momentum and continuity into the next year as well as your work-life balance:
When do you stop?
One of the biggest reasons this is such a hard decision is that you are the business. When you stop, the business stops. So does the revenue. Because of that, it is easy to never stop. You may want to take a break, but you also don’t want to disrupt your business.
Unlike more traditional jobs, there aren’t natural times where you can say you hit an annual finish line of sorts, like incentive payout thresholds, for example. You could conceivably just keep going and going and going (kind of like those old Energizer Bunny commercials).
For anyone out there who is a freelancer, here are two key things to consider that can help you get comfortable with shutting it down each year:
1. How long is your business development cycle?
The shorter your business development cycle is, the easier it is to shut things down and quickly pick them back up. This is contingent, of course, on having a well built out network of customers. Without that, it doesn’t really matter how short your business development cycle is.
On the other end of the spectrum, if you run a business that has longer business development cycles, you may be worried that you can’t shut down because the re-ramp up time will take too long. The good news is that this shouldn’t stop you from shutting down.
It simply means that you have to start key parts of your business development cycle in advance of shutting down. If you can go into “shut down” mode with a few key business development efforts well underway, showing positive signs towards conversion into revenue opportunities, or even complete, you can still shut down.
You still have the challenge of not wanting to drop off the planet midway through, towards the end of, or after you have completed a business development effort and have real work ready to start. It is all about communication with your customers or clients.
2. How does your customer view you?
Trusted partner? Commodity provider? Or somewhere in the middle? Answering this question honestly is really important. Whereas none of these answers are bad, they do inform how flexible and accommodating your customers will be around services they may buy from you and when they buy them.
If you have reached that lofty “trusted partner” status with your customers, you get some nice shut down flexibility. They may wait to start some work until you can do it. They may hold a need for you because they want you. This is obviously the best place to be, and I’ve been fortunate enough to experience real example of clients doing exactly this.
That being said, even if you are a trusted partner, it still doesn’t always work. Sometimes, business needs arise when they arise, and they aren’t flexible. But I’ve found that they are often more flexible than you might think if you openly talk with your customers about timing.
If you are a commodity provider, the likelihood that your customer will accommodate your timing is probably low. This doesn’t mean you have a bad business. There are a lot of commodity businesses out there that were intended to be just that. You may simply have to do annual shut down revenue planning based on a realistic view of how flexible (or not) your customers will be.
Beyond both of these important things, you still have to think about how much revenue you are willing to give up simply in the name of work-life balance at the end of the year. This is really about personal choices.
- Are you able to let that customer and revenue opportunity go?
- Do you really need or want it?
- How much of a break do you want and need before heading full steam into next year?
These can be hard questions, but asking them in combination with how you think about your business development cycle and how your customer view you can help you plan for a much needed shut down. And it is never too early in the year to start that planning process.
Are you aware of your work-life index? Take a minute to find it with my new quiz.