There are several benefits to becoming a self-employed contractor. Starting your own company, being your own boss, and making the decisions are appealing if you have an entrepreneurial spirit and want more freedom over when you work and the clients you work with.
If you have good abilities and expertise in your field, it may make logical sense to move from working for someone else to owning your own business. Today, many construction firms (even huge ones) want a more flexible workforce and prefer to hire independent contractors rather than full-time workers. Hence, the freelancing market is increasing for skilled contractors in many parts of the country.
However, self-employment comes with its own set of problems. You should be completely aware of and prepared for all areas of entrepreneurship to prevent unpleasant shocks down the line. Here’s what you need to know about starting and running a successful self-employed contractor business to help you decide if this move is right for you.
Be Certain You Want to Be Self-Employed
Being your own boss is not for everyone. Ask yourself two critical questions before taking this step:
- Is self-employment a good fit for your situation?
- Is your personality suited to working for yourself?
Sometimes becoming self-employed may not make sense, regardless of how strong your desire to be an entrepreneur is. When you have a reliable wage and regular working hours, it’s a lot easier to plan vacations, large purchases, and retirement. Business owners often need to take a pay cut to get their business off the ground and put in long hours during those early months and years.
Being your own boss has many benefits, but it also means that you are solely responsible for the success of your company. This includes managing money, hiring and dealing with staff, customer service, ordering supplies, filing taxes, and everything else that goes with owning a business. Being an entrepreneur may not be for you if coping with the uncertainties of self-employment causes you a lot of worry and anxiety.
Before making the leap to self-employment, carefully consider your lifestyle, financial condition, and future retirement goals—and share your thoughts with your family. This may be a decision that needs to be made with your spouse or other dependents.
Be sure you have financing in place
How much (if any) capital will you need for to start your contractor business? You will need to fund company and personal expenses until your company generates revenue. Even if you have a portfolio of clients when you start your business, it might take months before you are paid for your first project.
Before you decide to become an independent contractor, go over your finances thoroughly and estimate your needs as accurately as possible. Then, if necessary, look into possible sources of financing, such as family, friends, or business loans from a bank. If you need funding and plan to seek loans or cash from equity investors, you’ll need to provide a detailed overview of your financial needs in your business plan.
Create a business strategy
There are several reasons for most new businesses to have a business plan:
- To do market research to see if your company idea is viable.
- To explain how you intend to sell your products and services to clients.
- To obtain funding or attract investors
- To plan for future expansion, such as purchasing additional equipment, hiring staff or subcontractors, and so on.
A great business strategy, which you should update regularly, is a roadmap for success.
Name, Register, and Insure Your Contracting Business
Before you open your doors and begin accepting clients as a contractor, you should:
- Decide on the legal structure of your company—do you need to incorporate, or can you function as a sole proprietorship?
- Choose a business name and, if necessary, register it.
- Properly insure your business—Some states require contractors to have General Liability insurance.
- Open a bank account for your business.
- Register for a tax ID number
This type of admin work can take time, but it helps your business start on the right foot and can help protect you and your finances.
Have a marketing plan
Getting the first few paying clients is frequently the most difficult part of beginning a new business. One way to find new customers is through word of mouth. Ask friends, family, or business colleagues if they know anyone in need of your services. Advance word-of-mouth may help you get work much more rapidly, as well as provide feedback on the viability of your company concept.
However, you probably can’t rely on word-of-mouth referrals alone. A marketing plan could help you brainstorm and apply some easy, low-cost marketing methods to attract your initial customers. This might include everything from a website and social media accounts to radio ads and mail flyers.
Always act professionally
As a contractor, you may not wear suits or carry a briefcase, but that doesn’t mean you aren’t a professional. Inappropriate clothing or behavior on your part can turn off potential clients and cost your business.
Acting professionally includes all parts of your business. Consider wearing work shirts with your company name and logo to all jobs, along with appropriate footwear and safety equipment. You may also have your logo and contact details painted on your work vehicle, so clients know who you are as soon as you drive up.
Being professional also entails correctly answering the phone, using voicemail, and swiftly responding to messages or emails. Developing a reputation for bad customer service in today’s era of online reviews and social media could cause trouble for your organization.
Starting your own contracting business is an exciting step—one that should be carefully considered and planned before you take on your first customer or project. This hard work and planning should be protected, and business insurance is one way to do this. BizInsure helps small business owners find insurance coverage that suits their needs every day.