Despite the relative job insecurity inherent in operating a solo financial practice, going freelance offers flexibility and freedom — to choose the kind of work you do, the people you work with, and the time you spend doing it. Here are 10 things you should know before venturing out on your own:
Unlike the search for a full-time job, don’t look to executive recruiters for assignments. Instead, consider networking the core of your marketing and business development efforts. One of the best ways to network is through active membership in professional associations, with the emphasis on “active,” according to Ken Drossman, who started his Lakeview Business Consulting two years ago and is the incoming president of Financial Executives International’s New Jersey Chapter. “You have to be actively involved so people really get to know you,” says Drossman, who also belongs to the Wharton Business School Club of New Jersey. “Then they’ll pick up the phone and call you when they need an interim CFO or help with an issue.”
Insist on a Retainer
Get your money up front. For example, if you’re paid weekly, require two weeks’ pay when you start. Then invoice the client at the end of week one for that week’s work, with payment presumably received at the end of week two. By the end of week two, the retainer still equates to both the second week of service and the upcoming third week. The pattern then repeats each week. If the client pays promptly, hold onto the retainer and apply it to the final invoices. “Never look at aged receivables,” says Drossman. “Work against money already collected.”
Give Good Value
Freelance CFOs are always auditioning for future work; any assignment is in effect an on-the-job interview. So a CFO must always work at peak performance, to get more work from the same client as well as referrals. To make clients feel they are getting their money’s worth and maybe more, invest some non-billable hours researching information that will help the client or thinking about solutions to the client’s needs. It will pay off in future work.
Don’t Underestimate Unbillable Hours
Build into your fee structure unbillable time like networking and administrative work, because just running your business will take more time than you think. In addition to his full client load, Drossman spends about 10 to 12 hours per week on networking in order to develop new business. He spends four to eight hours on administrative tasks such as sending out bills and keeping his own books. Solo CFOs also must consider the down time between assignments and build it into their fees while remaining competitive.
Line Up That Next Job
Until you’re so successful that you can beat off job offers just for fun, line up future assignments like so many airplanes on a runway. That way you can reduce your downtime between assignments, which should help in pricing yourself competitively. Also, except when working as a full-time, interim CFO, try to work for more than one client at a time. “I build into my practice working with multiple clients simultaneously,” says Drossman. “The more diversified the client base, the more diversified the risk.”