5 years ago, after my first year of self-employment, I summarised here for the very first time what I had learned. Even half a decade later, all the things I wrote back then are still valid for me. But in the meantime, some new insights have been added, which I now want to share with you.
It gets more comfortable (if you want)
The first years of self-employment were the most work-intensive, as I had to invest a lot of time to build up my business and generate a solid client base. However, once this client base was established, many things simply became more comfortable. The solid client base gave me a fairly stable income and the stress of growing was gone for now. At the same time, this also meant more time freedom, which I had hoped for when I took the step into self-employment.
I then used the freed-up time to ramp up new projects where the fun factor was paramount. I have also become very selective in choosing clients and projects since then.
Referrals are the best business driver
In the agency business, paid advertising that reaches the target group exactly is now really expensive. On Google, ONE click now often costs more than 10 €. I doubt that this can generate lucrative business for an agency.
In the initial phase of a start-up, you will not be able to completely avoid cold acquisition, as you are still completely unknown on the market. However, cold acquisition does not primarily mean calling strangers for days on end. It generally means making people aware of the company you have started. This can be done with paid advertising, published articles or by taking part in tenders. There are many possibilities.
However, it is also important to be found on the net by the target group. Therefore, search engine optimisation should be high on the agenda at the very beginning of a start-up.
Once the first customers have been acquired, however, the most important acquisition channel comes into play: recommendations. Satisfied customers pass on the name of your company and this results in favourable new business. The probability that a lead generated by a referral will become a customer is generally very high. You have an enormous advantage in terms of trust, which often leads to potential customers not looking at other offers.
Of course, it’s important to do a good job at all times so that the referral process works.
Measure your time
In the first 2 years of my self-employment, I often completely misjudged projects in terms of effort. Sometimes I was so far off that a cleaner had a better hourly wage than I did. That’s why I started measuring my efforts with a time tracker at some point. (Personally, I use Toggl) At the end of a project, I evaluate with a few clicks how long it took me to do what.
My calculations have become more and more accurate over time and today I achieve the profitability I want with my business.
But the evaluation has also helped me to assess which customers are unprofitable. Which brings us to the next point.
Get rid of customers
In my first year as a self-employed person, I gradually gained my clients through acquisition. My main goal was to build up enough business to make ends meet. At some point, I reached the point where I was very busy. Taking on new clients became harder and harder because I simply didn’t have the time.
At the same time, however, there were clients with whom I simply no longer enjoyed working or who had caused a lot of effort for relatively little income. The bottom line is that these clients took away the time that would have been necessary for me to take on new, more interesting projects.
For this reason, after about 2 years, I decided to terminate the cooperation with some clients. On the one hand, this meant that I had more time again to take on new projects. On the other hand, I also enjoyed my work more again, as the clients concerned often robbed me of motivation and energy.
Since then, I evaluate my clients every year and stop working with them if it is no longer a good fit.
Reject new business
Not only sorting out existing clients is important for me, but also turning down new business. In the past, it has been shown without exception that the projects where I already had a bad gut feeling at the beginning, the actual work was a pain and only cost me valuable time and energy.
I am aware that in the first years of self-employment, you naturally can’t turn down every project. Otherwise I wouldn’t be sitting here writing this article. But once the business is up and running, you shouldn’t be careless about accepting new clients and projects. My motto is: If you don’t like it, don’t accept it. After all, it is my valuable and, above all, limited lifetime that I invest in my work.
Employees are a risk
In recent years, I have met many other people who started businesses. Many have been successful, others have failed or are constantly in turmoil. Behind the failure there was often one factor: employed staff. Unfortunately, many underestimated the financial risk that salaried employees bring with them. Employees make sense when you are already on a solid financial footing. Anything else is more than dangerous and can quickly ruin the dream of self-employment.
Personally, I have only ever worked with external freelancers. This way, I avoid the financial risk of a permanent employee and have access to truly outstanding people when I need them. Many other successful entrepreneurs I know have been using the same strategy for many years. Here you can also find an article I once wrote on this topic.
Building financial reserves is important
Not least the Corona crisis has shown how quickly everything that has existed can change. In order to be prepared as an entrepreneur for difficult times when things are not going so well, financial cushions are important. If these are not available, things quickly get uncomfortable. That’s why I put money aside every year from the beginning and built up a buffer.
This buffer not only has the advantage that you can withstand crises, but also gives you flexibility. If the existing business is no longer fun, a financial buffer can finance the freedom to start something new.
Constantly develop your business field
The world around us is constantly changing. In order to remain successful in the long term, it is therefore important to keep up with the changes, otherwise you run the risk of no longer being in demand at some point. In the years I have been self-employed, I have met many companies that have not done this and have therefore fallen into turmoil at some point. Many have overslept digitalisation, others have had an external corporate identity that was created somewhere in the 90s.
It is therefore important that you regularly deal with the question of what you can do better, what is new and what is relevant for your own company.
The coming years will certainly continue to be interesting. Who knows what wisdom I’ll be able to offer after 10 years and whether I’ll still agree with everything I’ve written now. We will see.