When starting your own company it’s not enough to have a great new product or service. It’s not enough to have ample financing. What you also need is sound business sense, the “5 M’s” of self-employment. What are the 5 M’s?
Marketing your services
Don’t put all your eggs in one basket. Develop a diverse client base in terms of industries you sell to and the size of client organizations you target. For example, during the 1980s the bottom dropped out of the oil business for several years. As a result many chemical companies and consultancies, large and small, saw their sales to oilfield service companies decline substantially. Having a diverse client base would have helped lessen the impact of this sort of situation. Having contingency plans to implement would allow you to quickly compensate for the loss of major customers.
I derive much of my income from my freelance technical writing. During the recent recession I saw my income from sales to both companies and magazines drop substantially. To compensate for this I expanded my sales to government agencies and the nonprofit sector. Luckily I did not have to start from ground zero since I already had some sales to these sectors before the economic slump hit in 2008. I also monitored my sales closely and was able to take timely action to expand my client base because I saw my sales to certain sectors begin to decline in the fourth quarter of 2007.
During the 1980s when my technical writing sales to the oil industry slumped, I was able to compensate by recruiting new clients in Europe and marketing to pharmaceutical industry trade publications. However, because most European countries have been harder hit by the recent recession than the U.S., these strategies did not work for me this time around. Instead I increased my marketing to units of the federal government.
Managing money issues
When you are selling services, it is often difficult to decide what to charge. There are several strategies you can adopt. First, you can learn what your competitors are charging for the same or very similar services and adopt a similar price structure. Alternatively you could take the approach of offering a premium service and charging a higher price. This is the approach I usually take and it often works even in competitive bidding situations if you clearly explain what you are selling and why your service is more cost effective at a higher price than competitors. For example, I occasionally charge 25% to 33% more than my competitors in competitive bidding processes and still win the work. Of course, this approach means that I must provide the added value that I promise.
Sometimes it is difficult to obtain a fair price for your service. For instance, in 2011 a major oil company saw freelance writing projects being offered at $25 per hour on Craig’s List. Neglecting the greater difficulty of technical writing, they offered technical writing projects at this fee. I and some other technical writers turned down the work when it was offered at this low hourly rate because it was substantially lower than the going rate for this kind of writing. The oil firm hired people with limited or no technical backgrounds to work on the projects. They got unsatisfactory documents (chapters in a training manual for example) as a result. I don’t know how this situation was eventually resolved. However, I do know they approached another technical writer and me to whom they offered the original low fees to edit and improve these poorly written documents.
The sharp drop in income during the recent recession led some experienced consultants and technical writers desperate for work to reduce their fees. However, now that the U.S. economy is growing again, albeit slowly, these chemists are finding many of their clients are refusing to pay their pre-recession fee levels. Thus they face the unpleasant choice of losing clients or working for lower fees.
Meeting clients’ specifications
When designing projects for clients, it is essential to agree upon the specifications of the project, project budget, the timetable for completion of various parts of the project, schedule of payments and reporting requirements. Having project management skills is often essential in managing projects to the satisfaction of the client as well as yourself.
It is worth spending time up front clearly defining the client’s specifications and agreeing on how you will meet them. These are the biggest factors in determining whether the client will be satisfied with your work and willing to assign you additional projects.
Minimizing scope creep
Scope creep results when new features are added to a project’s scope after work has started. Scope creep is usually caused by inadequate planning at the beginning of the project. Often each change request is small and the entrepreneur accepts them to keep the client happy. However, a point often is reached when the changes become numerous enough that the project requires much more work than originally agreed upon. The additional work can delay project completion and cause the project to go over budget.
To achieve commercial success it is often essential to complete the project on schedule. To help assure this, project managers often adopt project milestones and dates for their completion. Milestones are intermediate goals that clearly indicate progress in achieving final project goals and completing the project. They are also useful in monitoring project spending relative to achieving project goals.
Following these 5Ms helps increase the overall success of your business while increasing customer satisfaction and increasing the chances of obtaining repeat business.
John Borchardt was a chemist, freelance writer and devoted ACS career consultant for over 15 years, until his sudden passing in January 2013. He was the author of the ACS/Oxford University Press Book “Career Management for Scientists and Engineers,” and had more than 1500 articles published in a variety of magazines, newspapers and encyclopedias. As an industrial chemist, he held 30 U.S. and more than 125 international patents, and was the author of more than 130 peer-reviewed papers. John’s advice, insights and articles helped hundreds of scientists improve their professional lives, and he will be truly missed.