The Pros And Cons of Working As A Freelance Business Consultant
This is a guest post by James Gustafon for InternMatch’s Contributor Platform. If you’re interested in getting involved as a Contributor, learn more here.
When most people think of a business consultant, they first imagine somebody in professional attire, a two-button suit, semi-collar dress shirt, and a double-windsor silk tie. But it’s just as likely for a consultant to wear Levi jeans and a plain white t-shirt to work. Business consulting covers nearly every industry, and you can put your skills to good use working for yourself instead of a company.
1. The Pay Is Good
Business consultants often make a high hourly wage, if you can find relatively steady consulting jobs, you’ll see your income explode. Minimize downtime by investing in a laptop with a wireless 4G adapter, which lets you work on the road or at home if your Internet connection stops functioning. A home security system is a must for any self-employed individual. With a little luck, you’ll never need to use it, but the monthly cost doesn’t compare to the cost of losing invaluable client data and business transactions.
2. You’re Your Own Boss
Is your current boss clueless, mean, or too demanding? For many self-employed individuals, being one’s own boss is the best perk of all. You set your own income, hours, and responsibilities. Don’t want to work until midnight twice a week? No problem!
3. Tax Deductions
You’ll have to pay for new vehicles, office furniture, computers, and other equipment out of your own pocket, but you’ll be able to write business purchases off on your tax return. Once you start consulting, your taxes will become far more complicated, but you’ll have additional money-saving opportunities that aren’t available to most people.
4. Choose Your Clients
Just like a bad boss, a bad client can make your life a living nightmare. From withholding payments to verbally abusing you over the phone, you often have to grin and bear the struggles when you’re working for a company. Self-employed consultants have the freedom to choose their own clients, and if you’re in high demand, you can pursue those jobs that will net you the greatest profits.
5. Work as Much or as Little as You Want
Most people would prefer to work fewer than 40 hours a week while some driven individuals would prefer to work 50 or 60 hours a week. As a business consultant, you can take a vacation whenever you don’t have a scheduling conflict, and you never have to call in sick. Don’t have much work at the moment? Take the rest of the week off, and catch up on some yard work.
Cons: Some Risks Are Avoidable, and Some Aren’t
Just by looking at this list so far, becoming a business consultant seems like a professional no brainer. Unfortunately, this career path does have a few downsides, but you can avoid most of them with some careful planning.
1. Clients Who Don’t Pay
Some clients pay invoices right away while others prefer waiting a month or two. Occasionally, you’ll come across a client who refuses to pay at all, in which case you might have to sue to get your money. Did the client go out of business or leave town without a trace? In both cases, you’re better off forgetting about the job and moving onto the next client.
2. No Benefits
Do you like your current employer-sponsored health insurance or retirement perks? As with any other form of self-employment, you’ll lose these benefits when you become a business consultant. However, this can actually be a good thing. If you earn more money than at your previous job, you can contribute more to your retirement account, and you can purchase a larger variety of health insurance plans.
3. Organization Is Key
When you work for a company, you rely on other employees to take care of finances, marketing, billing, payroll, and other day-to-day activities. You’ll have to take care of all of these tasks and more when you start your own business, and it’s easy to become overwhelmed by the sheer volume of work.
4. Self-Employment Taxes
The IRS requires companies to split Social Security and Medicare taxes 50/50 with you. Self-employed consultants have to foot the entire bill themselves, and you’ll end up paying an additional 7.65 percent of your income in taxes each year. You’ll be able to deduct part of your self-employment tax from your federal income tax, but you’ll still end up paying more.
5. Unsteady Work
Unless your old company was on the verge of bankruptcy, you were paid on a regular basis with no hiccups. Can’t find work as a consultant? Your income will quickly dry up. Few consultants find full-time work, so the trick is to make enough to get through the occasional slow period.
About the Author:
James B. Gustafon is a former business consultant and entrepreneur with over 20 years of experience and a wide variety of knowledge in multiple areas of the industry. He currently resides in Austin, TX and spends his time helping consumers and business owners alike try to be successful.