I have been running my own product design consultancy for just 2 years. I enjoy it, but it is a real struggle to make it work.
It turns a profit, and pays me a small wage but things have recently come to a head.
A baby is on the way, and I am struggling to see a way for the business to provide a secure income to support the new family member.

As I see it I have 3 options on the table;
1. Battle on with the business, live with the uncertainty and try and make it work. It is pretty borderline ATM
2. Go out and get a job.
I will be able to earn far more than I currently bring in and the extra experience I have gained should help me secure an interesting job.
3. Take my client base and use them to try and secure a senior role in a local design consultancy.

If anyone has any other suggestions or pearls of wisdom I would be interested to hear them.

No pearls from me; I’ve always worked for the man, and have liked the sense of security it brings, whether imagined or not. I’ll never be rich, or even that well off, but I don’t live to work.

3, do what you do with support – though may need to up the figures a little to be attractive

I’m with Crikey on this one. I’ve seen plenty of friends and colleagues set up their own businesses, but they all work insane hours and are no better off money wise than they were before (although may be happier, in fact they must be as that’s why they all left in the first place, couldn’t take working for the man).

I used to struggle a bit working for the man… 7 years in one job though because the people were so nice.
I think my ability to work as an employee is proportional to the ammount of responsibility I am given. The more I am involved in the decision making process around the job I do the more I enjoy it.

Once child gets older you will really appreciate being able to be more in control of your own time/hours/holidays etc. However it is also nice to be able to work for someone else and just leave work in the office and come home in the evening but the downside of getting a higher paying job is that they often want you to work longer and harder for the cash 🙁

My temptation would be to stick with it if you can, the extra cash may not be worth what you lose in terms of control and freedom.

Something I’ve always wondered with self employed and own business type people is, do you ever work out your hourly rate ?
Like footflaps says, they always seem to end up working long hours with no holiday.
If you add up your total hours, not just work but all the other stuff that goes with it, doing your accounts etc., then divide it by your income, is it worth it compared to working for someone else ?

Only you know if option 1 is realistic. Are you sitting on your arsepiece a wee bit, can you work harder / smarter and get the business really moving? Or are you flat out right now and it’s just not happening?
If you’re on the rivet, as Phil would say, then a baby coming along will really do you in.

Can you diversify a bit. Theoretically I do the same job as when I worked for the man but in reality that forms less than half of what I actually do. I’m in product design, too, but it’s a wide field.

To MTG, I’ve never added it up because I’ve never felt the need. I enjoy it, it pays the bills and I get plenty of time off. When I work hard I get all the benefits and rewards, which is nice.

EDIT: Garry makes a good point, how near capacity are you? If you are busy AND struggling to make it work then it might be time a re-think

This month has been at max capacity, but should bring in about 20% more than we need.
Biggest problem is filling the pipeline with new work. I probably have 4 quiet months a year and seem to spend a lot of time digging my way back out of the whole they create.

Costs are quite high which doesn’t help. Doing business in the SE feels expensive!

nickjb, yeah, I can see the appeal, that’s why I’ve thought about doing it myself in the past.
I looked in to haulage rates, the cost of a truck and trailer, renting a yard to park it and everything else that goes with being an owner driver, and decided it wasn’t worth the worry and risk. I’d rather work regular hours for a slightly lower regular wage.
Maybe there are other jobs where the middle man takes a bigger cut and it’s worth going alone. It’s just that the owner drivers, mobile mechanics and builders I’ve met never seem to be as well off as I would like to be for the hours they put in.

I spent the best part of 10yrs either setting up, running or selling businesses. I know what you mean and I m,ust admit that while I used to lie to people about the benefits of running your own gig I absolutely hated it.
Yes you had more flexibility – more flexibility to work all the time, worry about your pipeline of work, try and hire the absolutely RIGHT people every time, not take holiday, I had about 3 days sick in 7 years !, be expected to answer the phone 24×7, have no support or anyone to bounce ideas off. And I am talking a 15 person/$4m business as well.
I’m quite glad to be out of it, partially. I still work but am part of a bigger organisation and while accountable and senior (Partner) I have colleagues to bounce ideas off, people to take up the slack when I am away and feel mroe in control.
And yes it might pay less, sort of, at least it is a bit less stressful.
If you need stability and want to focus your time and effort on the little one then I would suggest you do just that. Don’t try and fight too many fights all at once.

Diversify. Utilise your existing customers, there must be a few who you feel close enough to, to tell them you need to expand and is there anything else you coud be doing or them.

Don’t try to become something your customers don’t see you as. Let them tell you what it is you could be doing for them. They’ll be more likely to use your services then.

Good luck.

Btw, just set up myself after years on the corporate ladder. work currently coming from the staff I used to manage! Loving it so far but I could see how easy it would be for it to hack you off.

two years is barely getting started. There’s tipping point between having to find the work and the work finding you – that happened for me around year 3. Its also when I stopped having to travel so much wit my work, suddenly everything was on my doorstep. The first few years I was constantly pitching, promoting, tendering to keep the work coming in…… then overnight seemingly…. work just started coming to me. I haven’t even looked at my cv or folio for 5 years or more, apart from one trade directory entry (where people who have heard my name can find my contacts)I don’t advertise either. But that tipping point, when it happened, doubled my income.

Something I’ve always wondered with self employed and own business type people is, do you ever work out your hourly rate ?

No – because its a fruitless calculation to make

work currently coming from the staff I used to manage!

This can bear some nice fruit. Former colleagues and clients- as they move on and up – bring you with them. When they are in a new job, with new staff and unfamiliar surroundings the first thing they reach for is the familiar – someone they know the measure of.

Two things for sure as others have mentioned, (1) you will be glad of the freedom in a few years and (2) two years is not a long time in establishing your business, hopefully soon you will get to the ‘tipping point’ of clients and pipeline.

Totally understand your predicament, but a new born is not that expensive but gets more expensive as they get older, I’d be inclined to stick it out for say a year or so and then review as they get more expensive.

Might be a shame not to when you may be on the cusp of greatness!

And further – you may well be grateful of the flexibility of your hours with a newborn!

No – because its a fruitless calculation to make

Not entirely. I realise there’s more to it than the money and for some people “being your own boss” is a big part of the decision that will overrule other, more practical, aspects.

Ultimately though, with the jobs I have considered, owner driver or mobile mechanic, it came down to choosing between working 40 hours a week for someone else for £400, or working 60 hours a week for myself for £600.
An oversimplified argument using round numbers and not taking things like holiday pay in to account, but you get the idea.

I just wonder how many self employed people actually do the sums.

Dropped our from a well paid plc position to set up in ’97 had one son not quite 2 and another newborn. Cash income dropped quite a lot but I have never missed anything they have wanted me to see – school/sports/trips/birthdays – compared to mates who stayed in the rat raceI would say that I have a better relationship with my boys.

Comments have been made here re time – 2 years is a business still in start up mode, 3-4 years is the key point.

Would suggest getting the help of a good external business adviser, but be careful, we went through 3 before we found someone brilliant who helped me focus the business and drive it forward in 2004 – now employ 5 people and am v happy.

Good luck with your decision, it’s a tough call to make.

This month has been at max capacity, but should bring in about 20% more than we need.

That would worry me a bit. By max capacity do you mean absolute max or a 40hr week? If it’s absolute max then that isn’t sustainable. I try to make a reasonable wage at 50% capacity, some weeks are busier, some are empty so it averages OK.

Costs are quite high which doesn’t help.

Intrigued by this. Computer, software, travel, colouring pens, what else? Or do you mean mortgage and household bills, that’s a bit trickier?

One advantage not to be overlooked is the ability to spread any income across ‘periods/years’, so that you can pay very little (in percentage terms) to the Taxman – and you’ve also huge abilities to set all costs (and more) against gross rather than net as usually happens when you are PAYE.

Costs are quite high which doesn’t help. Doing business in the SE feels expensive!

But would they be cheaper elsewhere?

If 100% of your time only brought in 20% more than you need then your rates are too low. I’d suggest it should be bringing in AT LEAST 50% more than you hope for (at “40 hrs” a week) and probably aiming for 100%. If you are clever about how you introduce this to existing clients they can even be encouraged to bring forward proposals/agreements. E.g. tell them a price rise is coming in June, but all existing work will continue on the current rate, and any proposals completed before the start of may will only see half the increase… …obviously you need to work out the details to suit your needs!

What difference do you offer a customer compared to a “big agency”. The successful one-man-bands I know all do something very specialist (e.g. the expert in structural/drop test/vibration stuff; a guy who specialises in optical stuff; someone who knows how to make stuff really water tight for submersible applications). To the extent that the agencies hire them in (at big £) for very specific parts of bigger projects, as well as them having their own clients.

One of the reasons we (customers) use agencies is that they have ‘breadth’ of experience (so the great concept, gets turned into a great design, which gets converted into a very practical mouldable part, which has been designed in the right material etc. Obviously one man can do all of the that but I’m more confident that multiple people will deliver something that works. Rather than looking to find an agency to work for – are there any other one-man-bands like you who might be interested in forming either a loose or formal allegiance to strengthen your offerings?

I’d say any project which demands more than 80% of your time, needs to be paying a premium for “urgency”, because you can’t afford to be out finding new clients. Most customers are comfortable with the fact – you can do it for £400/day as 15 days spread over 5 weeks, or you can do it for £600/day (still 15 days) crammed into 3 weeks.

Finding clients: Many projects these days include an element of electronics. Build relationships with some of the electronic design/build companies locally. You can bring them work and vice versa. Likewise with local machine shops/moulders etc. Universities and relationships with business link (and whatever is replacing the RDA locally) can also help find early stage clients who might be looking for jobs to be done. If you are not spending at least 1/2 a day a week “networking”, meeting prospective clients, writing proposals etc. then you are not going to have a sustainable level of business.

Get recurring income: one of our local smaller agencies has started offering a “production management” service once the product is finished. Essentially they look after the drawing control, design management side of things and liaise with manufacturers on an on-going basis so their small clients don’t need someone in house to do all that. This helps ensure you get repeat business for design modifications, and future products but also differentiates them. They charge a monthly retainer for certain services and then an extra fee for “real” work!

Consider a different business model (note this is higher risk, but could be part of your ‘putting the price up’ strategy). I know of at least one electronics company who work this approach for products they like. Offer your design services at say £450/day. Many of your clients are small/early stage companies and can’t afford that. Reduce your rate in return for a ‘piece of the upside’, e.g. equity, royalty. The best model I have seen (from your point of view), took that £450/day charge, offered to do the work for £240/day* in ‘cash’ but with the balance (£210/day) as a ‘loan’, which accrues interest (at a sensible rate). The client has the option to repay the loan and interest at any point (if they feel cash rich). They have to make a repayment every quarter which is at least 10% of their turnover in that quarter [the clever part there is making it all turnover, not just turnover on the product you designed!].

* that needs to be a level you would be happy doing the work for anyway; then any future income is a ‘bonus’.

Finally, encourage your clients to make use of your slack time at a discounted rate. Obviously you need to be using this time to ‘sell’ but there is no harm in highlighting to your existing clients that small non-urgent projects can be fitted in around/between other jobs at a discounted rate.

I’ve had my business 22 years and STILL convince (delude) myself that I’m better off. I earn less than I would with a normal job and have always put in at least 60 hours a week for marginal pay. Think I’ve had three weeks holiday in all those years.

Why the hell I continue to do it is beyond reasonable explanation but it just feels better.

After 2 years as your own boss you will probably find it impossible to accept the restrictions of full time employment.

At least, that’s what most potential employers will think.

Can you join a consortium of people doing the same thing as you?

I spent the best part of 10yrs either setting up, running or selling businesses. I know what you mean and I m,ust admit that while I used to lie to people about the benefits of running your own gig I absolutely hated it.
Yes you had more flexibility – more flexibility to work all the time, worry about your pipeline of work, try and hire the absolutely RIGHT people every time, not take holiday, I had about 3 days sick in 7 years !, be expected to answer the phone 24×7, have no support or anyone to bounce ideas off. And I am talking a 15 person/$4m business as well.

Is there the possibility your just good but not brilliant at this sort of thing. Presumably if your good at starting Business and running them your’ll soon become reasonably successful.

Im my job i’ve been stagnating for a while. I often wonder if its because Im not as good as it as other people. Ie I should be doing work now not on singletrack.

I went from IT contracting to working for the very large man last Autumn. Wasn’t happy about it at the time, and the money’s not great, but here I am at home on a sunny Monday morning in shorts after a leisurely breakfast. Going to browse some training materials now, might have a bike ride over lunch.. and I also need to book my PAID holiday time.. 🙂

I have my own business (7.5 years old) , work sensible hours, generally don’t work weekends, have 25 days a year holiday + bank holidays etc.

Money isn’t as good as it was before the ‘recession’ but still take home a reasonable amount that means my wife only has to work part-time and term time to supplement income a little. We have two 2.5 yr olds too.

So it can be done.

Wow, thanks for all the responses. Great a well balanced advice / opinions.

This is what I will probably do.

Continue trying to take the business forward, in the remaining months before the baby arrives.
Contact few people in other consultancies that I know and see whether a “deal” might be possible. As well as what form such a deal would take.

Also I will probably enquire about a couple of really interesting jobs I saw yesterday… Not convinced about this option but want to explore how I feel about it by going through the process.

for MTG…..

i was a self employed chippy in the UK earning roughly £1000 a week for a five day, 8 – 4pm week.

i’m now in germany. first started working for a carpentry firm and recieved 1600€/month, 1150€ after tax and that was for a five day week, 7am start and often a 7pm finish. no overtime as such. any overtime was given as time in lieu when there was snow/no work in winter.

i’m now freelance and can earn 1600€ in a week (a whole 7 day-week, admittedly). my outgoings associated with work are a little higher, but all tax deductable – which before hand they were not. and besides, my accountant sorts that out (also tax deductable).

ok, so i sat at home last week as i didn’t have any work, but i got to go walking and riding down south whilst everyone else was at work. it looks as though this week will be quiet, too, so i’ll be off enjoying myself again. i should try and sort something out for next week, otherwise the GF will moan.

i’m not complaining. i’ve got enough in the bank to see me through untill August if nothing turns up.

Self employed sparky here, been trading 2 years – after a couple of months I said I’d never work for anyone again.

Work 5 days a week – spend the odd evening or a bit of the weekend pricing, invoicing or accounting (do all my own accounts) and I have 4 weeks a year holidays. Downside is that a lot of the work is away from home.

I’m a one man band, but pull in some larger jobs and use subbies. In 2010/11 I turned over approx £100k and pre-tax profit/my earnings (I’m a sole trader) for S.A. purposes were approx £50k.

I have zero work related stress compared to astronomic stress when I was in senior management earning £10k pa less – I aint go back to da man (fingers crossed).

Is there the possibility your just good but not brilliant at this sort of thing. Presumably if your good at starting Business and running them your’ll soon become reasonably successful.

Probably. I suppose it depends on if you want a business to be just you or you + 1 or 2, once you get to you + 20 then you are into a different field. My first one was me + 90 others when we sold it ($20m), second one was me + 12 which was probably even worse than 120 in many ways. I think there are entrepreneurial people who can just make businesses fly, I found it hard as I’m more a techncial person vainly tryign to run a business. Current incarnation is going well though and I am working for the man and enjoying it.
Horses for courses, I’m always happy to employ either contractors who want perm or people who have run small businesses. Generally both of those types can equate effort and time into money so work more efficiently. It’s the lifers that I find hard to motivate.

aint no way i’d work for some one else again .. as the sprky laid out above we have quiet week here and there than like this week the world goes mad and i’ll clear 2k this week,
one of the best pieces of advice i ever recieved was in the school playground when ‘d been on my own for a year or so and i was worried as i had no work all day.. the guy said enjoy the day cos the phone will ring.

in the school playground when ‘d been on my own for a year or so

Is this what you get up to on your day off?

Hey mate. Firstly, congratulations! Good work.

Have not read all the responses so sorry if I am repeating them but here’s my opinion:

Try option 3 and if it doesn’t wok then go for option 2.

I have got two kids now and all I can say is that once kids come along you stop giving a shit about work and all that matters is that you can leave on time and you get paid every month without fail.
Seriously, family life can be stressful and if I had to worry about where the next work was coming from on top of all the other stuff I have to stress about i’m not sure I could take it.
I have been in the same job for a long time now and before I had children I used to have fairly regular worries about whether I was achieving highly enough and developing my career, but now quite frankly I couldn’t care less about all that stuff and am actually much happier at work now I have more important things to attend to outside it.

You are a highly skilled and employable guy so you will not have any problems finding a good and interesting job. Do that now and make things easier for yourself, and once your family is a bit older maybe you will want to have another go at doing your own thing.

All the best, P

Hi P,

Nice to hear from you. Didn’t realise you had 2 sprogs now, great news.
You raise some interesting points, I hadn’t factored in the high likelihood that my priorities will change. My Wife (L) is already in a frame of mind that I can’t appreciate yet. At the moment my motivations are split between providing for the family and wanting to succeed in the business. Thankfully they are both quite compatible but if ever the demands of one conflicts with the other I know which will win.

You racing the Gorrick on Sunday?

You racing the Gorrick on Sunday?

Ha! This question shows how little you appreciate my situation 🙂
I have not ridden my MTB in about 18 months I think. Just don’t have time any more – way too much going on at home all the time. Of course living in London doesn’t help since it means going for a ride takes a whole day.
I am eagerly awaiting the time when my son can start riding an MTB, since that is realistically when I will be able to start riding again regularly.
In the mean time I am getting my bike fix at the local BMX track – my son loves riding there on his balance bike. I will get him his first pedal bike later in the year and hopefully next year both he and I will start racing BMX… 🙂

Good luck with everything, keep in touch and let me know how it all goes.

It’s a difficult one this – working for yourself is great but the freedom isn’t always what people might think – if you don’t work you don’t get paid. Saying that, the opportunity to make serious money exists when you work for yourself (but also the opportunity to lose your shirt).

I think Packer has a good point – once you have kids I guess stability would be key over the thrill of running your own business – not in that situation myself but can appreciate it.

I started my own business in March 2010 after working for a company doing the same thing for 6 years previously. I had my own IT company prior to that earning good money for someone in their early 20s but feeling very unsatisfied with it all. Halved my income to work for that firm but doing something I loved and then had a family. Once the wife had given up work and I had 3 then 4 mouths to feed, I soon realised I wasn’t going to get to where I wanted to be working for someone else and made the leap back.

Haven’t looked back once and whilst I probably do a 50 hour week on average, it often doesn’t feel like work and I’ve always worked that hard regardless. Yes, the pressure is there but it’s nice pressure and business is going very well. 35% growth Y1 to Y2 and forecasting 150%+ growth Y2 to Y3 and am approaching double figures on the staff side of things.

It’s not for everyone but I’m quite a laid back character and the pressure doesn’t really stress me out, but having gone from being my own boss to working for someone else and then being my own boss again, I think having a break from a business can do you some good and helped me decide what exactly I wanted to be doing. If I’d stuck with the IT stuff 8 years ago I almost certainly wouldn’t be doing what I do now and enjoying life so much.