Can I make it on my own? - includes related article on networking

Five entrepreneurs reveal how they left staff jobs to set up their own shops.

* Martha has two small children. She wanted more control over her daily schedule.

* Lee's company merged and moved. But life in New Jersey appealed to him, and so did an early retirement package.

* Joli was stressed out by the ad agency pace. She needed emotional distance and more freedom.

* Gary's agency downsized, then lost his major client. He took the severance package as a bridge to his next job.

* Maureen's boss was fired. She took a generous early retirement package before the bloodletting came.

Each of these professionals gave up a staff job. Yet they still shared one desire, to remain creative, and one need, to maintain their standards of living.

The question of whether to become an independent communicator crosses the mind of many a staff person as the world around them shrinks, hours lengthen and security loses its meaning.

When the inevitable happens to me, many wonder, can I make it on my own? These five did. And here are the key questions they faced: What were your concerns? What mistakes did you make? And what advice do you have for those thinking of a similar move?

The First Concern: Money

Going independent means an immediate drop in cash flow, the reduction or loss of benefits, and the need to spend - for stationery, computers, printers, phone lines, etc.

"You have to begin with money in the bank," says Martha Voss, Voss Communications, Bernardsville, N.J. "I built a nest egg of $5,000. I didn't feel comfortable in leaving my job until I had that in place for start-up costs." Her husband has his own company, and she also waited until she was eligible for benefits under his policy.

Joli Furnari, on the other hand, applied for COBRA (a U.S. program allowing her to keep her health benefits for a specified time - but paid by her, rather than her former employer), at U.S. $300 a month, because her husband was not working when she left her marketing firm. "We had been saving for a house and had around $20,000," says the West Paterson, N.J., writer. "We had no children or mortgage, so I thought we would be okay."

Writer Lee Bland of Mendham, N.J., found another source for the $6,000 he needed for start-up costs. "My severance package," he says. "I invested it in myself."

"You need at least six months of cushion on hand to pay bills," says designer Gary Ghezzi of Denville, N.J. That's about how long it takes to find clients, do a few jobs, and expect to be paid. "Someone told me that if you can last 18 months, you'll probably make it." While single then, he also bought catastrophic health coverage for $125 a month.

Where else did the money go? The largest expense was an average $3,000 for computer hardware and software. Another expense was sta-tionery. Printing costs can range from $250 to $750, depending on how many letterheads, envelopes, business cards, invoices, mailing labels, etc., are ordered. Other costs were for phone lines, furniture, copiers, fax machines, etc. None of the five invested in a fancy promotional kit or marketing program, and none took an outside office for their work.

The Second Concern: Temperament

A freelancer's lifestyle is like riding a rollercoaster. "It's boom or bust," says Voss. "The boom is great, but the bust is scary."

Temperament is key, says Ghezzi. "Do you have an entrepreneurial spirit? Do you like to talk to clients? Can you adjust to the crazy hours? Can you make your own decisions, instead of having a boss do it for you?"

Freelancers must also have self-discipline. Can you meet deadlines while working at home with no one looking over your shoulder? Or, must you dress up and go to an office? Also, are you self-reliant? Do you still need a clerk or secretary to type a letter or make 20 copies?

If you pass that test, Furnari says, there is nothing like being independent. "I have much less stress. I can sleep at night. I eat normally. I have time to do things I want to do." She doesn't miss going to an office "where you have to dress up, play politics and all that nonsense."

But while they may be more productive at home, given the fewer interruptions, three of the five felt the loss of "schmoozing" at the office. "I missed the interaction, bouncing ideas off people," says Bland. "Or a draft may seem okay, but someone can give it a spin to make it better." And, of course, others drop by to test their ideas.

But Bland has noticed that the schmoozing is less vital today. After a few clients accept your work, he says, "you gain confidence in yourself and in your ideas."

The Final Concern: Clients

Before offering a lance for hire, it's wise to develop a small client base. Every experience, however, is different.

"I'd like to say I had a great master plan," says designer Ghezzi, "but I didn't." Leaving his job, he took freelance work while looking for a new staff position. "I had my foot in both camps. Then came a job offer and a revelation. I didn't want it. I really wanted to be on my own."

Maureen Dillon hedged her bet. No sooner did she take early retirement than she became a contractor for her company, American Express. On the other hand, Voss tried to work part-time for her company and segue into a freelance career. "But I found myself doing the same job for less money, with no time to find other clients," she says. "So I made a clean break."

How Do You Find a Client Base Before You Leave Your Job?

Network. Network. Network. "The term is a cliche," says Bland, "but people you have worked with can be the life blood of those first months on your own." As a writer, Bland found design firms he had worked with most helpful. Their assignments even helped him learn new skills. In addition, he reached out to communication friends in his industry, steel, and brought in a job from the U.S. West Coast.

Furnari put feelers out to everyone she knew. Would you hire me if I went freelance?, she asked. Three out of the first 10 people said, yes. "The climate was right," she says. In fact, there is a shortage of pharmaceutical promotion writers, and clients soon tried to hire her.

When Dillon accepted contract work from American Express, her wisest decision, she says, was to continue working in the office two-and-a-half days a week. "I chose to work there for social reasons," she says, "but it's been a-good strategy, because I've made contacts and developed other business. In fact, some people see me around so much, they don't know I'm gone."

Soliciting business, moreover, never stops. Voss still spends five hours a week on prospecting when she has work, and 10 hours when she doesn't. "You can't finish a project," she says, "and then say: 'OK, who's next?'"

A Penny for Your Mistakes

We asked each entrepreneur one mistake they made, and their advice:

"Don't take on too much work," says Martha Voss. "I hated to turn anything down, and I found myself working all hours and risking deadline promises." She now has a limit of one large assignment and two small ones at the same time. Small jobs are those she can do in a day or two.

"Be aggressive in contacting people," says Furnari. "I stopped after I got three positive responses. Now, I don't know if I'll have those clients next year. I should have called all 25 to 30 people I know in the pharmaceutical market, instead of 10. I should have called in every favor. My next mailing will be more planned."

"Don't rely on an outplacement service," says Bland. "It was depressing to go every day to an office where everyone was out of work. You feed on each other. It's not a positive environment. I had only one offer in that time. It didn't work for me."

"Plan your finances," says Dillon. "Freelance life is insecure, so you need to earn as much money as you can from your investments. I didn't. My investments are very haphazard, and I've probably lost money. After three years, I finally sat down with a financial advisor."

To avoid mistakes, says Ghezzi, ask yourself this key question: Do I want to do only freelance work, or do I want to start my own business? "I've seen too many creative people end up as salesmen and administrators when they start a business," he says. "I don't want that. I want to do design."

The Bottom Line

And how successful have these entrepreneurs been?

One made less in the first year than on staff, then was surprised to equal it in the second year.

One has been able to supplement a pension enough to support the same lifestyle.

One is making more money in the first year than when on staff.

One makes less than half of the old staff salary, but a pension brings income close to that level.

And one projects a little less income in the first year.

So, should you make the break to independence day? There is no clear-cut answer. "Most people are willing to tell you their experiences," says Furnari. "Seek out people you admire, and ask their advice." But for Voss, it's a personal decision. "No one can advise you if you should break away. They can only tell what's in store for you if you do."

13 tips on starting a freelance business

1. Should you do it? Seek the advice of people you admire.

2. Use your name or the service you offer in the firm's name.

3. Establish your business phone, fax number and E-mail address first, then order stationery.

4. Don't use your home phone number for your business number.

5. Create a visual logo that identifies your firm.

6. Develop a mailing list from everyone you ever worked with.

7. When sending out samples, send copies, not originals.

8. A brochure is a luxury. Samples and a good cover sheet are enough to start a business.

9. Join an organization of your peers to discuss rates, contracts,taxes, marketing, etc.

10. When discussing rates, ask the client what the budget is.

11. Recognize that when you're busy, you're in a positive frame of mind to make sales calls.

12. Learn what's deductible, from expenses to a home office.

13. Talk to a lawyer or CPA before incorporating. It may not be necessary or worthwhile.

RELATED ARTICLE: KEY ADVICE

Networking:

"The hardest thing to face when you go out on your own is the sense of isolation," says Martha Voss. "You need to talk to people who are doing what you're doing. You want to know how to price jobs, for example. Or how to handle taxes." She had saved a promo piece from a writer, Susan Wills, and asked her advice. That's how she learned about the Self-employed Writers and Artists Network, or SWAN.

"It's important to meet other people who do what you do and compare notes," says designer Gary Ghezzi. "You can't focus just on yourself, on creating work and collecting fees. As important as networking is when on staff, it's more so when you're on your own."

In New Jersey, creative people like Voss and Ghezzi turn to SWAN. Members are writers, illustrators, designers, photographers and media professionals. The 12-year-old organization has doubled in size in the past three years to 145 members. It is believed to be the only organization of professionals from different creative disciplines.

Three women started SWAN in 1984. Given today's downsizing, it may be an idea whose time has come. While SWAN distributes a directory with a write-up by each member and has its own Web site that features samples of members' work, it's the human connection that draws these independent people together.

"I had a lot of questions when I went on my own," says Furnari. "Should I incorporate or not? What makes a good promo mailing? I got the answers at SWAN meetings."

"You can always learn something by rubbing elbows," says Ghezzi. "Comparing notes also enables you to judge your own effectiveness." Finally, such contacts can produce referrals and new business. For someone who doesn't like cold-calling, Ghezzi finds networking to be a godsend.

Starting such an organization is not easy, but being involved in IABC is an excellent preparation. The rewards are tangible. Networking friends may become collaborators - with a writer, photographer and designer joining forces to serve a client.

Robert A. Parker is a business writer in Nutley, N.J., and is a member of SWAN. For more information on SWAN, call (201) 967-1313, or go to www.swan-net.com.

COPYRIGHT 1997 International Association of Business Communicators
COPYRIGHT 2004 Gale Group