By James Gustafon, an Overdrive contributor
When most people think of a business consultant, they first imagine somebody in 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. Here are a few benefits of working as a freelance business consultant:
- 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 necessary 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.
- You’re Your Own Boss. 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!
- Tax Deductions. You’ll have to pay for new 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.
- Choose Your Clients. 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. If you’re in high demand, you can pursue those jobs that will net you the greatest profits.
- Flexible Work Schedule. Most people would prefer to work fewer than 40 hours a week while some driven individuals would prefer to work between 50 and 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.
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:
- Clients Who Don’t Pay. Some clients pay invoices right away while others prefer waiting. 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.
- No Benefits. Do you like your current employer-sponsored health insurance or retirement perks? As with any form of self-employment, you’ll lose benefits when you become a business consultant. However, this can 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.
- Organization Is Key. When working for a company, you rely on other employees to take care of finances, marketing, billing and other day-to-day activities. You’ll have to manage all of these tasks when you start your own business, and it’s easy to become overwhelmed by the sheer volume of work.
- 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.
- 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 money to get through the occasional slow periods.
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.