Risk Management

There are a few other areas to consider when considering starting a freelancing business to make it a less risky. 

Primarily, these areas all relate to your personal and financial circumstances. 

Why is this important?

Starting a business will be very hard if you have a lot of pressure or stress in other parts of your life. 

I want you to start with the best circumstances possible so you can succeed, so let’s look at what we can do to make it as stress-free and risk-free as possible.

With this in mind, I have put together a free risk calculator to give you an idea of how risky your potential new business might be.

It will give you a good idea of whether or not you’re in a position to start your freelancing business. 

Simply go through the questions, marking ‘yes’ or ‘no’ based on your circumstances, and the result will tell you whether or not starting a freelance business is risky. 

You want to aim to have your risk percentage at 50% or lower to start your freelancing business.

Free calculator download is HERE, or click the link below and answer the questions.

https://mailchi.mp/8862aa51e803/risk-calculator

NB: You just need to make a copy of the w/s or duplicate the locked tab to use it. 

So, how did you do when filling out the questionnaire?

If your risk is less than 50% 

Great! You’re in an excellent position to get started. No more messing around. Commit and set a date by which you will start, write your notice letter to your current employer and pin it on your wall. 

If your risk is over 50% 

Don’t let this deter you. Of course, you can still start now if you want, but I would advise working on a few of these areas first to get your score under 50%. Once you’ve done this, you will find it much easier, and there is much less risk of ruin should the unthinkable happen. 

Working on getting your risk to 50% and below

Here are some suggestions to reduce your risk when starting out

• If you pay rent or a mortgage - try living with friends or family when starting to cut your expenses.
• If you have any dependents (kids or family members) - they are still your responsibility; there is nothing you can do here except reduce your expenditure and risk in other areas.
• If you have personal debt - try reducing your debt first; you don't want the stress of a business and debt.
• If you do not have 4-6 months' worth of savings to cover monthly expenses - the easy answer is to wait and build up more savings first; empires take time to build, so be patient and do it right.
• You don't work for an employer in the skill you want to freelance - not a big problem; you just need to prioritise getting reviews and references in your first few projects.
• You don't have 5+ years in the skill/service you want to freelance - again, not a significant issue, but you may want to think about reducing risk in other areas since you will have less experience or contacts to draw upon when starting.
• Your current colleagues/friends wouldn't recommend your skill/service - either you have rubbish people around you, or you’re not very good at what you do and need more experience; be self-aware and find out which one it is
• You don't have past employers to seek work from potentially - you just need to prioritise getting reviews and references in your first few projects.
• When you type your skill set into jobs boards online or on Linked In, and you don't get a lot of opportunities come up - this might mean that there isn't a lot of demand for your skill set in the freelance world right now; go back and reassess your market or reduce risk in other areas. 
• You can't secure references from existing or past employers - if you can't get a single reference, you may need to ask why you have not warranted one. If it is a new skill, you must prioritise getting reviews and references in your first few projects.

CAVEAT…

The above is my recommendation, and what I considered when starting my business. 

Most businesses fail due to poor planning, insufficient cash flow management, lack of a wide enough customer base and poor financial management. 

My risk calculator aims to address all of these, but you must understand that risk is subjective to your personal situation. 

You must consider your personal and financial circumstances beforehand.

Think about what your downside is and what your upside is. 

As an employee, you will always have a glass ceiling on how far you can go and how much you can earn. 

As a business owner, the sky is the limit; you set your own limits.