Become a well-paid Independent Project Manager
Ultimate Guide in 2019
This Ultimate Guide is specifically crafted for Program and Project Managers who wish to become a well-paid independent contractor.
An average PM makes 60K per year. An average independent consultant makes 107K per year.
Even if you aren’t a PM I promise: you’ll get a ton of value out of it.
You will love this guide if you are curious about becoming a self-employed consultant at one point in your career.
In this comprehensive guide I’ll cover:
💥 Step by step: how to go from an employee Project Manager to a Independent Project Manager
💥 How to test your Independent Project Manager Value and USP BEFORE you start
💥 How to build a solid foundation for the next 10 years of your independent consultancy business
💥 Prepare a stellar Independent Project Manager Resume
💥 How to get your first clients (and keep on getting more!)
💥 Setting up the ever-lasting machinery to support your Contracting Activities
You are a PM. Now learn how to become independent! 👇👇
Why should you care what I have to say? Because I’ve been there, done that.
Chapter 0: Why I wrote this guide
I have seen a lot of fuzz on the internet on becoming a freelancer. None of them was customized for PMs.
As a management consultant in IT I didn’t get much value out of that “generic advice”.
Too much irrelevant information can become quickly overwhelming.
Jumping from article to article is overwhelming.
So, I wanted to have a laser-focused advice, all in one place.
And this guide is born.
Who am I?
I started my career as an employee like you did. I was an immigrant with no network, no local language skills and no insight to a self-employed life.
My father was a teacher and my mother was an officer. No history of entrepreneurship runs in the family. It was dreaded and discouraged.
Yet I managed to become a Self-Employed Independent Project manager, landed on multiple Fortune 500 clients and multiplied my income beyond my imagination.
In this comprehensive guide I’m sharing my own experience as well as dozens of clients I helped.
Enjoy responsibly! 🙂
Disclaimer: None of the points of view shared in this guide, which is written with a sole purpose of help, should be regarded as a financial,commercial or legal advice. None of the products mentioned here are endorsements. Consult a lawyer and/or an accountant.
TABLE OF CONTENTS
Chapter 1: Set the Stage Right
In this chapter I’ll cover the bases of becoming a successful independent contractor.
First, you’ll learn how to set your priorities straight. You’ll have your goals crystal clear.
You’ll read about the mindset shift.
You’ll also learn about the right level of experience to start freelancing and how geography is at play.
You will thoroughly understand why employers hire self-employed vs. employees.
❓ Why do you want to be an Independent Consultant?
To increase your earnings? To have more freedom of work? Better self-image?
A combination of all?
Do you absolutely need to become self-employed to reach those goals?
Answering these questions for yourself is going to reveal your values.
Becoming an independent project manager is not a goal in itself. It is one of the means to a better life.
If you want to be a successful self-employed independent project manager, you MUST to make sure the means meet the ends.
❓ Is it right for YOU? Pros, cons and the mindset
Independent Project Management might feel like an overpaid employee, but it is far from it.
👉 You are not only shifting to independence: you are also shifting from an employer to a client mindset. You will need to be more outcome-focused, and self-motivated.
👉 You have a bilateral, time-bound contract to abide.
👉 Your corporation is a different entity than yourself.
👉 Understanding your client’s needs and strategy is at utmost importance.
👉 The positive side of the coin: you’ll earn more. Like tons MORE. You’ll have more freedom. You’ll get more experience from multiple clients in a shorter amount of time.
👉 You’ll need a resilient mindset to overcome hardships and hard times. Being prepared is all there is to it.
💥 PROs and CONs of an Independent Project Manager vs. Employee in 14 Categories
Going from employee to self-employed is a life-altering decision. Consequently, it is crucial to understand the benefits and losses.
I am a big proponent of everybody who has the skills and experience to become self-employed.
However, this is an honest comparison with the true upsides and downsides.
Everybody’s story is different, an informed decision is key.Here’s yours.
I made a quick comparison grid below, check it out.
You are an independent entity. You are seen as an expert, and your opinions are valued. You can choose your days-off, and take a variety of decisions by yourself.
You represent a company. Your value is based on your efforts and years in the company rather than your potential. You need a manager’s permission to do nearly everything.
In some PM positions x3 higher than an employee. Expect to be paid better than 90% of the employees at your level.
More your employer pays for you, more of a cost center you become. Your income is fixed, not scalable, apart from the occasional bonus and measly yearly increases.
Your contract can finish any time within the notice period.
It is harder to remove an employee, and it has by far a higher cost.
You mostly pay your own expenses. You have to pay your own insurance, your retirement, your trainings, your accountant, lawyer and tools.
Mostly covered by the employer.
Paperwork and administration
Mostly your responsibility.
Mostly handled by your employer.
Freedom in self development
You need approval for even a book or course to buy, often series of HR and direct managers involved.
You need approval for even a book or course to buy, often series of HR and direct managers involved.
Freelancing makes you focus on professionalism, discipline and carrying responsibility by design.
Your company has to align in order to gain self-development advantages you want to draw for yourself.
Freedom in choosing whom to work with
You can work with whomever you want to: multiple clients or a single client. You can fire a client.
You can often only work for one company. Since it is a more permanent relationship, you can’t quit easily.
Value Of Experience
Your multiple years of experience in multiple clients is seen as an exponential asset. You can talk from an outsider’s point of view
Your experience counts well in the company, but externals are hired to advise you.
Motivation and Coaching
Completely your responsibility. Self-motivation becomes real. You need to review yourself and have a serving attitude.
Your company takes responsibility in your motivation and shares the responsibility. Too much of it can be detrimental, watch out.
Usually easier with freelancers, with quicker start dates.
Usually takes multiple interviews and through multiple departmental hoops.
To fill a gap in skills and experience immediately.
To have somebody with adequate skills and train them up for the long term.
Usually, you are exempt. But you still need to understand to be successful.
Employees must have a deeper understanding of it and have to put up with it.
❓ What's the right level of experience to become a Self-Employed PM?
I’ll be very honest here.
If you are a newly minted project manager, you want to gain a bit more experience.
I’d say it is at least 2 years at a full-time PM role.
Use this time to hone on your craft, your soft and hard skills, with becoming self-employed as your end goal in mind.
And get your current employer to invest in you while you can.
That certificate? Get it now. That network? No better time than yesterday.
Act like the person you’d like to become.
Volunteering for skills you lack the experience for and getting more responsibility within the company are great ways.
With determination and correct guidance, you’ll get there.
❓ Are you in the right geography?
Some states are unfortunately just outright not self-employed friendly.
They either don’t have the culture or history, or it is simply not beneficial for employers.
If you are in a state that is self-employed unfriendly, then consider relocation. If that’s not possible, your options are limited to remote working. But beware, that can often imply a pay cut. Negotiate well beforehand.
The state where you set up your operations is also important for your taxes. Therefore, it is an important decision.
❓ Do you have the necessary experience/skills/network?
Are your hard skills in demand?
How about necessary soft skills to get a client AND retain it?
Maybe there are opportunities in your current employer to gain a skill that will exponentially increase your chances in your independent project manager life. In that case investing in yourself beforehand could be the way to go.
❓ Fill a gap in the market: Understand why companies hire independent project managers.
Once you are an independent project manager, like it or not: you are an entrepreneur.
And you need to think like one.
You need to watch the market and industry you are in. Constantly.
What are the most sought-after skills?
Employers hire freelancers to fill a gap they couldn’t otherwise.
That means you should be 10x better than their average managers.
Your combination of skills must be your USP.
Then you need to learn how to sell it. (Don’t worry, in this free guide you’re covered for that too!)
Chapter 2: Your Lean ROADMAP for an Independent Contractor PM
Now it’s time to build a YOU ROADMAP.
Especially a Roadmap you can start implementing right away.
In this chapter you’ll learn what a LEAN roadmap is, and why you need one for your self-employed transformational journey.
We’ll talk principles. We’ll talk tactics. You’ll also learn how to take care of basics that you didn’t need to before.
And to tip the scale, I’ll also share my proven principles on how to create an actionable Roadmap for yourself to become an independent project manager.
❓ What is a Roadmap?
A Roadmap is the GPS that takes you from where you are to where you want to be.
It does so with guiding principles: i.e. don’t take toll roads, avoid highways, etc. Your roadmap does exactly the same.
Almost any big transformation has a clear roadmap.
Your independent project manager transformation is no exception.
Look: Think of the Roadmap as a sort of project plan. Every time you look into it, it’ll show you what the next steps are. And it will do it on a time-bound basis.
❓ Why do I need a LEAN Roadmap?
Any list of goals without a project attached is a list of dreams.
You are well-educated in project management.
You currently do it for your employer’s benefit.
Why not apply the same proven principles to your journey?
By no means I’m asking to apply a full-fledged PMBOK style approach.
Instead, I propose to create a LEAN roadmap.
What is a LEAN Roadmap?
The Lean Roadmap is the system I use with my coaching clients to get to a certain goal. This could be getting promoted, getting a raise, getting your work noticed.
Or as in this case, becoming an independent project manager.
Lean Roadmap is the type of roadmap that gets you from your point A to point B using the shortest and cheapest way possible.
To make your Roadmap Lean, you need to stick to 4 Roadmap Principles listed below
✅ Test first, go full force second.
✅ Collect relevant data and metrics at every step.
✅ Pivot when necessary.
✅ The Roadmap is timebound.
❓ What are the prerequisites for your Lean Roadmap to Independent Project Management?
⚠️Prerequisite #1:List your risks
What are the possible personal/professional risks in this journey?
Write them all down honestly as you would for any project.
👉 I have a health condition that obliges my current health plan.
👉 My industry is in a downturn. Contracts are scarce.
👉 Keeping a client in my sector needs a specific skill-set (I’m looking at you, construction projects)
👉 If I can’t find adequate time to implement my roadmap, it will fail.
👉 …. (insert your risks here)
⚠️Prerequisite #2:Plan a contingency cash reserve
Contracts may not come immediately one after the other. Layoffs happen. Downturns happen.
There is no such thing as “long-term contract” when it comes to independent contracts: all of them have a notice period. This period is often one to three months, six months in extreme cases.
Make sure that you have 6-8 months of survival reserves without income. Put it into a high-interest & low-risk investment fund. Thank me later.
Even if you find a contract remember: most invoices are paid in 30 days AFTER the delivery. That makes at least 2 months of not being paid post-start.
🌴Prerequisite #3:Plan your retirement
Because nobody will do it for you.
Congratulations: you eliminated thank pesky employer, along with its contributions to your 401K.
Time to get expert advice for your own region.
🤒 Prerequisite #4:Plan your health insurance
Your health is the infrastructure of everything you have in life. Currently your employer has likely chosen a plan for you. And pays for it.
When you are self-employed oftentimes, you’ll need to change plans. See a broker and inform yourself about the options.
🤒 Your Health and Intelligence is your infrastructure
When you have a sick day off, you aren’t paid. And your client doesn’t get the work done.
Let that sink in.
Even though it is not your fault, it is easier to take care of your physical and mental health than bearing the consequences.
Keep investing in what got you where you are. And more.
⌚ Action #1: Time-box your Roadmap
It might come as a shock: whatever is not booked, won’t get done!
You’ll need to set a goal for each step outlined in this guide and a timeline.
I recommend limiting it to a 6-month period. At 7th month you should be able to call yourself Independent Project manager.
Your roadmap is your adventure from where you are to where you want to be.
And timeboxing it is key to avoid procrastination!
This brings us to:
👊 Action #2: Clarify Where you are (Your Point A)
Your point A is the honest evaluation of your professional self today.
It is not an easy task: the professional self is a complex beast.
You can go all-nuts about it and risk losing yourself in self-help books.
Consequently, I’d suggest limiting your focus to 4 areas: Skills, Network, Personal Brand and Infrastructure. These all take work and any work has to be planned.
Answer these questions honestly:
❓ What are my top 3 strongest skills (soft and hard)? Ask this to yourself and your colleagues.
❓ How well am I connected in my industry? What are the profiles of people in my direct circle?
❓ How am I perceived in the industry? Am I contributing, and out there “enough”?
❓ What do I know about the mechanics of becoming an independent project manager?
👊 Action #3: Clarify Where You Want to Be (Your Point B)
Picture yourself as a successful freelancer in 6 months from now. Thinks in terms of same areas: Skills, Network, Personal Brand and Infrastructure.
Then answer these questions for that future-self:
❓ What are the soft and hard skills I have?
❓ What kind of key people do I have in my network? What am I doing to nurture it?
❓ Where am I with my personal brand? Do I have an online and social presence?
❓ What mechanics do I have in place to help me legally and financially?
👊 Action #4: Set Your SMART Goals
Now you have your Point A and Point B set, it is time to draw a line from Point B to Point A (not the other way around!).
You want to know where you’ll to be in 6 months, and work your way BACKWARDS to where you are now.
To do this: Clarify your SMART goals for each area of this guide. Here are some examples:
✅ Where do I want to be in terms of skills? What are the top 3 soft skills and hard skills I have to acquire? (For some pointers check out this research I’ve conducted)
✅ What are the SMART goals for expanding my network? i.e.: I’ll attend at least a meet up every week, and will connect with 10 recruiters for the next 6 months.
✅ What are the SMART goals for my personal brand? i.e.: I’ll post weekly articles on LinkedIn, I’ll appear once a month in industry-leading podcast, and I’ll have at least 2 speaking engagements by the end of month 6.
✅ Which mechanics do I want to be ready with? For instance, getting an accountant, having the correct type of company set up, etc.
Then divide it into monthly goals, and voila! You have the skeleton of your roadmap with KPIs to track.
If you need a knowledgeable accountability partner to keep all this on track, I’m here for you.
❓ Which skills and qualifications are the most in-demand?
How can I acquire them?
This seems like an eternal question.
You can elicit a lot of information from your network.
However, there’s one golden way to get going: Let the market speak for itself, baby!
Job sites are a gold mine of information for an Independent Project Manager. Try LinkedIn Jobs, Indeed, Monster. Or whatever works best in your country.
Sometimes there are job boards known best for its niche contracting, such as JobServe in the UK.
Let’s take a look at Indeed.com as an example. We’ll enter “Project Manager” for our target location, and filter contracts.
273 contract positions within 25 miles. Not bad.
Next step is to click on a few relevant ones and capture reoccurring themes.
Here’s a job ad for a Senior Project Management Contract.
Here’s another one for a Senior position:
You can easily see that common themes for more senior position is to have a degree, have experience in leading themes and having a PMP. Therefore, put that certification on the roadmap.
Analyze a lot of them, and always keep an eye on them: even when you are engaged for a long-term contract.
They tell you about nearly everything you want to know in an instant:
👉 Which industries are hiring Freelancer PMs?
👉 Which skills are in high demand, for higher-paying gigs?
👉 What are the qualifications? Certifications?
👉 What’s the average experience needed?
Let’s take certifications for instance: You’ll find that PMP is valued much more in the US than it is in Europe: where PRINCE2 is popular. You’ll find in some positions ITIL will help, etc.
By following these steps you’ll have a clear idea of what would your ideal gig look like. And maybe more important, what kind of gigs you shouldn’t take for your long-term career prospects.
What about freelancing web sites?
No offense but these web sites are known for finding cheap labor. You are in competition with low cost of living countries. Sure, you can read a lot of stories online about how they make millions off of these sites.
I am not a fan.
The biggest reason is that it is not worth the effort for an independent project manager. Until you build a reputation and a lot of cheap projects, it is unlikely to receive nice ongoing contracts.
Their advantage is usually being fully remote if that is your thing.
But you might be able to land better paying remote gigs by following this guide.
👊 Action #5: Set Your Milestones
Like any project, set easily identifiable milestones for yourself on your roadmap. For examples of these milestones, download the checklist.
To be able to set milestones, your goals should be SMART.
Milestones should be time-bound, and have a clear measurable criterion to check them off. Here’s a list of example milestones for the beginning of your roadmap, i.e. networking:
🚩 Month 1:
Connected with 10 recruiters. Have gone to 1 local meet-up.
🚩 Month 2:
Connected with 20 recruiters. Have set up 3 calls with them. Have gone to 3 local meet-ups. Have connected with 10 freelance PMs.
🚩 Month 3:
Have got a speaking engagement at a local event. Connected with 30 recruiters. Have gone to 1 interview. Have gone to 5 meet-ups. Have set up meetings with 3 Freelance PMs to learn about the market.
You get the idea. The milestones are progressively increasing in labor and you are getting closer to your goals.
Have you downloaded the workbook? It is a great resource to make this guide actionable. There are more milestone criteria there, and it is free. Download it here.
🤳 Self-Accountability, Self-Motivation, Self-Everything
Creating your roadmap is one thing. Keeping at it and getting results is another.
As an independent project manager, you need to secure your own coaching and accountability partners. That’s where being self-motivated stops being an HR buzz-word and really bites you!
Ask your friends, your significant other and people who have taken the steps you want to take to be your sounding boards.
You are at the driver seat of your career and self-development
It might sound scary, but the good news is that you don’t have to ask for permission for a training or a resource from a boss anymore. Think about the flexibility it gives on your life.
Chapter 3: Preparing A Stellar Resume
A graphic designer has a portfolio to show online.
An architect has sketches and a series of buildings. What do you have as a Project Manager to showcase your work?
Yes, it is your resume. In this chapter we’ll dive right in the most important elements of an independent Project Manager CV.
You’ll also learn what differentiates an independent contractor PM CV and a vanilla Employee PM CV.
🌟 The Resume is Still important
Let me be upfront I won’t give you generic resume tips here. IMHO if you are smart enough to read this guide, you can find a lot of those generic resume writing tips elsewhere on the internet.
For an employee.
Preparing a resume for a freelance position is a different beast 🐗
Your approach to any kind of text you are writing, whether it is a CV or a cover letter, should be entrepreneurial.
In other words, you should treat every piece of text as a copy and make it better.
🤟 Know your audience
Who are you writing your resume for?
Top 3 suspects are For Hiring Manager, HR and any interim. They show different traits. You want to pass all of them for an interview.
HR & interims will likely to do a CTRL+F in your document for the most sought-after words.
Therefore, you need to make your resume keyword-rich: PMP, PRINCE2, any hard technology skill must be mentioned clearly, close to the top.
The hiring manager is different. (S)he is going to check how your real-life experience stacks up with the requirements of the role.
🎯 Your Objectives Section
You don’t want to write “work at a company that cares about you” anymore: because they’ll be your clients.
This resume section may feel like it is about you, but it is not: it is about the client.
Use this section as a pitch: why are your ambitions align better than anybody else for this role.
Make it crystal clear that you are a freelancer, and all you care for is client success.
📜 Your Project Descriptions
Hiring Managers will look carefully at this. Take time to highlight your relevant experience for the position for each project you managed.
Beware that now you are an independent project manager: figures with concrete data and bottom lines are ever more important than wishy-washy statements. For instance
✔️ The $ value your client has got
✔️ The size of the team
✔️ The $ or man-days cost of the project
✔️ Team’s significant achievements
✔️Your Concrete Responsibilities
❌ How you think it helped the company realize its strategy
❌ How it was technically soun
❌ How cool the project was
❌ Private names and acronyms
👌 Your Skills
Imagine you are the HR manager screening your CV. You spend tons of time to figure out if you have sufficient years of experience at a particular skill. What would make your life easier?
Use a grid to show which hard skill you have, and how many years of experience at each skill.
An example of such a grid is included in the free workbook that accompanies this article. Download the package here.
💼 Your Showcases and portfolio
An image speaks more than a thousand words. If you have an online portfolio, link it.
If you can link the similarities with the job you are applying, this becomes gold.
🏅 Certifications and Education
Make them very visible.
They may not be the ultimate deciding factor for the hiring manager, but they are crucially important for the HR manager.
It can be the difference between getting in front of a hiring manager or not.
If multiple languages are of importance in your region then make this visible.
Oftentimes remote roles with specific customer locations require language skills. If you speak them you can jump ahead of the queue.
My advice is to not to mention them in your CV openly.
In bad hands (and believe me, there are a lot of them in the recruiting agency world) it can do worse than good.
I advise putting a simple one-liner such as “References can be provided upon request”.
Chapter 4: Testing The Waters
In this chapter you’ll learn how to take small simulations before going full force client hunting.
Tiptoeing before any sacrifice.
You’ll learn about setting, negotiating and testing your daily rate.
You’ll learn tricks to get the price you want and how to say NO to lower price points.
You’ll learn about how to quantify and test your network.
So, if you are also a believer in Test-First Dive-Second, let’s first dive into this chapter.
🕸 Build a network of recruiters and talk to them
Recruiters and interims are your friends.
Well, scratch that. They can sometimes be the one negotiating you down.
Though they have a lot of incentive to place you at a client.
More often than not they’ll have insider information at a client or at a market. Take them to a coffee.
Ask them for tips about your local market.
Ask them about your chances of finding a freelance contract.
You’ll find that they are surprisingly open to get to know you better.
You’ll often find gold.
📶 Check your LinkedIn for Gold
We tend to underestimate our existing connections.
Get to the list of your connections and re-connect with those who have relevant experience or roles.
Ask for advice, mentorship, referrals, and endorsements from them.
✌ Apply to a few jobs with your stellar CV and Get Feedback
At this stage we should put your CV to test too.
Apply to a maximum of 5 jobs that you think your stellar CV as an independent project manager can pull-off.
The main goal here is not to get a contract (if you do, that’s great!) It is to get feedback.
You are going to spend most of your time hunting for feedback for your CV, beyond the generic “We regret to inform you…” email.
You are going to connect the job poster and ask directly why you were not selected.
You’ll send your CV to recruiters and actively solicit for advice.
You are now an entrepreneur and marketing yourself is a duty rather than a nice-to-have. Aptly promoting yourself is a quest that never ends: even after you’ve got your first customer.
How did I get my biggest clients with most lucrative contracts?
I landed on my biggest contracts through my reputation in certain Subject Matters (Enterprise Architecture, IT strategy, Digital Transformation, Document Management, ERP and CRM implementations).
I’ve become members of professional societies. I blogged. I spoke at conferences.
Showcase your skills and experiences.
There is absolutely no shame about it.
👉 Building your personal brand as an Independent Project Manager
You are now crystal clear on what value you deliver.
Now let the world know it.
We’ve now settled that your reputation is crucial to protect. Your subject matter expertise, your soft skills, your network power should all come out.
Your articles, media appearances, speeches: all play a role. Therefore, it is time to approach them strategically rather than tactically.
👉 Your Online Presence
Many self-employed PMs neglect their online presence. Taking a little bit of care here will put you ahead 90% of them in the race.
It is no secret that everybody googles you.
And you have tools to tap into this “first impression” opportunity.🌎 Website – blog – medium
🔍Being opinionated is sought after.
Nobody likes generic and politic with no personality.
Writing about your opinions on Social Media, Medium is a great way to influence others.
And google bots.
Get your own domain name with yournameandsurname.com – you’ll almost for sure come on top in searches of your name.
Hence, you’ll have the ability to shape a client’s first impression about you.
LinkedIn posts and engagements are a great way to promote yourself.
Your posts should talk about key points that you want to be known for. Therefore, when you connect with a hiring manager: you are again controlling his/her first impression.
Needless to say: Your LinkedIn profile should be top-notch. Approach it as a piece of copy, and getting professional help is never a bad idea.
🏭 Industry Directories / Forums
Does your industry work with directories? Are there well-known forums?
For instance, in IT – being an active Stack Overflow user pays off.
One of my favorite facebook groups is Project Management Cafe. People are friendly and you can get answers to your questions pretty quickly.
Find the relevant online channels for your niche as independent project manager and be part of those communities.
Being cited in big journals (Entrepreneur, Huffington, or your niche’s magazine) works like a charm.
Try to pitch to known and unknown outlets or blogs as a guest poster.
You can also sign up for HARO for requests and pitch reporters about your subject matter expertise.
PR has the benefit of being a sticky promotion for the long term. Your web site will be higher ranked by google,for like, forever.
▶️ Podcasts / YouTube Channels
Find interviews you can get on. It is a great way to showcase your expertise and help others.
Consistently done, you’ll see fresh prospects flowing into your funnel continuously.
👉 Your Business Card and Logo
You’ll see a ton of myths when it comes to business cards.
“Business cards are dead”
“Nobody uses business cards”
“My trash is full of business cards from events”
I beg to differ.
It is still cumbersome to connect with someone at an event just online, and not forget to reconnect.
I still always go through the cards I receive after every event.
As a consequence, I am for getting your cards designed and printed nicely.
You’ll leave, and your card stays.
Even if it ultimately ends up in the trash: it reminds one last opportunity to connect before the end of its life.
💰 Nail down your compensation (Avoid this 1 biggest mistake in pricing)
How much should you charge for your services? At what interval?
Hard questions, but not for the reasons you think.
It is hard because there are a lot of moving parts: Your geography, your role, your client’s needs, your sector: all play a role.
So I'll not give you a number. Instead, I'll show you how you can get a number for yourself.
Key step is to collect more information.
And I’ll tell you exactly how to do that.
Basics of a Freelance Fee Structure
It is crucial to understand your options for compensation.
Usually large corporate clients will have a standard and you’ll not need to think twice.
But sometimes you may be expected to come up with a creative compensation scheme, and knowing what’s out there is mandatory.
Your pricing structure will be different if you have multiple clients vs. one client at a given time, contractual obligations, etc.
Here I’ll talk about 4 main types of compensation schemes used by independent project mangers.
I’ll define them, talk about the pros and cons of each. It will be then up to you to choose or mix things up.
This is the type proposal where you are asked to provide a quote or have a pointer from the client. You need to make a winning proposal that the client happily accepts.
You are either paid at the end or more commonly, split payments (i.e. 25% beginning, 50% after a certain milestone, 25% sign off and closure.).
Beware that you should factor-in risk. It can vary from 15% to 100%.
This is never my preferred structure but once I worked for a big company who sold the project as a fixed budget.
And there was no way that budget would be met.
3 PMs were fired before me, and here I told them that they would lose money on the project. Or worse, lose the client.
Not a pleasant position to be in.
On the other hand, there are pros and cons to consider:
✅ If you are confident that everything will go fine: in time, on budget, the client is trustworthy, etc. You can end up with more cash than initially budgeted.
✅ Clients can feel more at ease if they know their end cost will not change by much.
❌ A very strict project and risk planning with very detailed contracts required. Every scope creep cost is on you.
❌ The scope disagreements with the client can detriment your relationship.
❌ End cost with all contingencies can scare a client away.
2.Milestone/Delivery Based Pricing
Similar to the fixed price, but with a twist: you are paid based on achieving milestones instead of one or two big lump-sums.
You need to carefully define the success criteria for each milestone and include your risks and contingencies for your payments.
In my experience, you should do this only if you are a big integrator/owner of the whole project with a significant budget, and access to resource to shuffle.
✅ Attractive for clients as it is outcome-based.
✅ Achieving easier milestones could leave you with a higher yield.
✅ Possibility of an early agreement and foreseeable cashflow with trusted clients.
❌ Each milestone and their sign-off criteria should be signed off and in the contract.
❌ Often ends up in complicated contracts and disputes, as you have multiple gates of payment.
❌ Every sign-off could be more stressful than the other, trickier than the other resulting in
❌ Risks are embedded and calculated, and ideally passed off to the client (otherwise it will be passed off to you!). Therefore, delivery prices could be inflated.
3.Hourly (or daily) Rates (most common for multiple clients)
Your independent project manager rate(whatever-ly) is something that you should calculate in any of these structures. This is also your cost, so beware.
In the hourly scheme, you work a variable number of hours in a month as part of a framework contract.
There are usually upper limits in # of hours you can spend (to protect the client) and lower limits (to protect you).
✅ Attractive for clients who associate value with hours spent, and don’t want to pay more. You track your hours and you only bill what is spent.
✅ Attractive for freelancers with multiple clients at a given time, as it gives the opportunity to juggle the hours conveniently.
✅ If things don’t finish on time, the risk is not on your side. (although be sure to communicate this early. Nobody wants to find out they have to pay more by the time of an invoice!)
❌ You will need a time tracking system to clock in your detailed hours for each client. You might need to use your client’s system if they have any.
❌ Your invoicing could become more complicated.
❌ You might miss some hours of work for a project, affecting your cashflow
4.Retainer Fees (most common for 1 client at a time)
Retainer fees are hourlies on steroids.
It works like this: you agree on a daily/hourly rate. Then you guarantee the client that you will be available for them at least X number of days/hours per month.
The client pays upfront every month. If there are more hours, overtime: they are dealt as in hourly/daily.
This scheme is very common when you have only 1 client, and you are there for 5 days a week every week.
However, it also works wonders if you have multiple clients.
✅ Visibility and guarantee of steady income
✅ Easier scheduling due to the guaranteed number of hours
❌ Not a lot of downsides.
❌ What’s the most common mistake in choosing a structure and pricing?
By far the most common mistake is to think like an employee.
That is, by dividing your salary to your working days and hours, to come up with a daily rate.
This number is likely to be deflated because it doesn’t take into account your expenses and risk of income insecurity not being factored in.
Furthermore, going for a cheaper rate signals what it is: a cheap job to be done. It tarnishes your reputation. Breaking off from a low rate is much more difficult than coming down from a higher rate.
Another common mistake is not understanding the fee structure.
Every fee structure commands a different outcome, and how/what you get paid.
Ignoring the risks might make you competitive in the short term, miserable in the mid-term.
You have the structure, but still not the ultimate number. So, what to do now?
👉 Talk to fellow independent project management consultants
Meeting fellow independent consultants is a golden opportunity for your research.
You’ll have an immediate understanding of the market. What should you ask?
Ask how much they charge.
But won't they keep it as a secret? I'll never get an answer!
You'll be surprised.
In Independent Consultant's world rates are not as big taboo as it is in the employed world. You can at least throw the idea of a rate in your mind and get a feedback.
The worst they can say is no. Best is a solid number. Everything between is your gain.
Get some pointers from a few self-employed project managers to adjust your price.
👉 Talk to recruiters
Recruiters are not always out there to negotiate you down!
Listen to their suggestions with an open mind, and learn what they are paying to other independent project managers.
Learn about the trends in the industry and how it affects rates.
Ask them what differentiates people with high rates from those with low rates.
They’ll provide a region-specific answer to these critical questions.
👉 Think your expenses!
As an independent project manager you have several costs that your employer used to cover. Your taxes, social insurance costs, set up costs, accountant costs, legal costs – just to name a few.
Your end rate should be covering this base and some more.
👉 Negotiating your daily rates!
You are either talking with an interim or a direct client.
Naturally, you can expect higher rates with direct clients because of less man-in-the-middle eating your lunch. As a result, negotiation with a direct client should start from a higher price point.
When you are negotiating with an interim almost always, they will try to negotiate you down. When that’s the case include a margin of negotiation beforehand, and know your absolute minimum.
Bottom line: Know your adversary at a negotiation, and aim for win-wins.
💥 How do you say NO to a very low price?
Instead of answering directly as “no” use it as an opportunity to pitch your value.
Here’s an example:
“I understand budget concerns. However, I take pride in my work and I am a senior PM with X years of experience. You could find juniors for the price you are offering but you are risking a successful delivery. It all depends on how much this project is important to you”
Top 9 Mistakes Freelancers Make During Negotiation (and how to avoid them)
I have worked with dozens of Project Managers to become independent project managers, and I have met hundreds during my career.
There’s always this question I ask them: how do you negotiate?
You would think that every independent project manager is a master at negotiation.
And that maybe true for the daily stakeholder management work, but it is not the case for self-interest negotiation.
Top point in any negotiation is to have the upper-hand. A small mistake can ruin all the hard work.
Thinking that the client thinks exactly like you think is the overarching mistake.
Following basic mistakes are common even after years of independent project management experience.
1.Being unprepared for negotiation
There is always a negotiation. It is safer to be master negotiation than be sorry.
Researching the company (or interim) is a key part.
- What does the client want to get out of this project?
- How strategic is the project?
- Do I have any contacts in the company?
- Why do they want to hire a freelancer, what are their expectations?
- What rates do they historically pay?
These are all must-haves BEFORE going into the negotiation room.
Second part of this mistake is ignoring to network with other independent project managers.
This is key in setting your price, as it gives you direct market insights. When you know less qualified PMs are charging less than you, you’ll inevitably be more confident.
Of course, you never want to undervalue yourself. It is a tough balance.
You’ll inevitably be asked to give in at certain points.
Don’t take these swings personally. It is in the nature of negotiation.
Instead of cutting off negotiations, come up with counter offers and search for win-wins.
For a good example of this, refer back to the “How to Say NO” section.
3.Not appreciating the Client's point of view
The Client is obviously trying to hire the best candidate at the most efficient price-point.
In the capitalist economy this position is fair and square.
Putting yourself in the client’s shoes is key in coming up win-wins.
What is the real reason behind their ask? Are there any beneficial ways to achieve the same results/or even better?
4.Not leaving any room for Negotiation
Starting where you want to end is an easy mistake to make.
You may want to cut negotiations short. Not advisable.
If you start any negotiation with your absolutely non-negotiable end price, you will get stuck quicker than you expect.
Same goes for your Statement of Work. The more stringent requirements you have without justification will hamper your upper-hand.
Know what to give, know what to take. And balance will find you.
5.Giving up too quickly
Most common and easiest anti-pattern to fall into is to see them as negative and a showstopper.
A much more solid approach is to see them as an area to demonstrate your solution-oriented side. I.e. Is Budget a problem? Instead of saying NO directly check if the project could be achieved with less hours by cutting some scope.
This is just one example. You can extrapolate it to all challenges.
6.Not taking new information into account
More often than not you will learn new information during the negotiation.
- The project might suddenly be super-interesting.
- They might be offering remote work.
- They might be offering a chance to step up for higher roles and more projects.
Sticking to your guns doesn’t mean ignoring mutually beneficial facts.
The last thing you want to do is to enter a negotiation room with a fixed mind.
7.Using your employee salary as a base for Independent Project Manager Contract
Your employee salary is past. Now you are an independent project manager.
There are a lot of horrible advice on the internet throwing in formulas to project your rate from your current salary.
Your employee salary is not the market for AN independent project manager.
You are almost always leaving money on the table if you go into this route.
8.Negotiating based on a disadvantageous Fee Structure
The fee structure can be limiting and dangerous if you don’t pay attention.
Is the client pushing for a fixed price? Then you need to absolutely make sure contingencies and extra times are well defined.
There is no point in negotiating a higher fee when you are stuck in a horrible fee structure.
Starting at a wrong fee structure is the epitome of starting on a wrong foot.
For more on the fee structure, revisit the Basic Fee Structure Section.
9.Going for a one-size fits all
All clients are different.
All agencies/interims are different.
If your client is a multinational that pays higher fees there is no point in thinking about “share compensation” like you would do in a start-up deal.
If the interim is paying high fees it doesn’t mean that this is a dream contract. They might be charging your client way more at your expense.
The client will expect the results for what they pay, not for what you get.
Chapter 5: Getting Client(s)
Our CV is ready.
We’ve tested our ideas and built our roadmap. We even know what we should charge daily. Now what?
This is the meat of it all. The ultimate goal.
This chapter details how to find your ideal client group, where to get jobs, nailing your client interviews and how to keep those clients you got.
So, are you interested in getting real clients (and keeping them)? Let’s go!
👨👦👦 How to define your ideal client group
Successful independent consultants always spend some time by defining their targets in their client-hunting arsenal.
Because knowing what you aim precisely helps you shoot more accurately.
Questions to ask yourself to determine your ideal client persona:
- What skills do they need the most?
- What job ads do they have out?
- How can I access internal offers?
- What’s the best strategy to network with the right team? Where do they hang out?
⚡ A Lead generation powerhouse: Job sites
Job sites are the easiest way to get clients especially when you are starting out.
Writing a customized application and a custom CV will put you ahead of 50% of the candidates.
The crucial aspect here is to act fast. Independent Project Manager positions close much faster than employee positions.
Sign up for job alerts with right keywords in those job sites.
💥 A Neat LinkedIn trick that immediately lists tons of contract jobs for free
You've been reading so far! Great, here's a treat for you:
Go to search and type “project management contract” or "independent project manager". And set type to “content” instead of jobs on the left. You'll often find gold!
👲 Your current employer
When I got my first contract and gave my notice to my employer: they were frustrated.
Why wouldn’t I tell them first?
Chances are that, if you are reading this far, you are a good PM with a solid determination to improve his projected value.
Chances are that, your employer also appreciates that.
In lieu of losing you, they might be open to offer you a contract position as an independent project manager. Wouldn't that be cool?
🕸 Harness your existing network
💎 A relevant network is as good as its weight in gold.
Reach out to your existing network and grade individuals in 3 groups:
1.Direct Influencers: These are the hiring managers and executives in the companies you want to work for, people with direct connections there and people who are actively hiring.
Reach out to them with private messages and tell them you are going solo.
2.Second Degree Influencers: These are the recruiters, ex-colleagues, etc. that you already know. Reach out to them with private messages to get their opinions.
3.Out of the immediate-importance circles: These are the people you want to have in your network, but you don’t want to kill time by reaching out privately. You’ll communicate with them with public messages and social media posts.
🕸 How to build a relevant network
It is more important than ever to build meaningful connections with the people who matter.
You want to make sure that your key connections know what you are up to, what your skills and experiences are.
Sometimes you give a helping hand to a problem they have, sometimes you reply to a job ad. Sometimes you share/like/comment something they find important.
Engagement is the oxygen that keeps your network alive.
At this age you have a lot of online and offline tools available to you.
- Social Media: No surprise here, be especially active on LinkedIn. Also post on twitter and follow relevant people in your geography.
You want to know the events these folks are attending to build meaningful connections with them.
- Meetups – Offline meetings: They are still important, if not more. We all yearn for impactful connections. There are tons of research out there that shows more than 50% of all jobs are filled via networking.
- Your Local Chamber of Commerce: If your work is industry-specific the connections you have here could prove very valuable.
- Your Local PMI Chapter: If you are a PMP, a great get-together opportunity is in local chapters. Find them here.
👉 Connect with consultancy companies (more open to freelancing)
Make a list of consultancy companies who are well known in your industry and are constantly hiring independent consultants.
Follow them on social media, and don’t miss their events.
👉 Connect with other PMs
Wait: I am not going to get jobs from the PMs, will I?
You’ll be surprised how much contracts my clients and I got through referrals of other PMs.
They are excellent sources of information about what is going on in a company at a level you’d like to be involved with.
Pay it forward by helping other fellow independent project managers.
This is how we all roll.
👉 Connect with Adjacent Professionals
Similarly, the people who you’d work with or for are amazing contacts.
Program Managers, Process Managers, Engineers, IT Architects, Strategy and HR consultants: all fair game.
They can often provide invaluable insider information about the industry.
You’ll otherwise spend countless hours to figure it out all by yourself.
👉 Connect with Mentors and Coaches
Do you have an over-achiever in your network?
It might be harder to reach them casually, as they are likely to be in demand.
These people are usually more impact-oriented and they’d be more than willing to offer advice than listen to pitches about yourself.
Ask them key questions and tips. Invite them out for lunch.
I also helped dozens of PMs become independent. Let me coach you too.
👉 Connect with Recruitment Agencies
Recruiters know the current state of the industry better than anybody else.
And they are the most open group to shamelessly network.
Help them promote their events, job posts, etc. Meet them for a coffee. Apply for their positions.
Heck, cold call them – even if they don’t have a position at the moment. That’ll change.
Importance of Word-of-Mouth
Are you a good PM?
If you are reading this guide so far, chances are you are.
Then most of your future business will come through client referrals.
Hence protect your reputation like nothing else.
This involves doing a good job obviously: but it is more than that. You should choose clients based on this criterion. You should network for this.
Pair your reputation of being a good PM with a technology or industry reputation: you will be off to races in no time.
🥂 Nailing Your Client Interviews
To be upfront: This is not a complete interview guide.
However, as an independent project manager you need to approach interviews in a profoundly different way than an employee does.
Your independence and ability to choose your client is a strength. As an employee if you are changing jobs often: you are a job-hopper that can’t hold on to anything.
💥 As an independent project manager, you are an outsider pro who is experienced in how the rest of the world operates.
Therefore, in the interviews stick to your guns. Talk about how you delivered the value, and how it extrapolates to the job at hand.
I.e: Your answer to the common questions will have to change. The questions are more about the client than it is about you. i.e.:
❓ Where do you see yourself in 5 years?
❌ Employee: Further leadership positions in the same company.
✔️ Self-Employed: Providing value to my clients on a larger scale.
💥Read the job description as YOUR LIFE DEPENDS ON IT
The job description is the ultimate contract BEFORE the contract starts.
The interview has one clear goal: drawing a line between your experience and the needs of the client.
More you help your client to do so, more your chances of getting hired.
Take every bullet point in the description and think of anecdotes, stories, and pitches to match it.
I.e. The job description says “Experienced in communicating cross-unit stakeholders in a matrix organization”.
1. You should immediately think about a time that you have coordinated cross-department activities for your project. A workshop, constant reporting, presentations – all qualify.
2. You should think of a matrix organization you worked for.
3. Last but most important: You should present the wins in your effort in the scenario. What have you brought to the table that created a difference? I.e: By talking to another department, I solved resource shortage problem.
💥 Research the company culture
Being an independent project manager doesn’t rid you from cultural fit questions.
Here are some questions to ask:
- Is the client a hyped startup?
- Are they trying to put more mature practices in place?
- Do they have a growth mindset or a cost-cutting mindset?
- Any articles in the press about their strategy?
- What do they blog/tweet about?
- How do they dress to work?
💥 Research for the most common interview questions
Hiring managers are busy people. They may not always have the time to start with specific questions.
These questions are also great openers.
Imagine this: you are a student to get into the exam, and you know the questions beforehand.
This gives you a head start. This is your chance to practice your pitch over and over.
You’ll find a lot of common questions on google depending on your specialty, but here are some must-have pointers.
❓ Tell me about yourself
You should prepare for this question like it is second nature to you. Perfect this, because it is your pitch.
Prepare a 1-minute introduction that includes: your background, what you do now, and your ambition for the future. Shortly mention your certifications and education too.
❓ What was the most challenging project you worked on?
Like all questions, this is more a question about the client than it is about you.
You want to point to challenges that resemble the current challenges the client is facing, and your approach to solving them.
❓ How do you manage customers and stakeholders?
This question is about your communication style and pro-activeness. Subtly point out that you know everything by the book (PMBOK, PRINCE2, etc.). Connect it with experience of practice: it will do wonders.
❓What is your strongest skill?
They are asking about what makes you stand out.
A common mistake here is to talk only about hard skills. The problem with this approach is that it doesn’t differentiate you enough.
A smarter way is to respond with soft skills in combination with hard skills. They can be easily found on the market one-by-one. The combination is harder to match.
💥 Practice makes perfect
It is highly possible that if you have been with the same company for a couple of years, your interview skills are rusty. It happens to the best of us.
I’m amazed by the number of candidates who do not notice this.
Practicing your body language and delivery in front of a camera brings 10x results for a client interview.
Write down your messages and tell them to your camera till it becomes natural.
💥 Follow-up is ever-important
You want to follow up with your interviewers after the interview.
Make sure that you added them on your LinkedIn BEFORE you had your interview, and checked their profile.
In my experience optimal time for a follow up is 3-days unless your interviewer has told you otherwise.
❤️ How to satisfy and keep your clients
You’ve made it, and you’ve got a client. Maybe even two. Congrats!
But getting a client is one thing, keeping them is completely another.
How does a successful independent project approach keeping clients?
Let's dive in.
👉 Your very first project with a client is the most important one.
You need to bring your a-game to this one.
- It is crucial to build a reputation of a high professional with the ability to deliver on promises.
- Over deliver.
- Regularly ask for feedback. If possible, conduct performance reviews with them.
Take more responsibility.
- A fellow PM is leaving? Volunteer to replace him ad-interim.
- They are running short of people to conduct interviews for new hires? Volunteer!
See your extra effort as an investment in the pipeline.
👉 Make sure that you know the project pipeline
All fairy tales come to an end. Projects finish.
I was working once for a Financial services company, and I did a great job. But the project was coming to a close.
I knew that there are other projects in the pipeline but they were scheduled to start after my contract finishes.
Hence before I left – while the good taste of success is still fresh – I pitched my candidacy for an upcoming project.
The CTO was very intrigued.He didn't have to waste months to find a manager he doesn't know.
I left the company and got another client. In 4 months, before 15 days the project started, I re-contacted the CTO.
I got the project 3 days later as a half-time gig in addition to my current contract, with a great rate.
My bank account was very happy for that period.
To this day they still call me for new challenges they know I am a good fit for.
Repeat clients are only repeat clients because you understand their pipeline and strategy well.
👉 What’s your definition of Quality in your work?
I can’t count the times that a client of mine or a person I interviewed with can’t come up with a clear answer to this question.
As an independent project manager you need to have a clear definition of “success” in your mind and communicate it with your client.
Define your Quality in 3 aspects: budget, content and time.
Assess yourself on an on-going basis: is the quality as good as you initially promised? Are you still on track?
Then validate checkpoint with your client.
This will help you keep the client, but more importantly, it will build an ever-growing trust.
👉 Communicate your boundaries clearly
What ticks you off?
After-hour calls? Overtime?
Be upfront about them to avoid any issues down the line.
I had clients calling me at 3 AM and I didn’t care when I was 23.
Now 12 years and 2 kids and later, I do.
Being unclear makes depressive PMs and unhappy clients. Unhappy clients tend to not stick around.
👉 Navigate and Network in the Company like there is no tomorrow
Having solid relationships with all levels in the company results in repeat business.
Use your lunches and watercooler time for productive networking. Avoid corporate gossips (but listen to them).
Spend some time in understanding company politics at play.
👉 Avoid redundancy
Oftentimes you will find that everything goes too well and too smooth.
The project might be on autopilot and you may find yourself not doing a lot of work.
Instead of making yourself too comfortable this should raise an alarm bell with you.
It is fine for a couple of days or a week but if it takes more than that, my rule of thumb is always to inform the client.
Don’t be scared to be dismissed.
Not only your honesty will be appreciated, but also you will also have the unique chance to bear more responsibilities within the organization.
I ended up getting more business with the client nearly every time I followed this approach to reduncancy.
👉 Focus on Results over Delivery Schedules and Budgets
We’ve been all guilty of this in the past but there is no way around it: there is no point of delivering a project early that doesn’t have a business case anymore.
If the client will not get the results desired, escalate it as soon as possible.
Don’t be afraid of losing your gig: your reputation is more important.
And it will pay-off.
💔 When should you reject a prospective client?
Even after a client accepts your proposal, nothing is still guaranteed. Both sides should do their due diligence.
When you are doing yours, here are the red flags to watch for:
🚩 The client tries to change the terms of the agreement after the fact.
They may try to renegotiate your price, statement of work, non-competition, or your contract. This is a signal that the client is not big on its promises.
🚩 Verified stories of non-payment to other independent project managers
🚩 The client wants an unpaid-overtime
🚩 The client suddenly requires commitments you cannot fulfill
Some clients like to ask for clauses like it is your responsibility to ensure a replacement when you are absent, or you’ll need to travel when you can’t, etc.
It is important to stop and let them reflect before the rubber hits the road.
🚩 The client asks something against your values
You can always find a new client and more money. The world is full of it.
You can’t restore your self-respect that easily.
For instance, if you are against guns and you find out you are helping a gun organization indirectly, consider rejecting.
🚩 The assignment risks to damage your reputation
You need to protect your reputation because everything depends on it.
There is no way that the project will be delivered on time and on budget? Say it so.
Do not accept any contract that will jeopardize everything you built.
💔 How and when to fire a client as a professional independent project manager
Nobody marries with a divorce in mind.
Yet 50% of marriages end up in divorce.
There will be disagreements. Discussions on custody of blame.
But it is important to amputate a limp before it festers all body. Hanging on a toxic client does more harm than good.
❓ But how do you know it is time to let a client go?
It is never an exact science. But there are common red flags to watch out for:
🚩The biggest red flag is that client is consistently behind in their payments.
My rule of thumb is that if I don’t get the second payment in a row, my lawyer gets the third invoice.
Even if they pay you afterward: the type of toxicity and lack of respect in someone’s craft shouldn’t be tolerated.
Same goes for a client who tries to lower your rate. With your rate down, you are in a downward spiral. So is your reputation.
🚩 Company culture, work environment or relationship is toxic
You feel that you aren’t contributing to anything. Company gossip is off the roof. You find yourself spending more time with corporate politics than actual project management work.
I have recently worked with an outstanding client, and they were quite happy with my work.
Unfortunately for both of us, the relation I had with the interim company was toxic.
And since I was in a binding non-compete, I respectfully left the assignment.
These sorts of situations almost certainly warrant a friendly farewell.
🚩 Constant scope creep
Especially if you have fixed milestone payments, this can deteriorate your relationship quickly.
Even if your payments are not fixed: when the client doesn’t recognize it is their constant expansion of scope is the problem of late deliveries, you’ll have angry discussions.
🚩 Unpaid overtimes and Risk of Burn out
This goes hand in hand with respect and protecting your reputation: if a client doesn’t respect your time and value, their invoice is probably not worth your respect either.
Burnout is serious. When you have one, you don’t have an employer to compensate you. Your health is your biggest asset that the client doesn’t pay for, but takes for granted.
🚩 You aren’t evolving professionally
You have stopped learning anything new.
The work at a client is a good steady income, but you feel your time is wasted doing the chores.
As an independent project manager YOU are responsible for taking care of your career, skills, and personal development that got you here.
There is no reason to accept a career setback and risk your future clients.
Now that you know the red flags to watch out for, we'll explore how to cut the ties.
❓ What’s the best way to fire a toxic client?
Here it goes: There is no painless way.
The best way was to not to have them at all. And that’s past tense.
But life happens.
When it does, you want to be clear in your intentions.
It is a tough line to walk, you should not be the one causing a scene. Your reputation is ever-more important to protect.
But never ever stay in a toxic relationship. Long-term damages are too far-reaching.
You shouldn’t be caught up in emotions and destroy your reputation.
Here are the steps I propose for a smooth divorce:
- Talk to the client and explain in all honesty, the problems.
- Kindly tell them your intention to stop and you are willing to make the transition smooth.
- Don’t provide feedback if not asked. When you are asked, point out the problem and how they can make it better instead of bashing.
- After your meeting, send an email to summarize what’s agreed.
- Honor your promises and leave when the notice period expires. Make sure that you are in good terms with your colleagues as much as possible.
Chapter 6: Get Your Ducks In Order as a Successful Independent Project Manager
Now: We have our client and/or hot prospects.
It’s high time to set the mechanics. This chapter goes through the nitty gritty of the machinery that you could set up. And hopefully forget, if all done right!
We’ll talk about setting up your paperwork, getting an accountant, attorney, your contract (what to watch out for!) and more!
Are you ready? Then, read on!
There is a reason that this is the last chapter. I see a lot of professionals jumping right into this step without the others: only to end up with a great machinery but ultimately no contracts.
Take all the advice here with a grain of salt. I am not a lawyer or an accountant, so your mileage will vary.
Get a solid accountant
Your accountant is your single-most important partner in business. Given that he will know more than you do about your books, importance sky-rockets.
What to look for in a good accountant?
A good accountant should be saving you on his fees many times over.
A bad one can get you into financial and legal trouble.
- You want a financially savvy advisor always by your side.
- You want to have a proactive advisor rather than a reactive bookkeeper.
- You want him to already have clients like you. An accountant specialized in keeping books of restaurants? No offense, but no thanks.
- You don’t want to just hear from him/her at the time of tax returns. (S)he should advise according to your cashflow and cash reserves in the course of the year.
- (S)He should be familiar with the technology and advice you. No “paper-only” accountants.
Spend your time wisely here, no rush. It is much more time consuming to get rid of a bad accountant than spending a little time in the beginning.
But Sidar, how am I going to find such an accountant?
There are a lot of ways, and a “good accountant” will differ from state to state, region to region.
But there is a trick that always works
Hire an accountant in the same way your clients would hire you. Reach out to other self-employed and have meetings.
They’ll be happy to refer you as it will strengthen their relationships with their accountant. Pay it forward by doing the same for your future accountant.
Working without a company
In some states you can work as a sole-proprietor without forming a company.
This is usually only advantageous to start with small amounts. Check with your accountant about the tax implications.
Set up your company, apply for tax and social duties, register business name & address
It is crucial to set up your business in a correct and optimized manner. Your accountant should be THE expert to deliver this.
Hence you should have an upfront, honest talk with your accountant.
- (S)he should present you with different options for your expected cashflow, tax optimization, optimum company type(LLC? S-Corp?), administration automation options.
- (S)he should also inform you about your liabilities and obligations in each setting. Your Tax Returns, your schedules and liabilities against the government are top topics to discuss.
- A good accountant will also help you register a nice business name. Don’t lose your sleep on your business name, since that type of branding is not your main attraction point. Plus, you can change it anytime you like.
Your business address must be an address that you can receive your official letters. You should always monitor this mailbox.
Consult your accountant before thinking of setting your company address at your home address, in some circumstances this might mean extra tax.
Opening a Bank Account
You’re a person, not a company.
- Your company will also need a bank account like you do.
DO NOT EVER, ever use your personal bank account instead of your company bank account!
- Your company IBAN should be on your invoices. Do not communicate it publicly.
- You’ll also probably need a company credit card.
- Your bank will instruct you on the documents that are required. This step is best followed with your accountant.
- You should choose a bank that is self-employed friendly, meaning you can do nearly everything online without having to book a physical meeting.
🚩Invoicing and Payments
To get paid, you need to create invoices.
In the previous section we’ve nailed our fee structure. Our payment structure should also reflect that.
Every invoice has a payment term that is stated on the contract.
Be sure to get advice from your accountant on what has to be on an invoice in your jurisdiction. Common culprits are: Invoice amount, VAT amount, company name and address, company number, company IBAN, client name, address and company number.
Every invoice should be uniquely numbered.
Your finances, your accounting systems
As a freelancer you need a – preferably integrated – way of creating and recording your invoices.
Ask your accountant, and for referrals in your network and in online forums. Sign up for the trials and play with them.
👉 How easy is to upload invoices? Is there mail forwarding + scanning?
👉 Is there an expense tracker built-in?
👉 What sort of reporting does it provide?
👉 Is it capable of categorization?
👉 How easy is to export all your data and leave?
👉 Does it directly connect to your bank account for the statements?
Once you are sure about a tool, your accountant should be able to cooperate.
Don’t forget that you should have full ownership and admin rights, not only your accountant.
You have to do everything in your hand to avoid lock-in. To the software, AND the accountant.
You’ll need to constantly keep an eye on your finances. Especially if you are working with multiple clients at a time.
Make an excel sheet that gives you the month-to-month overview of your money in the bank. Put in all your incoming payments and your expenses at the right month.
One-Client vs. Multiple Clients at a time
Is your intention to work with only one client at a given time?
Then paperwork and the rest of the machinery is much cheaper and straightforward.
When you have multiple clients at a time your # of invoices in a given month will inevitably increase. It can get more costly, but it might be worth it.
🚩Billing and Time Management Systems
Your billing and your time-sheet system will often be provided by the client. In that case all you need to do is to print them and get them signed and attach them to your invoice.
When your client wants you to generate your time sheets on your own, a simple excel showing the hours spend will do.
Your Business Insurances
There are several business insurance types to consider when starting a business. Make sure you contact a professional broker at all cases.
Here I listed some common insurance types.
🚩Public Liability Insurance
This insurance covers against claims from third parties against injury, damage or financial loss caused by negligence. It is often mandatory.
🚩Professional liability insurance
This is the insurance that protects you against your mistakes, gross negligence and everything else that a client can sue you for.
It often provides you protection with juridical assistance. This can save you tons of potential lawyer costs!
This is not a place to be frugal! Only the peace of mind is worth the price.
And they are usually not that expensive.
Ask your independent project manager network for referrals and policy examples before seeing a broker. Get an idea about the pricing and the coverage.
🚩 Cyber Insurance
Protection against hacks and attacks. It is not mandatory but highly advised if you are working in a high data sensitivity.
Self-employed are not protected against income loss, therefore you might want to get an income loss insurance. Depending on which assets you want to have in the company you may want to get vehicle insurance, building insurance, content insurance, and life insurance.
Getting an attorney
Your attorney is your buddy for doing things right.
It saves you a tremendous amount of time to have a relationship beforehand, rather than searching for one at the last minute when a problem arises.
He’ll also set you up with the company, review your contracts and other documents.
Try to reach out to your network. Accountants also often know relevant attorneys.
🚩Getting your permits
Depending on the state you are in and your immigration status you’ll need to get your permits in place.
In some industries a permit or a security clearance is required.
This process can be costly and time-consuming. Hence, plan ahead with your lawyer.
Getting Your contracts in order
Your contracts are literally your bread and butter.
I have seen so many burnt-by-clause cases that I can’t recite all here.
A good lawyer preparing, and seeing some examples from fellow independent project managers (albeit hard to get) would do wonders.
🚩Do I need professional help?
More often than not, your client will be the first to propose a contract with the template they have at hand.
If it is through an agency or an umbrella company, then this is usually their responsibility to provide.
However, when you got a contract your job isn’t finished. You need to get it checked by your lawyer and accountant to see if it is all in your favor.
🚩What are the Crucial ingredients of a contract?
How much and how are you going to be paid? What are the terms for overtime? Your basic fee structure and payment terms should be defined here.
Statement of Work:
What you are hired for. You are a PM, so the SoW should describe PM tasks. This also make sure that you don’t end up moping the floors for a living! (kidding. It doesn’t ensure that at all.)
Who owns the IP? It is often the client. You should watch out for clauses that lock in your existing assets (i.e. templates from a previous gig).
When one of the parties decide to end the contract, there is often a grace period. This protects both you and the client.
A common standard is 1 month. It may vary depending on your industry, geography and client.
The penalty in case of not respecting the notice period is also often included in the contracts.
Some clients ask you to only to work for them at a given time.
They might also ask to not to work for a competitor for a while.
Measure the importance of these aspects for you and decide for yourself.
“Hidden Employment” clauses:
When your tax office knocks your door, their most common claim is “you are acting as an employee”.
There are severe fines and social payments for contracts that don’t include these statements.
Show some love to these statements. They protect you and your client at the same time.
🚩Are there any toxic clauses to watch out for?
Your lawyer is still the best person to watch out for them.
In the meanwhile, here is a couple of them:
Non-compete: Does your client not want you to work for a competitor?
Then they better compensate you well for it.
When you are working with an agency, they also often insert these to prevent circumventing them.
Penalties: For a variety of reasons the client or the interim might want to introduce this. Not all of them are necessary! Be sure to check them well with your lawyer first, and your insurance second.
Your business, your resources, your tools
You don’t have an employer to pay for your favorite subscriptions anymore. Hence you'll need to take care of the following technological infrastructure.
Don't get overwhelmed by them, they are usually very easy to get started and most are tools you are already familiar with.
🚩Project Management Tools:
Often the client has already selected a tool, and they’ll have a subscription where they’ll add you.
MS Office, MS Project, Productivity Tools (Trello, Kanban, etc.) all the way. For these key tools I never rely on the client having a license.
🚩Your Cloud Storage:
Do get a system to back up! Your assets develop over time. You get to build templates and resources to reuse. You have your invoices and company documents.
Cloud storage is mostly free and will save you a headache. Do NOT rely on the client’s cloud system for your documents.
🚩Your Own Computer:
You’ll need your own computer. Depending on the client, they might provide laptops but no need to count on it.
🚩Your own Mobile & Subscription:
You’ll not have an employee mobile anymore. Your mobile and your subscriptions are often tax-deductible.
In this guide I shared my proven methods about becoming an independent project manager. You read about:
🚀 What you need to be prepared for an independent life
🚀 How to see your independent project manager journey as a project and create your customized roadmap
🚀 How to prepare a CV that gets clients
🚀 How to test waters BEFORE diving all-in
🚀 How to get clients and sort out your preparation
🚀 Set the mechanics right from the beginning for a successful, satisfying, long freelance career
Bonus: Final Advice
Here is some final miscellaneous advice that’ll be helpful.
💣 Working Directly vs. Agencies and Umbrellas
Best paying clients are usually direct, and repeat clients with no middle-man in between. Make sure you perform once you land one of them.
💣 Keep at it
You will reap the benefits. Don’t let day-to-day setbacks to discourage you. Get support.
💣 Reputation is everything.
And then more. Protect it like your life depends on it.
Renewals rely heavily on reputation. It is the basis for keeping your clients.
💣 I lied. Networking is everything.
Networking is a non-stop activity. One person in a key position changes everything.
It is the top value-for-money activity.
💣 Never, ever screw a recruiter or agency.
It might be tempting to cut the middle man in process. But know that the word goes around, and you’ll need that middle-man in the future.
💣 Invest in and take care of yourself.
Because nobody else will. Start by letting me coach you.
And one last thing.
I spent countless hours to prepare this guide, because I’d like to help more professionals to become entrepreneurs and self-employed. I’d like to help everybody who deserves it, to multiply their income.
If you enjoyed reading this guide, would you mind sharing it on your LinkedIn, tweeting, emailing it to an entrepreneurial friend, or an ambitious project/program manager?
It would mean a lot to me.
1. Accompanying Workbook and PDF Version of this article (above)
2. 5 best states for Self-Employment (US): https://www.howmoneywalks.com/the-5-best-states-for-self-employment/
3.How to find a good accountant
4.Contract Killer, an open-source contract