So you’ve decided to take the plunge and set yourself up independently as a consultant or an interim manager? Great work! You know you have the skills, experience and know-how to add value to your future clients’ businesses, but how hot is your knowledge of running your own business? Working for yourself is enormously rewarding but there are pitfalls. Here’s how to avoid a slip up along the way.

Ensure there is a real market need for your product or service

Your ability and desire to deliver your service is crucial, but it’s also essential that you design a product or service for which there is a real market need. One decision you will need to make is what your specialism will be. You’ll need to conduct research within your industry sector to ensure there is enough demand – if not, consider broadening your offering or developing further skills.

Take the time to build a compelling value proposition

Your value proposition tells potential clients what value you can add to their business and why they should hire you – so it’s pivotal to your business that you get this right. This needn’t be longer than one or two sentences, detailing the issues existing in the marketplace, and how you have helped clients overcome them. Better still, use real-life numbers within your proposition to prove what you have achieved for clients.

Consider the lifestyle your new business will afford you

When shifting to any new career, it is essential to consider the work you will be doing on a day-to-day basis, and it is useful to try and get a flavour for it first, before committing. Ask yourself the questions:

• What is at the core of the work I will be doing on a day-to-day basis?
• Are there any hidden surprises, anything I’m not admitting to or aware of, that could change how I feel about the work as time goes on?
• Am I committed to this life or is this a stop-gap solution to a temporary problem?
• Will my work afford me enough time off for friends/family and for hobbies and interests?

You may benefit from meeting with someone who already does the job you wish to do, to find out some answers to the above questions and to get a realistic picture of your future working life.

Be ready to hit the ground running

Consultants and interims are generally brought into companies to achieve instant results. There is usually little to no induction time and you may have a period of a week or less to familiarise yourself with the company, its people and its culture. Be prepared to hit the ground running, and do all the necessary preparation in advance of Day 1.

Ensure you have all the relevant insurance

For most interim managers, the only insurance you will need is Professional Indemnity insurance. Some projects may require you to purchase additional Public Liability Insurance or other insurances. Ensure you are aware of the insurances needed and the risks should you choose not to get insured.

Take legal advice on IR35

IR35 is a piece of legislation designed by HMRC to ensure that those working through limited companies pay the correct amount of income tax on their earnings. For those working within IR35, the legislation states that they must take 90% of their earnings as salary, not dividend. More information on who is affected can be found in our guide to IR35. As IR35 is applied on a per-contract basis, it is recommended that you have your contract reviewed by an IR35 professional if you are unsure whether it falls under IR35 or not, as some assignments have conflicting issues.

Use a specialist accountant

If you are working in the private sector, you will need to set up a limited company. When choosing an accountant, you have various options. Some may consider going to a high street accountant or even doing their own books. We would discourage both of these choices as they can be very costly in both time and expense, especially if deadlines are missed or things go wrong. However, you do have the option to choose a specialist accountant for consultants and interims. Specialists such as Competex can handle online filing, fluctuating payroll, personal tax, and give advice on allowable expenses. The team at Competex has a superior knowledge of the various compliance issues associated with working alone, as well as how to pay yourself tax-efficiently through a limited company.

Use a specialist payroll umbrella company if working in the public sector

If you are working in the public sector, it is much more tax-efficient and straightforward to work via a payroll umbrella company than to use a limited company. There are not very many payroll umbrella companies in operation as the rules governing the public sector only came into operation in April 2017, however the interim agencies are starting to turn towards this way of working. The only specialist umbrella company for interims and consultants is Competex Pro. Competex Pro differs from other generalist umbrella companies in our unique treatment of expenses, resulting in more take-home pay for you.