. Can Manage the Fiscal End of Your Work "> 3. You Must Know How to Manage the Fiscal End of Your Work It is essential to your financial success to know what sets you apart from the competition. "I am very entrepreneurial about this," said Moran. "You are the whole company. Your contract is an agreement between two people, trading value. What is your value? You need to have a coherent value proposition.""Have a realistic idea of what your rates are going to be and dont discount them easily," said Moran. "Create a differentiating factor which allows you to show the market value you bring. Dont discount it because you are desperate for work. Let them negotiate you down. Be willing to compromise. But make sure you get a minimum commitment from people, an amount of hours each week you will be able to bill so you can better gauge what your income will be." Many first-time contractors set their rates too low because theyve misjudged their expenses. What makes up the perfect IT person? Find out here. "A lot of times when people leave a corporate job, theyll take their salary and divide it by 2,000 hours, realize they were making, say $20 an hour, decide to charge $30 per hour and conclude that theyll do just fine. But, they dont realize that you cant bill out 40 hours a week without working 60 or 80," Joshua Feinberg, a West Palm Beach, Fla.-based IT consultant and author of The Computer Consulting 101 Professional Kit, told eWEEK. Feinberg points to a few useful, widely used income guidelines for those starting out. "The first thing you want to look at is the utilization rate, the ratio of the hours you are billing to the hours you are working. Billing 30 hours per week, or a 75 percent utilization rate, is a good place to shoot for," he said. After understanding your utilization rate, its important to understand where your money is going. "For every dollar you take in, one-third will go to sales, marketing and promotional activities. This money could later on be used for your first salesperson position," Feinberg said. "The second third is administrative costs, from insurance to retirement and FICA benefits, lab equipment, training and certifications. The third part is what you can afford to pay even another technical person as a salary so you can take on more clients." Finally, many feel that the money spent on a financial consultant to help ensure business is going in the right direction is invaluable. "Its never too early to find a CPA to be one of your main business advisers," said Feinberg. Next Page: 4. Youve got to be business-savvy.
Finding something unique about your skill set and what you offer a company is an essential part of the marketing and rate-setting process. Once youve set yourself apart, youve got to stick to what youve decided.