Just before the pandemic I’d snagged what seemed (it wasn’t) like my dream job in London. I applied for my visa, packed my bags and had a plan to relocate in early 2020. In January 2020 a pandemic was declared and the world’s borders swiftly closed.
I mention this, as some part of my independent consulting origin story came down to luck. Sure, I wasn’t a passive observer, but it’d be a lie to claim I’d enacted some intricately crafted master plan to get where I am now.
As a statistician, I’m also aware that I’m subject to survivorship bias. The physically fit are more likely to become and remain fitness instructors. Successful traders are more likely to have strong investment performance. And I am a successful consultant as I’d have already found another job if I wasn’t.
Of course, it would also be a lie to say I’ve learned nothing along the way, which is what I hope to share here: simple insights into what it’s like to transition from a traditional job to working as a freelance consultant.
Setting up a runway
When I worked in a startup everybody was interested in discussing how long their ‘runway’ was. I usually just played along by citing aeroplane facts, until I figured out it was shorthand for how long a startup could financially sustain itself. Have too short a runway and a startup might not have enough cash to achieve profitability. Do the same as a freelance consultant and you might not be able to pay your rent.
I often tell people that freelance consulting is either a flood or a drought: one year you have more work that you can handle then suddenly there is a drought. Having a runway can help you manage this.
So how much runway is enough?
Well, as I’m not a financial advisor I have no idea. But, if I had to give a number I’d point to what’s recommended for startups: you should aim for savings to comfortably sustain yourself for 18 months or more.