Independent Contractors: Assessing Your Value in the Market

Take an honest look at your business


There are many important details associated with being your own boss, and one of the most important is evaluating yourself and the viability of your business. As an Independent Contractor, you will continually face the issue of assessing your own value. To know continued success you must frequently analyze your knowledge, education and skills to determine your place in the business community you serve—whether your market is global or based in your own home town.

The market for your products or services must frequently be evaluated to maintain a viable business. Competition, economic factors and changes in technology can all affect the market and hurt your bottom line if you do not practice vigilance. In corporate America, even the smallest companies typically conduct a market analysis every 6-12 months. For most businesses, it is an ongoing task.

For the Independent Contractor or small business owner, assessing your market value becomes something more personal--you must evaluate your own worth within your field. You must compare your knowledge, skills and experience to your competitors to see where you stack up. It can be a humbling experience to perceive yourself as your customers see you, but it is vitally important to the success of your business.



Do you foresee success?

What does the future of your business look like?
What does the future of your business look like?
Do your products and services stack up with those of your competitors?
Do your products and services stack up with those of your competitors?
Are your prices reasonable enough to attract customers, but high enough to pay your bills?
Are your prices reasonable enough to attract customers, but high enough to pay your bills?
What will technology do to the future of your business?
What will technology do to the future of your business?
Who would have predicted that four Harvard students could change the face of mass communication?
Who would have predicted that four Harvard students could change the face of mass communication?
If you ignore market trends you'll soon find yourself in trouble
If you ignore market trends you'll soon find yourself in trouble
Continually seek to improve yourself and your business and soon you'll be sitting pretty
Continually seek to improve yourself and your business and soon you'll be sitting pretty

Five criteria for assessing value in your market


Listed are five criteria for assessing your value as an Independent Contractor or small business owner. They require an understanding of your industry and the factors affecting it. Your own analysis will likely be far more detailed than the list offered here, but this represents a starting point for determining your place in the market.


1. What is the current demand for your product or services? Is there a high demand for what you offer? If so, you can follow the laws of supply and demand and charge a higher price for your services—within reason. Do not price yourself out of business. If your product or service is crucial to life in your community, someone else is likely trying to meet the same need you are. Conversely, you must charge less if what you offer is nice or helpful but not essential. People will get by without something (even if it is extremely helpful) if it is too expensive. Economic conditions can quickly affect what consumers consider essential.

2. What trends will affect your market in the future? Will this market exist five years from now? Can your business survive tough economic times? Will technology make your services obsolete or superfluous? How is your work affected by a global economy? All entrepreneurs ask themselves these questions, and the answers often determine the course of their business future. For example, a look at job opportunities for Virtual Assistants demonstrates that many are willing to accept a job for pennies an hour—just to get the contract. Competitors essentially working for free will profoundly influence any market.

3. Who is your competition? Who else provides the products or services you offer? Is your competition local (a “bricks and mortar” operation) or global (online)? Do their cumulative backgrounds, skills and experiences allow them to provide similar services in a superior or inferior manner? Determine the number of competitors you have and your place among them. Compare your strengths and weaknesses with theirs. If you are the best in your field, charge accordingly. If you insist on a line of work where you are worst among your peers, it is logical to charge the cheapest prices for your services.

4. How well do your skills, background and experience mesh? Are you an expert or a beginner in your field? Does your experience match your skills? A talented illustrator might be as skilled as an advertising executive for a major corporation, but without a documented history of successful advertising campaigns, the beginner must charge less for their services—their experience doesn’t yet match their skill level. Occasionally the “superstar” appears out of nowhere and dominates a market without “paying dues” or gradually earning respect in their field over time, but these rare individuals are not the norm (and you know who you are).

5. What value must you place on your time to succeed? The answer to this question is vitally important in service industries. For example, if a barber takes one-half hour to cut someone’s hair, the barber won’t survive working four hours per day and charging five dollars per haircut. The maximum earning potential for this business model is $40 per day. The barber has three options: 1.) working longer hours; 2.) cutting hair more quickly, or; 3.) asking more for a haircut. Charging $30 per haircut can earn $240 in four hours, but only if the barber is good enough to get customers while asking that much.



How does your business stack up against the competition?


How do you stack up with your competition? Are you prepared to fight for your share of the market? Perhaps you need to improve your skills to be competitive. Even if you currently dominate your field, it is always prudent to look ahead and “expect the unexpected”. That superstar might be preparing to burst on the scene, or technological advances could change how your industry operates overnight—it might even eliminate it entirely! When four Harvard students worked together to create Facebook, who could have imagined how much would change with their creation? Mass communication transformed with the success of their web site, and many businesses (small and large) adjusted their strategies in recognition of the potential this product held.

No one can predict the future, but it is important to place yourself in a position to succeed to the best of your ability. Without diligence you might not even notice the competitor or trend that could undermine your efforts to build a thriving business. The key to success or failure is not out there to be found, however—it is inside you. Watch for changes in your industry but focus on improving yourself. Increase your value in the market you serve. Even if your field of endeavor rapidly changes, you will grow and change with it. You will notice challenges sooner and even anticipate them. You will see further ahead, and adapt your skills to match trends.

When you focus on improving yourself, any assessment of your place in the market will seem much brighter.


Best wishes for continued success.


The small biz quiz

Do you periodically assess your place in the market you serve?

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Comments 14 comments

Just A Voice 6 years ago

This was a great hub Mike :)

Everyone who is self-employed should constantly review these points because times change constantly and you need to make sure your business is relevant to what is going on at the time. Not only competition wise but also economy wise.

Thinking outside the box is also a good thing. Our particular business is building custom homes. However, this market has crashed as we all know of late. We have been looking into doing government jobs as a way to make ourselves more diverse. Even though this is out of our comfort zone, it is something we can do, and worthy to look into because it gives us more options than just being great at one thing.

Very thought provoking.


Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Voice, thanks for stopping by. Your personal situation is an excellent example of how quickly things can change, and it sounds like your response is perfect. Government jobs march to different budgetary drummers than the private sector, and if that is where the work is to be found, you have made the right move. It is so important to react quickly and stay on top of things, whether it is competition, adapting to technology or economic upheavals.

Thanks for stopping by, and I hope everything is working out well for you. Take care.

Mike


dallas93444 profile image

dallas93444 6 years ago from Bakersfield, CA

Another thought provoking, "right-on" hub. Keep the informative hubs coming!


habee profile image

habee 6 years ago from Georgia

Great info, Mike! Hubby is an independent contractor and an industrial electrician. He mostly does small jobs now, and he's in hot demand. Folks around here have trouble finding anyone to do small jobs.


Stacie L profile image

Stacie L 6 years ago

a very good hub.Most of us independent contractors need to work on #4 and #5. we don't hone our skills and don't know our value. writing for pennies is a prime example.


mwatkins profile image

mwatkins 6 years ago from Portland, Oregon & Vancouver BC

Thumbs up! As a bookkeeper, you also want to keep in mind what money you need to stay afloat for the first 5 years in business and if that involves pie in the sky ideals then you better have a back-up plan (or trust fund). Great job - Honest and thorough!


Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Dallas, thanks for reading. I hope this article might have a nugget or two of value for someone reading--most of this was learned in the school of hard knocks. I appreciate your kind words, and I hope you will feel free to come back anytime.

Mike


Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Habee, thanks for stopping by. Small jobs is a great niche. I tried to find someone once to replace a window once, and everyone I contacted acted like they wanted to completely restore my home. I had to tell a guy I'm not looking to build a new house, I just want a window put in. Your husband has a good spot in the market.

Thanks again for stopping by, and I hope you had a nice vacation.

Mike


Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Stacie, thanks for reading. For many folks in service industries, improving our skills is the only way to get a raise. We can't keep our customers and charge more for the same work, and we don't want to work longer hours to make more. We must improve our skills. It can be difficult to do, but it is vitally important.

Thanks so much for stopping by, I appreciate it a great deal.

Mike


Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

MWatkins, thanks for reading and offering your insights. You are absolutely correct, you have to be certain your business plan is viable and be able to survive the tough times--otherwise it will be for nothing. Many folks take the plunge into self-employment without the information to know what it will take to stay afloat, and usually with disastrous results.

Thanks so much for taking the time to stop by, I appreciate it greatly.

Mike


Peggy W profile image

Peggy W 6 years ago from Houston, Texas

Hi Mike,

Hopefully you are staying afloat during these hard economic times. Art is a luxury for most people and sales in that area have definitely been hit. Wishing you the best. Good hub! Rating it useful!


Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Peggy, thanks for stopping by. I will confess that times have been better for me than they are now, but I am getting by. Thanks for the rating and for your kindness, as well.

Mike


pmccray profile image

pmccray 6 years ago from Utah

Thanks for sharing this valuable information. Since my recent layoff I've decided to devote more time to my business that I let lapse. Voted up, rated useful, shared and bookmarked.


Mike Lickteig profile image

Mike Lickteig 6 years ago from Lawrence KS USA Author

Pmccray, thanks for stopping by. I've been trying to step up the pace of collecting jobs, as well. These are challenging times, but I think it is possible to do well, even with the economy the way it is. At least, I'm hoping that is the case. Thanks again.

Mike

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