Editor’s Note: Previously in this Career Talk series, our experts on doctoral-career counseling have offered advice on running a tandem job search, writing and tailoring cover letters, interviewing, building a CV, and other topics.
Self-employment is often overlooked as a professional possibility open to Ph.D.s. However, a surprising number of us, having considered our options, are drawn to it. It certainly has its pros and cons, but for some, it can be an opportunity to leverage expertise into a livelihood.
One of us has direct experience on that front. In September 2023, after five years in an administrative position at the Graduate Center of the City University of New York, Stacy decided to make a go of working for herself. After eight years in New York City, she no longer wanted to be tied to a certain geographic location because of her job. She also saw a need in higher ed for her expertise in Ph.D. professional development and community-engaged research, and she wanted to bring her experience to multiple institutions. She has been self-employed as a researcher, consultant, and facilitator ever since.
Likewise, many graduate students and recent Ph.D.s hope to transform work they’re doing on the side — often but not always related to their research — into full-time self-employment that will pay a living wage.
It’s easy to see the appeal for academics: Self-employment offers some of the same flexibility as faculty life. You’re your own boss, so no one cares where or when you sit down to work (to a degree — state tax laws make that a little more complicated). Furthermore, many Ph.D.s are used to working multiple jobs and on multiple projects at a time. We tend to be extremely self-directed and self-motivated, with the ability to teach ourselves how to do things. And we often have deep expertise in a particular area, which lends itself well to consulting work.
What owning your own business does not offer is the same financial stability that (at least some) full-time faculty jobs carry, and it can be just as precarious as part-time teaching. For the self-employed, there is no biweekly paycheck, no promise of continued employment, and no employer-provided retirement contributions or health insurance. As a freelancer, you are always auditioning for your next job. In short, self-employment requires a certain threshold of risk tolerance.
If you don’t possess that quality, that’s OK. It just means that full-time self-employment may not be for you at this point in your life. It doesn’t mean that you can’t continue building a business on the side of whatever else you do for a steady paycheck and health insurance. Careers are long and often go in chapters. A side hustle now may become a full-time job in the future.
If self-employment appeals to you in some way, here are six factors to consider:
What problem will you solve? What services or goods will you offer? This is the obvious place to start. If you’ve been thinking about self-employment, you probably have a germ of an idea already. Perhaps you see a need related to your research that isn’t being met or you have certain skills that are in demand. You will want to refine that idea over time and develop an initial set of services or goods that you plan to offer.
To be clear, you don’t want to spend forever on this brainstorming stage. In the tech world, companies talk about releasing a “minimum viable product,” an idea that probably gives most perfectionist academics heart palpitations. But there is only so much time you should spend thinking about an idea before you need to see what happens when you put it out in the world. If you find yourself lingering in this phase for longer than six months, it may be time to force yourself out of it.
Begin by sharing your idea with people close to you to get their feedback. Those casual conversations can help you develop an “elevator pitch” — a short, engaging description of your business idea aimed at potential customers and clients. Within three to five minutes, you need to be able to describe what you’re “selling,” why it’s needed, and how you are best positioned to provide it.
Who are your potential customers and clients? Your options vary widely. We know Ph.D.s who have built successful businesses in career coaching, web-design services, and programming for kids with disabilities.
Answering the client question is a bit easier if you have done freelance work in the area in which you hope to build a business. For example, you may be offering cultural consulting or program evaluation in a particular subject area, or you may have side gigs doing podcasting, freelance writing, or instructional design. Alternatively, you may work in an area such as climate or environmental studies and do related contract or consulting work.
If that is the case, you may already have a slate of customers or clients who can be great resources. Talk with them about additional services you could do for them. Or ask them for (and even encourage) referrals to new contacts who might be interested in hiring you. Early on, however, it’s probably best to focus on your existing network of potential clients, who can give you concrete feedback on your business and how it might expand.
If you’re building your client base from scratch, you first need to figure out who and where they are. Are they in a particular industry? A certain geographic region or economic bracket? Or perhaps they are not individuals at all — perhaps your clients will be organizations, institutions, or other businesses. In that case, the question is: How do those organizations select and deal with vendors? If your clients are a mix of individuals and organizations, you’ll need to develop different services for each.
This stage is called market research, and it will help you refine what you are going to offer and how to talk about it.
It will also help you decide where not to focus your energy at this early stage. For example, Stacy initially intended to cast a wide net and try to position herself as someone with a broad background in changing organizational cultures. Technically that’s true, but the vast majority of organizations she’s worked with have been universities and institutions adjacent to higher ed. Eventually she decided that it was better to focus her business more narrowly (for now) on higher ed, given the depth of her network there.
How much will you charge — and how will you get paid? Unless you are independently wealthy, self-employment is viable only if you are able to make a living from it. In that vein, you will need to address some key questions about money.
Perhaps the most important is how much to charge for your services. That can be especially tricky when the thing you are selling is your own time. In general, your hourly rate when you’re self-employed should be roughly double what it would be if you were in a full-time, salaried position. If that seems high, remember that you will be entirely responsible for your payroll taxes and health care, which are substantial costs that an employer would contribute to.
Another key question: Do you plan to bill clients on an hourly basis or at a flat rate for a project? A flat-rate fee would give you more flexibility, but if a job took more time than expected, your hourly rate would go down. Billing hourly can be easier, but you don’t want clients to be surprised by a bill that is much larger than they expected, so you still need to agree on a budget ahead of time.
In either case, do not low-ball yourself just to try to please the client. If a particular client wants to pay less, adjust the services you offer rather than lowering your hourly rate to something that isn’t viable for you.
As an academic, you don’t punch a clock. You work on things until they’re finished, and then keep tinkering a little longer. But as your own boss, you will have to track your hours so that you know precisely how much time you are spending on a project — even on different aspects of a project, if it is a large one. Doing so will help you make better decisions about how you schedule your days.
Even when you and the client have agreed on a specific rate, getting paid may take longer than you think. As experienced campus administrators, both of us have paid our share of guest speakers and consultants, so we know firsthand how easy it is for those payments to get delayed, overlooked, or lost. All organizations will have different processes for paying you. Some will require you to register as a vendor in their system, which can add time to the payment process. To make matters worse, some organizations can’t pay you in full until after your services are rendered, leaving you waiting for a check well after the project is completed.
A few strategies that can help:
- Complete all of the paperwork that is required of you, and be responsive to any requests to fill out additional forms. Have a client list and a PDF of your CV/résumé at the ready for organizations that require one to pay you (sometimes a link to a website with your documents isn’t enough).
- Keep track of every dollar that you expect to be paid, and from whom. Don’t hesitate to follow up with your client if payment is taking longer than promised or if it just feels as if too much time has passed.
- Budget accordingly, knowing that you’ll need a fair amount of savings to cover your expenses if a check takes time to arrive. And if clients make getting paid too difficult, simply decide not to work with them again.
The bottom line is this: Money is important. You will need to get comfortable with asking to be paid for your work, and with negotiating up if the client’s initial offer is too low. It might take you a while to get used to opening those awkward conversations — after six months, Stacy is much more comfortable naming her price than she was at the beginning.
No doubt it will also feel strange to turn down work because the client can’t pay enough. But in the end, it’s about valuing your own time. And of course, as the business owner, you’re allowed to make exceptions to your rates, if the client or the work is important to you. Just be sure you understand the cumulative effects of those exceptions on your business.
How long will it take to hang out your shingle? A lot longer than you might think. Choosing to start your own business is not something that can or should be done on a whim. Stacy began testing the waters — talking with people in her network and trying to line up clients — about a year before she made the jump. She did not make a final decision until she’d procured two major clients, and that took most of the year.
Give yourself enough runway to get the business off the ground before giving up your current source of income (or, as may be the case for graduate students on a stipend, before it ends). Make sure that you have enough work lined up to sustain you through at least the first six to 12 months, with a plan to develop more opportunities during that time. Will you need other sources of income, such as a part-time job, to make ends meet? Or will you need to make lifestyle adjustments, such as lowering your expenses? The earlier you figure those things out, the better.
It is normal for this ramp-up process to be nerve-racking. Very likely you will have moments of serious doubt. (Stacy had many such moments, often in the middle of the night.) You may, in fact, decide during that initial stage that this is not for you at this point in your life, and that is also a completely legitimate decision to make. But a long-enough timeline will give your new venture the best chance of success.
How can you mitigate the inherent financial risks? Sure, it helps to have a spouse or partner with a well-paying job and health insurance — but not all of us do. So what can you do if the only income stream you can rely on is your own?
The No. 1 thing that Stacy did to reduce her personal financial risk was to relocate to a region with a lower cost of living. Moving from New York City to a midsize city in Oregon meant that her housing costs went down. Oregon also has a robust insurance exchange, making it relatively easy to find good health insurance for a price that is, by U.S. standards, reasonable.
Take a careful look at your major expenses, and see if you can lower them during your ramp-up period. You will also want to ensure that you maintain access to health care, and to have a bit of a financial cushion to help make the first year or two less precarious. How much you need to save will depend on your expenses and projected revenues. Be realistic about both, even if it means delaying your launch while you save. It is hard to do good work, let alone your best, when you are overly stressed about money.
Those are serious considerations. It’s important not to let the fantasy of owning your own business obscure the logistical and financial realities of it. Speaking of which:
What about infrastructure, systems, and taxes? A common mistake people make, early on, is to not take self-employment seriously enough. Keeping lax records and commingling your business and personal expenses can cause unnecessary complications as your business grows. You need to create coherent systems that work for you.
The good news is that there are many affordable, off-the-shelf systems available now for small businesses. To get started, you will generally need:
- A business email address
- A professional website
- An employer ID number (EIN) from the federal government
- A business bank account
- A time-tracking and invoicing system
Ph.D.s are often autodidacts — good at learning entirely new skill sets. However, it’s also important to recognize when you need to hire professional expertise. If it’s financially feasible (and it may not be right away), paying an accountant to do your bookkeeping can free up your time and give you peace of mind. Taxes for the self-employed can also be quite complicated, and it is often worth having a CPA handle that for you. Keep in mind that moving outside the United States will complicate your taxes, so if that is your goal, definitely have a conversation with an accountant.
There is still a lot about self-employment that we didn’t cover here: for example, whether and how to incorporate is a complicated and important question. We recommend checking out the resources offered by the Freelancers Union, a nonprofit that supports freelancers and small-business owners. Explore your options, and learn about the pitfalls. But for some Ph.D.s, self-employment can be a great alternative to traditional employment.
