The 5 Phases of Building an Independent Business

Although there’s no one canonical path—building your business is ultimately an individualized and non-linear process—understanding the stages can help guide your decision-making. You can use this framework to identify where you are and anticipate what might be next, so that you can feel confident in where you’re headed and focus on the best next step.

Phase 0: Validation

Phase 0 is when you launch a minimum viable product (MVP): a bare-bones version of your service, providing just enough value to your first clients to make it worth their while. The MVP approach will help you confirm demand for your service and provide you with valuable feedback. You’ll get signal on three important things: 

1. That you have the skills to meet a real market need

2. That customers’ willingness to pay is aligned with what you need and want to earn

3. That you enjoy working independently

You’ll also test-drive new skills like pitching, pricing, invoicing, drawing up contracts, describing your services, and managing client relationships. 

In Phase 0, investing in anything other than getting your first client is a mistake. Common distractions include spending too much time developing brand collateral, building a fancy website, or creating multiple lines of revenue. These activities will be important later—but right now, they’ll take time and money away from the critical task of getting your first client. 

Where that client comes from doesn’t matter.

What you’re looking for is a client who will work with you on the terms you offer, even if you’re not totally sure they’re a long-term fit. You’ll hone in more precisely on your audience in the next phase; for now, focus on signing that first deal. In this phase, plug-and-play resources are your friend. Think: Templates, calculators, and actionable guides, like these:

• Pricing calculator. Calculate your minimum hourly rate based on your estimated working days, billable hours, expenses, and fees.

• Contract template. Clarify project and relationship terms with a customizable, legally sound contract template. 

• Sales and marketing templates. Use referral outreach, cold outreach, and pitch call follow-up templates designed to help you make your first sale.

Phase 1: Finding product market fit (PMF)

Once you’ve validated that you want to build an independent business, you’ll move towards Phase 1, which is about finding product-market fit (PMF). In a nutshell, this is being able to repeatedly sell to an identifiable segment of the market that will pay you enough for your services.

To find PMF, you’ll need to identify a client archetype—your ideal customer profile (ICP)—who has relatively consistent pain points that you can solve. Your ICP must also be willing to pay for your services, and you must be able to reach them with your sales process. When these three things come together, you’ll be able to repeatedly sell your services, and the sale is worth the time you put into it. This is PMF. 

In Phase 1, your focus should be:

• Getting to know your target clients in detail. It’s ok to have multiple ICPs, but you need to know them all equally well. You should understand their needs and pain points before you ever speak to them. 

• Consistently delivering amazing experiences for your clients. You should be getting better and better at what you do, perfecting your process, and making clients happy enough to refer you or offer a testimonial. 

• Honing your sales process. Before going independent, you may have never sold anything before, and selling yourself can be a challenging competency to build. But it’s imperative to your success. In Phase 1, you should get your sales pitch down pat. 

• Developing your brand. Crisp up your positioning, put a stake in the ground with a good website, and build your digital presence on relevant channels like LinkedIn. Make sure that people who are looking for your expertise and skills can find you online. We suggest starting with your LinkedIn page and then working up to websites on Squarespace or another hosting platform.

• Sorting out your business operations. Build infrastructure for the legal, payments, accounting side of your business, so that you don’t have to reinvent the wheel for every contract or get lost in a black hole of receipts multiple times per year. 

• Building your network of collaborators. In your life after the nine to five, you don’t have a built-in team. Find a community of supportive fellow independents, collaborators with complementary skill sets, and referral partners.

The most common Phase 1 pitfalls involve losing sight of your priorities. You might be tempted to over-diversify marketing channels, monetize audiences that you haven’t built up yet, overwhelm your calendar with work that doesn’t align with your long-term goals—and you can expect to be bombarded by influencers trying to sell you gimmicks and shortcuts to making more money more quickly. 

To stay focused, remind yourself that building your business is about developing your core competencies and unique approach, not buying into someone else’s playbook. Be patient with the ups and downs, and permit yourself to experience worry or frustration without interpreting it as a sign that you’re on the wrong track.

Perhaps the most important thing to know about Phase 1? It’s not a one-and-done phase that you can complete and move on from forever. PMF requires ongoing maintenance as you adjust your offering, develop new products, target different clients, or make other changes throughout the lifecycle of your business.

Phase 2: Professionalizing

Phase 2 is about making an intentional shift towards long-term strategic thinking and building on your solid foundation from Phase 1. You may find that you’ve exhausted resources from Phase 1: your immediate network’s ability to deliver high-quality leads and your ability to manage the administrative overhead of running a business. You’ve got a solid base of clients to anchor you, so you can really start to scale your operations and make your business work harder for you.

In Phase 2, you’ll prioritize actions such as: 

• Standardizing your offering. Phase 2 is a good time to stop customizing engagements for every client and taking on work that doesn’t serve you. Instead, define a standard service offering (or set of offerings) that you only need to slightly adjust for each client. You’ve been through enough repetitions and iterations to understand the market need you fill, and you’re in a position to standardize your product to improve your ability to scale. At the same time, consider parting ways with holdover clients that don’t fit into your core menu of services. 

• Delegating and automating operations. It’s now crucial to move administrative work off your plate. Consider hiring a virtual assistant (VA), bringing on subcontractors, and automating routine or manual processes. It’s also the time to audit your infrastructure and consider improving your tech stack.

• Organizing your finances. You've learned about the ebbs and flows of work seasonality, so now you can forecast feast and famine cycles. Consider hiring an accountant, bookkeeper, or even fractional Chief Financial Officer who can oversee the money coming in and out of the business.

• Building your brand. Your branding and marketing presence becomes more important in Phase 2. You may have exhausted your immediate referral network, so you’ll need to build your core internet presence; this will help you become known in your field and build credibility with leads on the periphery of your network. You should also focus even more on building relationships—some of the best referrals come from genuine relationships with other independents.

The most common—and costly—mistake made in Phase 2 is micromanaging, or holding on to things you did in Phase 1 that aren’t scalable. Resist the idea that you don’t deserve (or shouldn’t pay for) support, and remind yourself that getting bogged down in administrative work or clinging to poor-fit clients uses up time that is better spent on business development. 

Phases 3: Scaling

In Phase 3, your aim is to increase revenue without increasing time spent on client work—you want to scale. You’ll focus on scaling components of your business or revenue model and finding and maintaining PMF.

Phase 3 mistakes can include trying multiple scaling tracks at once or choosing a track for the wrong reason—so check in with your assumptions before you make a plan. Be particularly mindful of biases you may have acquired from previous experience in the start-up world or in tech, and don't make decisions that directly affect your livelihood based on that programming. 

For example, resist the urge to prioritize rapid scaling just because a previous employer did. Remember that businesses tend to become more complicated as they grow and that you don’t necessarily need to generate millions to run a successful company.

Phase 4: Moonshots

In Phase 4, you’ll move beyond working on your business and explore other opportunities that your personal and professional platforms open up. You might decide to pursue a professorship, write a book, make a documentary, or launch a nonprofit subsidiary to make an impact on an issue close to your heart.

Build your business around you

As you consider these stages, keep in mind that the time horizon is completely up to you. Don't let anyone make you feel like you're doing things in the wrong way or at the wrong time—this is your journey, and you can choose to move to the next phase or not. The reality is that entrepreneurship is non-linear and many of these things can happen concurrently, so don’t be afraid to go with the flow. 

Finally, remember, you are your business’s core asset—everything you build stems from your ideas, your skills, your experience (essentially: your intellectual property). That holds true at every phase.