Is full-time, professional freelancing right for you?
Are you thinking about starting a career as a full-time professional freelancer but not sure what you need at the beginning? Then you have come to the right place. This article gives you a high-level overview of some of the things you need to consider before taking the leap!
Freelancing as a full-time career can be very rewarding, not to mention the flexibility it gives compared to a 9-5 job. More and more white-collar professionals are going independent, not least in developing and transitioning markets across Asia, Africa and Latin America. However, it is a big step and it should be carefully thought through. We have summarised some things that will help you decide whether freelancing is right for you and what you need to start out your independent career.
First of all – are you – and your family if applicable – prepared for the ups and downs of freelancing? You are likely to have periods when you are between projects and you need to have the financial means to weather such periods. Importantly, you also need to have the mentality to deal with such uncertainty. So the very first thing you need to think long and hard about is what financial commitments do you have that you cannot escape. You need to be sure you can cover rent or mortgage payments, other loans, utilities and many similar things you just have to pay. Go through your bank statements and any credit card bills for the last few months to make sure you don’t miss anything.
Unfortunately, for most people there some additional costs that come with the package when you go independent. These are things like your own laptop, any software packages you need for your line of work, insurances, office rent if you need somewhere to go to be undisturbed, business cards, maybe a website, and so on. Some of this can wait, other things not. Make a realistic budget.
If you have a family, your partner is very much a stakeholder you need to involve in the process and decision for you to go into freelancing. She or he and the rest of the family will be affected – whether it involves any initial financial compromises, or being on the receiving end of your stress when important deadlines approach far too quickly or when clients pay late.
Finally, do you have the discipline needed? When you go solo, you are – erm – on your own… In other words, there’s no director or manager telling you what to do, no one who cares if you show up late for work if you are working from home, and no one to make sure you are always on the lookout for your next assignment. You need to have the self-motivation and discipline to operate without the usual boundaries of traditional employment.
Are your skills in demand?
Let’s assume you have passed the initial test and said YES, freelancing is the long-term career for me, what then? It may seem trivial, but are you sure your particular skills are in demand on a contract or freelance basis? Is there already an existing market for your skillset? If not, why is that? Is there any evidence that demand will take off? One of the first things you should do is to talk to your professional network to get their thoughts on freelancing in your area of expertise. Not sure who to ask? Well, if you find it difficult to identify relevant people, or if it makes you uncomfortable to try to get this information, then a career shift might not be the right thing for you. To be fully transparent, this is easy compared to what you must do later in terms of selling in yourself and your skills to potential clients!
Decide how much you want to charge as a freelancer
If your area is an established freelancing market, then it’s easy to find out the going rate and you can position yourself accordingly. However, if your skills are unique or the market is immature, you have to find another way. It is likely to involve a degree of trial and error, but a starting point could be to divide your last salary (or the typical annual salary in the niche you are targeting) with the number of workdays in a year. You can then add an uplift to compensate for the fact you typically don’t have any benefits permanent employees have such as pensions, training, meal subsidies, etc, and also you are likely to have gaps between projects. The uplift depends on your local market but we often see between 20-40%. Sadly, this is not true for all geographies though, so do your homework! Ultimately, of course, you are worth as much as clients are prepared to pay for your services and it will be a result of supply and demand and how well you sell yourself.
There is something to be said for not being too aggressive in terms of your rate when you first start out in order to build up your portfolio of clients and references. However, also consider that it’s often hard to significantly increase your rate between assignments as new clients often ask and check what you have been charging previously.
Get your first clients as an independent consultant
For the vast majority of people, we recommend you have your first client/s lined up before you take the plunge! Firstly, it will be your first validation that there really is a market out there for you, and secondly it means that the initial financial leap will be less scary (assuming it’s a decent length project).
Having said that, from where do most new freelancers typically get their very first projects? Well, the short answer is that it tends to be from people they already know. In some cases it is from past employers or even your current employer; otherwise from professional connections you have interacted within your career to date.
The sooner you start thinking strategically about marketing the better.
As a career freelancer, one part of you must always be thinking about your next project to avoid big gaps. We have many articles and other resources about how to get more projects here on Outsized. At a high level, we see that successful freelancers tend to use a combination of active referrals, digital marketing, in-person and virtual networking. In some industries, it makes sense to have a professional website and maybe even a Facebook page. Depending on your niche, there may be relevant freelancing platforms, like Outsized, TopTal, Fiverr, Upwork, etc., that can be sources for projects. However, it’s dangerous to rely solely upon them for work and in some instances, you end up competing on price, not skills.
Think through the admin side of things
Finally, you will need to think through a number of administrative issues before you go solo. Do you have to register a company in your country, or can you charge as an individual? What payment terms do you offer and how will you invoice? Do you need to register for any taxes like VAT/ GST or similar? Do you need an accountant and/or are you required by law to have your accounts audited every financial year? It is hard to give any specific advice on this as it’s both location specific and come with pros and cons depending on personal circumstances. We recommend you speak to other freelancers in your market to get their thoughts, and also with a professional advisor (eg accountant/ tax lawyer, etc).
Being a full-time, professional freelancer ultimately means you will be running a business where you are the CEO, the marketing director, the sales guy, the accountant, the contract lawyer and everything in between. Yes, there are tools that can help you and there are external service providers who can make some of the admin easier, but ultimately you are on your own.
We know professional freelancing can be an incredibly rewarding career choice, financially and otherwise, but the question you need to answer is whether it is right for you and whether now is the right time to do it.