Hi Slackers, I’m back and proud to announce a multi-part blog series that teaches you the ins and outs of how to leave your current job to become a freelancer. The first part in the series covers the basics of freelancing so you can decide if its something that’s right for you. Future articles will cover topics such as finding consistent work, when to hire and outsource to other employees, and how freelancing can be used as a stepping stone to filthy riches.
What is Freelancing?
The economy is evolving, and one trend that continue to emerge is the concept of freelancing. Becoming a freelance worker means that you are not employed full time by one single employer, but rather take on several different contracts from multiple clients over the course of a year, and may even work for several different clients simultaneously. Industry forecasters have long professed that in the future we may all become freelancers as an efficient, mobile workforce demands it. We are still nowhere near this future state, but I do believe that freelancing is a trend that will continue to grow. Growth will be driven from demand on both sides, companies desiring more flexibility in their workforce, and employees desiring more flexibility in their lifestyle.
Pros and Cons of Freelancing:
Freelancing has many pros and cons compared to traditional full time employment.
Pros:
- More control over the type of work you do
- No office politics, increased control over who you work with
- Typically higher pay rates (often double the equivalent full time salary)
- Ability to take unlimited amounts of vacation between projects
- Usually greater flexibility to work remotely/from home
- Reduces reliance on a single company
Cons:
- No guarantee of future income
- May require significant time just to find work, which is not billable
- May have to pay for standard employment benefits out of pocket (e.g. healthcare)
- Requires you to actually work at a reasonable level. No results, no money
- Can be socially isolating working alone
- Cash flow is delayed and in some cases may go unpaid
- Additional taxes and administration expenses, more difficult to obtain credit
Who can do it?
The lifestyle of a freelancer is definitely not for everyone. You must have an acceptable comfort with risk and a well-rounded skillset that enables you to successfully sell work, the organizational discipline to complete projects on time, and the technical ability to do a good job. Depending on industry, a career as a freelancer can be quite lucrative as it is rare to possess all these attributes. In some industries companies will happily pay a premium for temporary and flexible labor if it means avoiding the expense commitment of a traditional full time employee.
To have a successful career as a freelancer, you must start from a stable base. If you are living paycheck to paycheck and have large mortgage payments or similar to meet each month, then you do not have the necessary buffer to get through the leaner times when freelancing. Lean times will happen to almost everyone, regardless of how competent, hard working, or reliable clients you think you have.
You must plan for it and have a minimum of six months of living expenses in cash on hand, including food, debt payments, housing, entertainment, insurance, etc. Every freelancer create a monthly budget for their actual true monthly expenses based off their actual spend for the last year. Almost everyone will under count and underestimate if budgeting from scratch, as its easy to forget things or assume you’ll be able to go without. Making a budget based on your actual spend over the last year give a more representative picture of the true cost to maintain your lifestyle. Go through line by line for all your bank and credit card statements for the whole year.
If this sounds like a big pain and you’re too lazy to do it, congratulations! That means you’re just like me, but there’s a reason I’m giving you this advice now, because I learned the hard way and I don’t want you to repeat the mistake. Take the time and do it, if you don’t have the discipline to do that, you don’t have the discipline to be a freelancer.
I hope you enjoyed part one. The next part in this series will cover the most critical factor to freelancing success: finding work. Join our mailing list here to get informed when the next article is available.