Freelancing is a great option for many people. Who wouldn’t want to work on their own things whenever they want?
However, we’ll be honest, it’s not as simple as that. Freelancing is hard work and requires a lot of sacrifices to get the most out of it. So here are some of the things you might have to make sacrifices on, at least in the early days of freelancing:
If you’ve started freelancing while keeping hold of your day job, this won’t be so much of an issue. However, if you’ve given up your job to go freelance, the first thing you’ll likely notice is the distinctive lack of money.
It’s hard work to get to an income that you’re happy with and one that can replace the salary you’re missing from your old job.
It is definitely possible to replace or even surpass your old salary but this takes a lot of time, patience and hard work.
Even if you do get to a level where work is paying well, it’s still inconsistent work that’s hard to plan anything around. Some months may be busy, some may be quiet. This is why it’s a good idea to have savings for those quiet months so you can still pay the bills.
Without a doubt, the biggest draw to freelancing is the freedom to manage your own time. You can work as early or as late as you want, depending on when you’re at your most productive.
However, one of the most common misconceptions is that you’ll have tons of free time. While yes you can if you want, this is just going to mean you’ll be earning less. You only make money for the hours you work.
You probably won’t be very busy in the beginning but instead of sitting back and waiting for the clients to line up you should be spending your time trying to get busy by marketing and sending out pitches to potential clients. In other words don’t relax too much in the beginning or you’ll set yourself up for a future of bad habits.
If you’re planning to go freelance and are also looking to take out a big loan for a car purchase or to apply for a mortgage, you might have to think again.
While you may have had a steady job in the past, freelancing and self-employment in general is a little more risky from a lender’s point of view.
They will want to see anything from one to three years of income proof before they’ll even think about approving you for a mortgage. So it might be off the cards in the early days of starting your freelance business.
Freelancing can be one of the cheapest ways to set up a business. You could set up a free website, with a free domain and a Gmail account. Many people start off this way and there’s nothing wrong with it while you’re finding your feet.
However, if you’re serious, it’s well worth investing in your business to give your website and online profiles a much-needed boost. We recommend that you get a custom domain and buy hosting to make sure you have full control and customisation abilities over your website.
Besides website costs, you might also want to kit out your home office with an ergonomic chair, sturdy desk and maybe even a new computer. You want something that is going to be reliable and not likely to crash on you when work is due in.
Make sure you keep a note of everything you spend on your business. These are expenses that must be deducted from your annual profits so that when you come to pay tax you’re only paying it on profits, not the expenses as well.
You’re going to face a lot of rejection. This is particularly true for the early days of freelancing but it’s also a regular part of the job. As a freelancer, you should be out there pitching your services to as many businesses and individuals as you can. Some will be interested, some won’t be. Some will not have the budget or you might catch them at a bad time.
Whatever the reason, you need to keep at it until someone says yes. Try not to take rejection personally, use it to learn from, to fine tune your pitches for the next one you send out.
You may find that in the beginning you’ll have to work for free or for less than you’d like. This is entirely up to you. Plenty of successful freelancers start out that way, some regret it, and others don’t. Weigh up the pros and cons and base them on your level of experience and skills.
If you do end up charging low rates or even working for free, make sure you don’t let this become a long term habit. Give yourself a target for when you’ll begin charging a better rate so that you can grow your business at a healthy rate.
Are you concerned about the cost of freelancing? Please pop any questions or comments below. For some tips of finances you can take a look at our page here.