You could say, I have opinions about freelancing. I write and indeed talk a lot about it – Freelancing is just something I do. But what about those who don’t, at least not yet? When The Freelancers Union and Elance-o Desk combined (like some kind of on-demand Voltron) to release the first real study of freelancing in around 8 years, the results showed that a lot of moonlighters (around 36%) would love to dive into freelancing full time, and perhaps more importantly – that 90% of none freelancers would be more than happy to try paid freelance work.
Now to those who’ve done a little research into the wonderful world of freelancing, the figures might not seem too big a deal. The ultimate in flexible schedules combined with the potential for more money, make it fairly easy to see why many people are starting to consider a freelancing life style. There is also an element of jealousy when it comes to our on-demand naps!
The biggest barrier to overcome perhaps, is economic. Most people understand that for freelancers – a steady income is something that happens to other people. To make matters worse, it’s also entirely possible for work to be hard to come by (the problem increases in line with the number of freelancers, which is only going up) so, out of the goodness of my heart I present:
Tips for normal people who don’t understand the finance side of freelancing so good (it’s a working title)
So you’re a full time cubicle dweller with dreams far above your station, you don’t see your current position going anywhere so you’ve made the (questionable) choice to bravely strike out on your own! But slow down there sparky, before you jump off the pier of full-time employment into the great/deep ocean of freelancing you need to stack a few odds in your favour. Taking the time to do a little financial prep work can be the difference between you diving off that pier, or being the guy thrown off it with concrete shoes…
Learning to count
The leap from cubicle to freelance is in reality the launch of business.you, regardless of what you want to be doing as “That thing I do that makes money” first and for most, you’re running a business. As such, if you don’t start adopting a business like mentality, you’re going to be spending way too much time worrying about your finances instead of actually doing the thing that will help improve them. With the aims of cutting down on logistical drama, setting up a few well-placed systems can passively help to keep your business on track – freeing you up for the most important part of freelancing: actual work judging people at the local coffee house!
Nap based humour aside, here’s the actually list of things you’ll need in place for the launching of your grand scheme.
Here’s the basics, learn them – sort them
• Around 6 months of emergency funds, to cover day to day essentials of housing, groceries, personal transportation and (for those in the US and arguably the UK to) insurance. You can also include the costs of job necessities such as the internet.
• A plan for your retirement (I can’t stretch this enough if you’re 35 or younger) with accountants and contribution payments in place, you may find the need to freeze the payments until you’re in a more stable situation. Handy guide here for setting up accounts.
• Some form of disability/medical insurance. If you’re in the US this could mean buying COBRA or sorting Medicaid (which is now a lot easier thanks to the ACA)
You need to take a fresh look at your budget
If you happen to be single, “start up savings” become a must. Start-up savings are money you’ll be living on during those painful first few months explains CEO of Workable Wealth Mary Beth Storjohann. Additionally start-up saving are not your emergency fund (you’ll need them both) also if your able to line up regular gigs while you’re still in full-time employment, you can reduce the amount of start-up savings you’ll need. I personally used a combo of regular work and moving to Canada temporarily to help ease the transition.
If you’re lucky enough to be part of a dual income household both you and your partner need to understand just how much your lifestyle costs.
“make sure you can cover the expenses with the other income coming in, and meet the need and wants for your lifestyle — or what sacrifices you’re willing to make”- CEO of Workable Wealth, Mary Beth Storjohann
In order to calculate just how much you’re going to need in start-savings, you need to work out A. how you can bring money in during start up months and B. how much it’ll be. Is it possible for you to cut down on your current employed hours? This allows you to retain a baseline income whilst you build up your clients and therefore your business (an approach I highly recommend) or could you just start freelancing now in your spare time?
Once you know how much you’ll have coming in, work out your monthly and take that away from your projected income, then take what’s left and multiply it by how ever many months you think it’ll take for your business to start earning a somewhat liveable income. The number have after all that, is how much in start-up saving you need.
The non-financial stuff you need to do, before you quit
1. Setting up a portfolio, webpage and LinkedIn profile are major steps in helping people actually find you. Websites like Odesk or Elance can be great places to displace your portfolio.
2. Get the word out. Let people know you’re heading out on your own or that you’re happily accepting freelance work. It’s also a good idea to at least consider new opportunities, regardless of if they come to you via more traditional word of mouth or via the internet – remember the people you know (be they online or local) will be your best marketing.
3. Moonlighting IS your friend. A lot of the freelancers I know got started while still in regular employment. As your client base grows you may find it becoming “busy” enough that you feel brave enough to make the full leap.
4. A lot of people have actually managed to start their respective freelance careers from the safety of their current job. Consider the possibility of making your current employer your first client.
Click onward brave freelance warrior, TO PART TWO!