Freelancing isn't all working in your pajamas and cashing client checks. If you want to escape the rat race for good, you need to make sure that you're prepared for both good times and bad.
Back your passion with the right preparation, and you'll never have to go back to working under those buzzing fluorescent lights ever again.
10 Things You Need to Start Working as a Freelancer
Here's what you need to get started on your freelance career.
1. An Idea
What do you have to sell that others want to buy? Even if you don't produce widgets, or specialize in a single service, it's a good idea to clarify this point before you get started. Think about what differentiates your business from your competitors'. It's perfectly fine for your answer to evolve over time—and it will—but you need to start out with this question in mind.
Not sure where to focus your efforts? Review this list of freelance job types to start brainstorming.
2. A Plan
If you’re not pitching your business to investors, you might not need a formal business plan. But you do need some goals, if only to be able to assess whether you’re moving in the right direction. A little preparation before you hang out your shingle will save you time and trouble down the road.
3. A Pricing System
Freelance rates vary widely by industry, geographic area, skillset, and experience. There's no set formula for determining yours, but a few things to keep in mind are:
- Your rate of pay for the same work at your day job. If you were full-time and salaried, don't forget to add in the value of benefits like health insurance, paid time off, and retirement.
- Whether you want to bill hourly or by the project. (This will likely change from gig to gig.)
- absolute drop-dead dollar amount. Do not pitch this number, of course, but keep it in mind. You might accept lower pay when you're starting out and building experience, but you'll want to develop an idea of how low is too low, so that you don't keep taking jobs that don't pay enough. There's no quicker way to become an ex-freelancer than by consistently pricing too low.
Most experts recommend that everyone sock away three to six months of expenses in an emergency fund. If you’re starting a business, you also need to add in startup costs and money for unexpected expenses, e.g., replacing a laptop.
For most working people, that can seem like a prohibitively large of amount of money. Before you give in and give up on your freelance dreams, think big. There are plenty of ways to raise money, without borrowing against your 401(k) or putting everything on a credit card. (Note: do not do either of these things.)
The best is probably starting your freelance career while you still have a day job and banking the money you make to take a leap.
5. A Client Base
The need for money in the bank is just one reason why it's a good idea to start freelancing on a small scale while you have a day job; another is that you'll have an opportunity to build up a roster of clients before you go out on your own.
Having two or three solid clients before you get started means that you have a measure of security, right from day one, because you'll know, roughly, when you'll be paid. Plus, you'll have time to work out any kinks in the client-freelancer relationship while you still have a job to fall back on if things don't work out.
6. A Way to Handle Money
You don't necessarily need an accountant, but you do need a way to keep track of expenses and invoices, and a means of tracking and paying estimated quarterly taxes.
When you work for someone else, they provide the equipment, from computers to desks to software. When you're on your own, well, it's up to you. The upside is that you can set up your work environment in a way that meets your needs, not those of an employer—and you can write off your purchases.
Save your receipts and be sure to note which why each expense qualifies as a write-off as you file them.
Many people go into freelancing assuming that the best part about it will be flexibility, only to discover that clients get tetchy if they routinely can't get a hold of you during normal business hours, and that it's almost impossible to put in 40 or 50 hours a week if you get up at noon. (Almost impossible: night owls might prefer a later schedule, and if they're willing to work at night, and have amenable clients, that’s OK.)
Just remember that while your clients can't ask you, for example, to be available for a total of 15 hours a week, but demand instant access whenever they decide those 15 hours should occur, you will need to be accessible. It's a fact of modern working life that everyone is in a hurry, all the time. If you're not available, you won't get—or keep—the gig.
Even the most successful and blissfully happy freelancers have dark days, especially in the beginning. Don't be discouraged if you find yourself wondering whether you've made a mistake. If you and the freelance life are a good fit for one another, things will work out. Either way, a bit of self-reflection is any career-minded person's friend.
10. A Willingness to Reassess
Finally, it's a good idea to reassess your goals periodically to make sure that freelancing is still providing what you need. If you don’t stop and look around once in a while, you won’t know if you’re on the right path.