Who hasn’t dreamed of being their own boss?
Answerable to no one and free to choose how and when you
work, freelancing is an appealing career choice that continues to gain
popularity largely because freelancers and independent contractors offer
businesses a flexible way of managing their labor needs and employing
specialized workers at a low cost.
In fact, as this article
published on American Express OPENForum suggests, the amount of income spent by
small businesses on contract workers now stands at 12% – more than double what it was nine years ago.
But becoming a freelancer is also a business choice that
requires planning, commitment, financial and professional discipline– as well
as the wherewithal to essentially find a new job each day and handle the peaks
and troughs of cash flow.
If freelancing is something you have considered, here are
some tips for assessing your readiness and suitability for running a freelance
business, as well as some steps to get you started.
Are you Ready to
Become a Freelancer?
Here are three very specific considerations to becoming a
freelancer that you should factor in before making the leap:
1) What have you got to offer? – All freelancers typically have a
specific competency or skill-set that is established and in-demand. Step back and assess the market for your
service. Can you identify potential clients? Do you have a portfolio,
track record of previous projects, or “clients” that you can use as
reference points? If the answer to any of these is no, then you are
probably not ready to freelance. Alternatively, you might want to take
small steps towards freelancing by researching and building a potential
client base (and perhaps even do some part-time consulting for them), or
building your portfolio while you are still employed full-time.
Another question to ask about your
“product” or “service” is how diversifiable it is. Will it survive and endure
potential market shifts and changing client needs?. For example, if a client
contracts with you for graphic design services to support their print design
needs but they find over time they need someone with Web design skills, could
you diversify or re-train to meet their needs?
2) Can your finances support you choice? Few freelancers hit the
ground running with a healthy pipeline of clients, and while the costs of
starting up a freelancing business can be low, you will need a financial
cushion to cover your cost-of-living and start-up expenses. If you are
able to fall back on savings, or have a partner (or spouse) that can
support you during the first few weeks and months – then freelancing (with
a business plan, get tips on writing one here) might work
for you. If not, then once again, you might consider doing it on a
part-time basis in order to establish a steady set of clients and a base
of savings to work from.
3) What are you looking to get out of freelancing? – Becoming a
freelancer requires a great deal of self-assessment. Understanding what
you want to gain from going freelance is one of the most important steps
to take, simply because the waters are so utterly new and uncharted. This
requires being honest about your needs, motivations and expectations, and
how much you are willing to endure to make freelancing work for you.
A useful way to do this is to look
at the pros and cons of freelancing versus those of a salaried, full time
position. This article
from Freelancer Crowd balances
out the pros and cons in a quick visual that might help guide your decision.
If you’re still unsure, read Taking the Plunge – Tips for Getting over the Fear of Starting a Business and get
tips for using preparedness, planning, and financing to help you succeed in
starting your own business.
Getting Started as a
If after reviewing your motivations, finances and
marketability, you find that you are ready to become a freelancer, there are a
handful of things you should know right off the bat.
As a freelancer or independent contractor, you are now responsible for paying
your own taxes, Social Security, unemployment taxes, workers’ compensation,
health insurance, and other benefits. You will also have to enter into
contractual relationships with your clients that are quite different in nature
to regular employer/employee relationships and obligations.
To help freelancers get started, the government has
developed this online guide from
Business.gov: How to Become an Independent Contractor – which includes
information and resources about getting started (including templates for a
standard client agreement); finding business opportunities, and operating your
business within the law.
These two earlier articles also can shed some light on
making the adjustment from employee to freelancer and business owner:
- Becoming an Independent Contractor: Part 1 – Taking the First Steps – Tips for
understanding your tax obligations; an explanation of what expenses and
deductions you are entitled to; and tips for making sure you are not
misclassified as an employee by clients.
an Independent Contractor: Part 2 – Contractor as Business Owner – Five
steps that you will need to follow to stay on top of your responsibilities as a
new business owner including, registering your business, getting a business
license/permit, and so on.