You’re working as a full-time employee, slaving away for 40 hours per week. The job is secure, your pay is pretty decent and the work is moderately interesting, but you don’t have much flexibility or freedom. All your friends are freelancers, regaling tales of £400 per day rates with the freedom to work when and where they please. Could you do it too? Could you forsake the good job, good pay and security for a life altogether more risky?
Life as a freelancer can seem very attractive, and in many aspects, it is. You are free to make your own decisions on when, where and who you work for. It’s not all sunshine and rainbows, though – you can fall into the trap of working long hours, and when you don’t find work, you aren’t getting paid – which can be tough.
How can you successfully make the transition from full-time work to full-time freelancing? This was the question I asked myself a year ago. 12 months on, and I’m coping pretty well, and here I’d like to share some of my experiences and advice on how to go about this daunting task.
I’ve split this advice into a 9-point plan. In short:
- Start side projects first
- Don’t worry about your rate
- Be professionally meticulous
- Set aside a place to work
- Keep your financials in order
- Get testimonials
- Ready? Take the plunge!
- Plan for fallow times
- Enjoy your freedom!
1. Start side projects first
If there was only one piece of advice I could give, it is this. Quitting your job and going full-time freelance will be considerably easier if you already have work, and the ability to build up your portfolio of work without the pressure of bringing in hard-earned cash will allow you to ‘test the water’ before fully committing to a new way of life. This does mean giving up some of your evenings and/or weekends to work, but I believe this is an important short-term price to pay for long-term success.
How to find a side project? This is a tough one, and probably the hardest part about being a freelancer, full stop. If you have clients, you are already halfway there.
I’d suggest the following approaches:
- Begin by attending as many networking events and meetups as you can. Tell everybody you meet that you are intending to become a freelancer and you are looking for part-time projects to start working on. If you live in a city, chances are there are already lots of meetup groups around. Start by checking out meetup.com. There may be other local resources you can tap into – for example, here in Bristol, the underscore mailing list is a fantastic way of keeping up to date with the local web development community.
- Get the word out on social media that you are looking for part-time projects.
- Check out online freelancing sites such as Elance, Freelancer and People Per Hour. These sites have a bad reputation in some quarters, due to the proliferation of engineers from the developing world bidding at very low rates. In my opinion, these sites can be useful, but you must spend time to search for the right client. Search for somebody who is based in your country, and preferably your timezone, so that communication is easy. Sell yourself on your skills but also the fact you are located close by, and make a big point of committing to fast, responsive communication. This is the key for many clients – they want to know that you are technically capable, but equally, reliable.
Many potential clients will ask to see a portfolio of past work. This is so that they can gauge that you are capable for the job. Getting a portfolio together can be difficult, especially if the majority of your work was undertaken as a full-time employee, under strict non-disclosure. If this is the case, it could be a good time to start contributing to something for free, to build up a small portfolio. If you are a developer, for example, you could contribute to an open source project.
One last thing to mention – you should check your employment contract for your existing job. Some employers insert a strict ‘no-compete’ clause which can restrict the type of work you undertake outside of your job. It’s a good idea to be sensitive to this, and perhaps fly under the radar, if necessary. This may limit the level of self-promotion you can undertake.
To summarise, start small, test the waters.
2. Don’t worry about your rate
Your goal at this stage is not to aim for the highest rate you can muster. In fact, charging a lower rate for a side project can relieve the pressure a little, as you won’t feel guilty that you aren’t working on the project during the day. Remember, the whole point of taking on side projects first is to minimise the financial risk of taking the plunge straight away. You still have your full-time job, so money should not be as much of a worry.
Aim to charge something that is below the market expectation for your capabilities, at least at first. You’ll find it easier to get your first break.
Some people would even advocate charging nothing for the project. Unless you are working on an open source project to improve your portfolio, I wouldn’t recommend this route. Charging something for the project ensures that both parties have some ‘skin in the game’, and will help to guard against endless changes from the client, who will feel they can get away with anything as it is all for ‘free’.
Most projects you will come across, especially at this stage, will be for a fixed price. You’ll need to estimate how long the work should take you, and convert this into a price. However, the beauty of not worrying too much about your rate is that you don’t need to spend too much time on this process.
Charge something, but not a lot.
3. Be professionally meticulous
So, you’ve found a project to work on. Congratulations! Now, the hard work really starts.
Remember that the client has put a lot of faith in you. They are taking a big risk in employing you, an unproven freelancer, and so you must repay that favour by doing the best job that you can.
Obviously, this means paying attention to the project plan and the deadlines, and making sure that you deliver something above and beyond the client’s expectations, at or before the deadline.
In addition to this, now that you have officially begun freelance work, you should get into some good habits early on.
- Track your time. If you have managed to score a project at an hourly rate, then this is essential so you know how much to bill for. However, even if you are working on a fixed price contact, you should track how much time you actually spend on the project. This can help you to figure out how accurate your initial estimate was.
- Ensure you communicate on a regular basis with the client. Keep them updated with your progress, and even better, if you can, show them your progress.
- Invest some time into setting up an invoice template, and use it whenever you invoice. I’ll talk about this some more in the Financials section below.
You might also want to look into getting a contract in place between you and your client. This isn’t always necessary, but I’d advise to get one in place, just in case anything goes wrong. You don’t need to spend hundreds of pounds on lawyers, though – there are plenty of resources online you can use. I particularly like the legalese-free Contract Killer template.
If you put this all in place, you’ll come across as a professional, dependable freelancer, and by combining this with your ability to deliver high quality work, you’ll be more likely to acquire new and repeat work in the future.
4. Set aside a place to work
It’s always important to try and separate your work life from your personal one. When you work in an office as an employee this is a little bit easier – you can leave the office at the end of the day and return home. The act of changing locations helps to draw a line between the two.
Freelancing, especially when working from home, can seriously blur this line. If you don’t maintain some sort of work-life balance, you may find yourself becoming overwhelmed, tired and stressed. Setting aside a place to work at home can really help to alleviate some of these pressures. You can associate that place as the ‘work zone’, and whenever you are in that zone, you work. At the end of the day, close the door on the work zone, and return to your life.
If you have a spare room, set it up with a desk and chair and use it. Otherwise, you may have to decamp on the kitchen table for a while. Whatever you do, try to remember that work isn’t everything, and keep the line between work and life as sharp as you can.
Try to maintain a good work-life balance.
5. Keep your financials in order
When you work for a company, your taxes and other contributions are all handled for you by the nice man or woman in the payroll department. Now that you are charging clients directly, there are a few things you’ll need to get in place.
Firstly, you should register with your government to pay taxes on your earnings. In the UK, this means notifying HMRC that you will be undertaking work in addition to your existing job. I’d recommend you become a sole trader – this is the easiest and most pain-free way of registering as self-employed, and costs nothing to do so. A more tax-efficient method of self employment is by incorporating a limited company, but this adds extra burdens such as the filing of accounts at the end of the financial year, for which you need an accountant. You can always go down this road later on if you take on freelancing full-time, but for now, register as a sole trader – it’s much less hassle.
As a sole trader, you need to submit a tax return after the end of the financial year (5th April in UK). This is a fairly simple process, which involves inputting your total earnings for the year (both from your full-time job and any side projects) and any tax you’ve already paid (which will have happened automatically for your full-time job). Usually the calculation ends up with you needing to pay X% of your self employment earnings as extra tax, where X depends on your total earnings for the year. It’s a simple process if you have tracked your invoices, and shouldn’t take longer than an hour or so to carry out.
Next up, you’ll need a bank account where you can get paid. The rules may vary depending on where you live, but in the UK, you don’t need to open a business bank account unless you incorporate as a limited company. As discussed above, you should start off as a sole trader, so your personal bank account will be fine.
Last, but certainly not least, to actually get paid, you’ll need to send an invoice to your client. An invoice should include the word INVOICE in really big letters, and include your name & address, the client’s name, the description of work carried out and the cost of this work. You should include the terms of payment (how long the client has to pay the invoice) and your all-important bank details. Lastly, ensure you give the invoice a number (sequential is good to start with) and a date. There are some simple invoice templates online, or if you prefer, you can copy mine.
It’s a good idea to keep track of the invoices you have sent, and when they were paid, as this will help you to calculate your tax bill at the end of the financial year (hello, Inland Revenue). A simple spreadsheet should suffice here.
When your first invoice is paid, celebrate! This is a great milestone – your first paid work as a freelancer. But don’t spend it all at once – each time you are paid, put aside a percentage of this for your tax return, so you can pay it promptly when it is due. A decent rule of thumb is to put away 1/3rd of what you earn, although this may need to be slightly more if you are a higher earner. If you are in the UK, check out the current tax bands on the government’s website, or alternatively search for an online tax calculator that will be able to work it all out for you.
Keep your financials in order, and pay what you owe – the taxman never forgets.
6. Get testimonials
My old employer is a very successful agency in central Bristol. They have built over 100 mobile apps for a variety of different clients, and after every successful launch, they ensure that a case study is written and signed off by the client. As a result, the case studies section on their website is very comprehensive. This really puts client’s minds at ease – namely, the agency has a proven track record of delivering high quality apps, on budget, and on time. This is music to the client’s ears.
You should strive to do the same. The more work you carry out, the bigger your portfolio becomes, and being able to back up your work with a quote or testimonial from your client puts you in a very strong position when bidding for new work. Chiefly, the client feels that it is less risky to go with you over an unproven freelancer, and anything that reduces risk for the client is a very positive thing.
In short, get clients to say nice things about you. Failing that, say nice things about yourself, and get the client to approve those things.
7. Ready? Take the plunge!
You’ve been taking on a few side projects, and you feel like you can probably get enough work to keep you fed, watered and housed. This is a great time to start thinking about diving in as a full-time freelancer.
Before you do take the plunge, consider carefully whether freelancing really is the life you want. The pros of added flexibility and ‘being the master of your own domain’ will contrast with the stressful times, especially when you cannot find work. Make sure you are ready to jump, and don’t be pushed – this is your decision. Not everybody is right for freelancing, and that’s ok. Everybody’s circumstances are different – there is no shame in holding down a full-time job.
One thing that can really help to make up your mind is the support you could achieve from your husband, wife or partner. If they are working and bringing in a regular salary, taking the leap into the unknown may not be as big a risk.
Another thing worth mentioning is that once you become a full-time freelancer, it can be difficult to get credit. For example, you will find it tough to get a mortgage, or buy a car on finance, as you have no guaranteed income to fall back on. If you are planning on doing these things, look at getting the deal done before you become self-employed on a full time basis.
If you do take the plunge, welcome! Your past few months of working on side projects and getting into all of those good habits will hopefully give you a great head start for the years to come.
8. Plan for fallow times
Now you are full-time freelancing, if you have work, it’s difficult to imagine what life is like when you have nothing to do. ‘But I’m a great designer/developer/whatever else’, you tell yourself. Surely I’ll find work when I need to?
Unfortunately, sometimes things happen outside of your control, and you need to plan for these eventualities. If you are sick or injured, and you are unable to carry out your work, there is no sick pay or other benefits that might have been available to you as a full-time employee. What happens if your client runs out of money? Or you simply cannot find more work once your current project has finished?
This is why it’s vitally important to squirrel away some nuts for the winter months. Keep at least 3 month’s worth of living costs saved away somewhere, and don’t touch it unless its absolutely necessary. If you can afford it, bump this up – I’m striving for 6 months cushion, for those ‘just in case’ moments. This will help to alleviate the obvious stress that you will feel when you aren’t earning, and will hopefully prevent you from seeming too ‘desperate’ when trying to win that new contract.
You’ve been working for months, if not years to get to this point. So enjoy your new-found freedom! Remember you are a freelancer, not a full-time employee, so you can dictate when and where you work. Need to pop out and buy some milk? No problem. Picking up the kids from school? Go for it! That package you ordered from Amazon? Never again will you need to collect it from those weird people at number 72.
I’m a big advocate for the freelancing life, but if it isn’t for you, perhaps you could float the idea of home-working with your employer. This might be the best of both worlds, and could give you a bit of freedom whilst maintaining the stability of a good job. Worth a consideration.
Hopefully this has given a bit of insight into how to become a freelancer. In a future post, I’ll be discussing the transition from ‘freelancer’ to ‘consultant’, and the move from being a sole trader to a limited company. But in the meantime, have I missed anything? Do you have any advice of your own? Please share your experiences, good and bad, in the comments section below.