How to Make the Jump From Employee to Full-Time Freelancer
So you’ve been doing a little freelance work on the side and are toying with the idea of making it your primary gig. But how do you know if you are actually ready to make that leap? Can your freelance job support you financially?
There are a lot of things to consider when it comes to switching jobs — of any kind — and freelancing is no different. You just need to think about some of the numbers and considerations a little more closely than you would if an employer was handling all of the details for you.
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Prep in Advance
If you are considering a move to full-time freelancing, advance planning is key. There are some thing you can do while you are still working on the side to help ease the transition so that you don’t lose valuable time in the first months of your full-time freelance gig.
A lot of the prep work comes in the form of creating materials for your business (if you don’t already have them) and formally incorporating as a business (if you have been putting it off).
Here’s a checklist to help you get started:
- Develop marketing materials and branding pieces, including leave behinds.
- Update and revamp your website, ensuring that it is search friendly and includes plenty of ways to contact you for business.
- Add new projects to your portfolio and remove old elements; tailor it to the type of work you want to do as a freelancer.
- Create business accounts (bank, credit card, phone, etc.) to keep your business separate from your personal accounts. You will be thankful you did in the long run.
- Formally and legally incorporate your business. This offers major protections for you personally if anything happens to the business. Consult an attorney in your area for help.
- Draw up basic contracts and terms. (You might want to consult an attorney.)
- Develop a rate card for services, including terms for non-payment, late fees and termination.
- Price and buy equipment and supplies, such as computers or software.
- Price necessary expenses such as health insurance and other benefits.
Run the Numbers
There are a lot of number involved when thinking about changing jobs. That math can be complicated when you are thinking about a career where you are responsible for everything yourself.
A $50,000 annual salary with benefits is not the same as $50,000 in freelance income. It will take significantly more money as a freelancer to put that $50,000 in your pocket. You need to consider business expenses, health care, insurance policies for you and your business, retirement planning, taxes and the list goes on.
If you don’t feel comfortable running the numbers, go find help. This stage of business preparation is vital to your long term success. Write a business plan with the help of a professional at a local community college (there are classes available in many markets) or a small business administration. Without a firm grasp on revenue and expenses, you will likely be surprised by how much things cost.
Understand Your Financial Needs
Do you know what money you need to live on? Determining if now is the time to go full-time freelance has a lot to do with your lifestyle, including everything from where you live to the type of spending you incur monthly. Accept the fact that it is likely to be different than it is right now.
Think of it this way. If you are considering a full-time freelance career, you are likely one of the many people working two jobs — your day job and your freelance job. You have income from both sources. If you quit that day job and go freelance only, expect a change to your monthly income level. Even if you think you can equal your “day job” salary freelancing, you won’t have the extra income from the second job — because it is your job.
You need to have a realistic idea of the income you need to live on, run your business on and feel comfortable with. It helps to start with plenty of savings on hand for rocky times; freelancing does not always come with a steady paycheck.
Evaluate Potential Lifestyle Changes
Yes, working from home can be wonderful, but it also has challenges. Even beyond finances.
- Do you have a dedicated workspace?
- Is your home free of distractions that will allow you to get work done?
- Are you self-motivated when it comes to tasks and deadlines?
- Are you ready to work more hours than at your previous job?
Be careful of jumping to a full-time freelance career because you think the lifestyle is carefree. Many freelancers would agree that the hours can be long and there are plenty of pressure and stresses that may not be apparent from the outside looking in. Make the switch to full-time freelancer because you want to do the work and it is the right fit for your lifestyle, not because you want to sit in flannel pants all day.
Develop a Network
While you will spend a lot of time working on your own as a freelancer, a good network will make work life that much easier. Surround yourself with people who can help you manage the parts of your business you are not comfortable with or don’t have time to manage.
These experts can include a number of different people depending on the type of freelance work you do.
- CPA or tax expert
- Attorney
- Insurance agent
- Web developer
- Marketing expert
- Referral businesses for jobs you can’t take on
Set Goals, a Timeline and Move Forward
Making the transition to full-time freelance might take longer than you expect. There are plenty of things that you should think about — and get done — for your small business before you “quit your day job,” and some of these things can take time.
Treat your freelance transition and career as you would a job with any other employer. In the planning phases, set goals and timelines to help you get your business completely off the ground. Think about timelines and goals in terms of stepping stones to success rather than dates on a calendar. For example, you might hire a CPA when you reach a certain dollar amount in revenue, a marketing team at another threshold or once a certain revenue goal is met take the full leap into freelancing full time.
Once you become your own boss, don’t forget these lessons. Continue to set goals for yourself that will help you get better, feel challenged and grow your business. Goals should fall into small things that you can do in the short term, mid-range planning and longer term goals. Pair every goal with a set of steps and timeline for accomplishment so that you can measure your own success. (And consider a reward for meeting goals!)
In the end, you want to head down a path where you continue to move forward as a full-time freelancer. As with any other job, you should feel personal and professional growth and development and satisfaction when the work is done well.
Conclusion
Making the move to full-time freelance can be terrifying and exhilarating. While it is not a career choice that works for everyone, the flexibility and work can be quite rewarding. Do your research in advance, plan it out in detail and then decide if making the move is right for you.
Freelancing 101 is an occasional series to help the increasing number of freelancers in the market. Whether you are a designer, writer, developer or wear multiple hats, we will share tips, resources and ideas to help you make the most of your small business. Is there something in particular you want to know? Let me know at [email protected].
Stock images from Stokpic.