Everybody talks about how great it is to go freelance, but the truth is that it can be a daunting process and it’s worth doing a little preparation before you make the leap into being your own boss. In this article, we explore when to go freelance so that you’ll know when the best time is to quit your job and hit the road.
The best time to go freelance is when you know what you are selling, have money to tide you over, have some clients already landed, when you enjoy sales and marketing, have some self-discipline and understand your costs and your fee structure. Let’s take a look at how that works in practice.
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The Essentials Of Going Freelance: Don’t Write That Resignation Letter Just Yet
Firstly, let me acknowledge that you can go freelance without doing any of the stuff I am about to list here. I didn’t do any of it. That’s because economic necessity had placed me in a position where my choice was: go freelance or starve.
If I’d had the luxury of picking a better time to start freelancing, however, I most assuredly would have taken it. I made a lot of mistakes in the first year or two of freelancing that could have been avoided if I’d just had time to think about what I was doing.
So, if you want a little less pain than I went through. This is what you need to think about:
What are you selling?
It might sound stupid but the endless numbers, of bad generalist freelancers out there begging for work on Upwork, suggests that it isn’t stupid at all. You want to spend some time defining what work you intend to do, and you ought to be looking at carving out a niche.
You’ll find plenty of people claiming to have struck it rich as a generalist on Reddit or Facebook but back in the good old days when Upwork was Elance, individual freelancer finances told a very different story.
Specialists make more money. If you have real-world experience to sell (and ideally all freelancers should have this) then you can start to specialize around what you enjoy the most.
When you know what you want to sell, you can more effectively articulate that to clients and in turn, they’re more likely to pay top dollar for it.
“I can write articles about any aspect of green energy generation thanks to my work on the New Green Energy Magazine for the last 5 years” sounds much better than, “I write about anything that I can Google.”
How much money do you need to get rolling?
If you are smart, you don’t just quit work and start freelancing. You do two things first:
- You save enough money to cover 3-6 months of expenses. Sure, if you just lost your job and you need money today, this isn’t going to happen but if you have a job, you can make this happen. Work out what you really need and then squirrel money away to cover yourself for a few months.
- You find a few clients in your spare time. Yeah, working two jobs sucks. But it’s worth it because if you do this when you quit, you already have a business – you’re not starting from scratch. All the evidence is overwhelming on this point, you are massively more likely to succeed in a business that you start as a “side hustle” than one you quit work to start. No, it’s not impossible to succeed starting from scratch but it is much harder.
If you do these two things then you have enough money to tide you over as you find more clients and because you already have some clients, that money will last longer than you planned for it to do. Congratulations. This makes a lot more sense than quitting with an empty bank account and with no income coming in.
You don’t mind selling and marketing yourself
This is the part where you need to be honest with yourself. If you want to make your living on Upwork, you’re going to regret quitting your job pretty soon.
With the singular exception of coders who are willing to work at below market value – the jobs on Upwork are mainly crappy, really badly paid and lead to very little in the long-term. Again, there are exceptions to this rule but don’t bank on being an exception.
If you want to freelance in the long-term you must learn to sell your services. You must learn to market them and while you may never come to love this part of the work; you have to be able to do it over and over again.
In fact, it’s also worth noting that the quality of your salesmanship is far more likely to predict your future earnings as a freelancer than the quality of your actual work. If you can do both, great but learning to sell is the number one skill that freelancers need.
If you don’t have it. Learn it before you start. You’re going to save yourself a lot of pain in the long-term.
Also, you’ve got time – set up your portfolio and your website before you quit. Seriously, there’s no excuse for not doing this.
You have self-discipline
The number one reason for people failing as freelancers is that they lack the discipline to do the job. Clients, mainly, pay for results. They’re not employers. They don’t tolerate “maybe it’ll get finished tomorrow” when you say it’ll be done on Friday, it had better be done by Friday.
The digital nomad life is amazing, but the truth is that unless you have cash in the bank or independent income (investments, etc.) you’re going to be working much of the time. If you can’t prioritize work over having fun – you’ll be begging your mom and dad to give you a cash lifeline to get you home pretty soon.
If you lack self-discipline you might seek a remote work opportunity instead of freelancing. You’ll still need some self-discipline, but employers tend to be less harsh than clients. You may get a second chance or two before they fire you.
You know what to charge
Freelancers that base their rates on what they could earn in an office are doing it wrong. The smart freelancer is charging what the market will bear and ideally, thanks to their reputation and skills, a premium on top of that.
You have sales, marketing, accounting, admin, etc. to do and you’re not going to get paid for that. Most freelancers are their own boss and their only employee – you have to get out of the salary mindset and into the “pay me for results” mindset.
I used to hire freelance services on an hourly rate because people told me that was “fair”. It wasn’t. Freelancers would continually let me down and I’d have nothing to show for their work but an invoice. Now, I pay people a premium but only when the work is done.
The work gets done far more often when the freelancer has to deliver in order to get paid. It’s fairer to them (they make more money) and me (I actually get what I paid for).
Similarly, when I was one of the Top 5 freelance writers on Elance (Upwork’s predecessor) out of about 700,000 writers, I was charging what I was worth, while everyone else was writing for peanuts.
My specialty is tackling large projects. I write non-fiction books, training courses, company policies, that kind of thing – there aren’t many freelancers out there that can handle much more than a blog piece. It means I can charge a premium because most of my “competition” has no experience in doing these things.
I can also write award applications (I’ve won several for clients) and grant applications (for charities in the UK and yes, I’ve won a few of these too). Both of these are premium services when compared to SEO spam.
You know what your benefits will cost
Yeah, not only do you have to pay your own benefits now, you have to pay your own taxes and accounting fees too. It’s a really good idea to get a grip on all your expenses before you set out on your own.
My costs are a computer and a bit of software for most of my work. They’re easy to keep an eye on. Then there’s some health insurance and the cost of travel insurance, flights, etc.
Yours will be very different to mine, probably. You can’t run a business if your costs outweigh your earnings. The only way to be clear that you can turn a profit as a freelancer is to calculate your costs and then compare them to your earnings. Do this before you quit.
If costs are bigger than earnings – you have two choices: cut your costs or boost your earnings. Simple, really.
Conclusion
Being a freelancer can be awesome but if you want to make it work for you – it can pay off to wait before you quit your job and pack your bags to become a digital nomad.
By saving some money, gaining some clients and preparing yourself to run a business – you can really give yourself the best opportunity to succeed.