Only it’s been months, or maybe even years now, and that good job still hasn’t come your way.
What are you supposed to do?
One option that is often overlooked is freelancing. While freelancing is not a perfect fit for everyone it could be for you. Here’s what you need to know.
What is Freelancing?
A freelancer is a self-employed person who acts as an independent contractor. As a freelancer you take your skills and offer them as a service.
Freelancers are responsible for finding their own clients, setting their own rates and determining their own hours.
As a freelancer every aspect of your career is in your own hands.
The Pros and Cons of Freelancing
When most people hear of freelancing they have either one of two reactions. The first type of person is completely turned off and only wishes to work as an employee for someone else. The second type of person hears about freelancing and starts dreaming of high pay and flexible schedules.
The truth is that freelancing has a strong set of both pros and cons.
Pros of Freelancing
- Ability to set your own schedule
- Large income potential
- Pursue work you enjoy
- Easy and low cost to get started
Those are some pretty great pros of freelancing. Unfortunately there are downsides too.
Cons of Freelancing
- Finding your own clients can be hard
- You need to earn more than you would at a day job to break even (see below)
- Responsible for bookkeeping/taxes
- Requires high level of self-motivation
- Variable income
The variable income is one of the biggest deterrents of freelancing. If you feel the need for a steady and highly predictable paycheck freelancing might not be right for you.
How to Set Yourself Up for Success
If you’ve decided the pros far outweigh the cons or you or just don’t have any other employment prospects, here’s what you need to do to set yourself up to be a successful freelancer.
Determine What to Offer and Charge
Your first step is determining what service you’re going to offer and what rate you’ll charge. The most successful freelancers often pair knowledge with passion to come up with an ideal service.
As a very general guideline here are just a few services you can offer as a freelancer:
- Social Media Manager
Again, these ideas are general. You’re going to need to make your idea much more specific. Anything that you would do in a 9-5 job can be done in a freelance setting. The key will be packaging your skills in a way that is appealing to potential clients.
After you’ve decided what you want to do, you need to determine a rate. You can go about this in a couple different ways – charge by hour or charge by project. Start researching to see what the going rate is in the industry you chose and connect with some already successful freelancers to get their advice.
Secure Multiple Clients
In order to keep steady work and a steady flow of money coming in you’re going to need to secure multiple clients. When you’re just getting started this is the hardest part.
Attend Trade Events – Attend any trade events in your area and network with potential clients.
Spread the Word Through Your Immediate Networks – Tell all of your friends and family of your new plans and have them help spread the word.
Cold Pitch – This method has by FAR been the best option for me but it’s usually the option most new freelancers are afraid to take. Cold pitching involves emailing, calling or visiting with prospective clients whom you’ve had no prior relationship with.
Check Job Boards – There are online job boards for almost every industry. Check out the ones relevant to you.
There are an endless number of ways you can go about getting clients. You need to keep experimenting and trying new things until you figure out what’s most effective for your business model. Securing multiple clients will be the key to your success.
Plan for Taxes, Insurance, and Retirement
When you’re making a plan for how much you’ll charge, how many clients you’ll take on and how many hours you’ll work you need keep this in mind: you need to earn more as a freelancer than you do as an employee to break even.
As an employee your employer takes care of things like taxes, insurance, and in many cases, retirement plans for you. This will now all be up to you.
As a freelancer you have to pay self-employment tax. This tax is comprised of Social Security and Medicare and is twice as much as you pay as an employee. On top of that you’ll need to withhold your own income taxes.
(I use Outright bookkeeping by GoDaddy to keep track of freelancing income and expenses and automatically calculate my taxes. It’s super simple software that has been worth every single penny to me.)
You’ll also have to foot the bill for health insurance and will need to plan for retirement contributions.
Add all of these expenses up and you’re going to need to earn quite a bit more as a freelancer than you did as an employee.
Learn How to Live on a Variable Income
One of the most fear-inducing aspects of freelancing is the variable income. If you’ve come from a world of steady, predictable paychecks it can be hard not knowing what you’re going to earn next week.
You can remedy this by living on a low budget for the first several months and saving as much money as you possibly can. When you grow your savings account to a large enough number you can start paying yourself a set amount each month – increasing or decreasing that number as you see fit.
The longer you freelance the better you’ll get at predicting the ebb and flow of your income.
It can seem scary to jump into freelancing but if you’ve exhausted all other options this avenue might be worth a go. If you’re already working a less than desirable day job I’d encourage you to start freelancing on the side to see how you like it.
If you can’t find a job at all then why not give freelancing a try? You’ve got nothing to lose.
Have you tried freelancing?