One in three Americans are now freelancing (that’s 53.7 million people), as revealed by a new survey from the Freelancers Union and Upwork.
If you’re thinking of dipping your toes into freelancing, this might be the year to do it. Not only is technology making it easier to find freelancing work, those who do are earning more. 60% of freelancers who leave regular employment are earning more and 78% of those are earning more from freelancing within a year or less.
Of course, freelancing isn’t easy. The cost of healthcare, unpredictable income, high taxation rates, non-payment and late paying clients, are all very real freelancer concerns.
So, if you’re thinking of going freelance. How can you assess your readiness or even gauge whether it’s right for you? Before you take the leap, ask yourself these seven questions:
1. Can your work well by yourself?
If you need a manager to guide you or team comradery to motivate you, freelancing isn’t for you. While there are social elements to being a freelancer (client meetings, networking, shared office space, etc.), there’s no getting away from the fact that you have to find a balance between the isolation of your work and the world at large.
2. Is there a demand for your skills?
With 53.7 million freelancers out there competing for business, you’d better be offering something unique and valuable. Most of the time, this isn’t the service you provide. Writers, designers, photographers, tax advisors, are all two a penny. What you bring to the table over and above your baseline product is what will differentiate you. For example, do you have experience in a specialist niche or market that is currently under-served? Are you especially good at delivering ahead of schedule? Think of the things that might differentiate yourself from the competition.
3. Can you manage your finances?
The stats look good don’t they? Freelancers can make more than they do in employment. But managing your cash is crucial to success. Everything from managing cash flow to setting aside cash for healthcare, retirement, life insurance, etc. has to be planned and watched like a hawk (one late paying client can quickly leave you high and dry in terms of cash flow). Your attitude to banking will also change. Money in the bank isn’t there to be spent at whim – you need to set aside cash to pay estimated taxes, and earn a healthy amount so that you can build a financial cushion to tide you over during lean times.
4. Do you have a thick skin?
Freelancers need to be able to roll with the punches. For the most part, clients are wonderful, but at some point you will encounter ones that rub you the wrong way. Sometimes they don’t pay you on time. Sometimes they ask you do work on vacation. Sometimes they challenge your work and rate. If you prefer to let your manager handle conflict, how will you handle it when it directly impacts you and potentially your bottom line?
5. How’s your time management?
Let’s get one thing straight. The image of freelancers lounging around in PJs only working when they want to is fiction. Freelancers work hard to find clients, retain clients, do good work, and manage their business. This means putting in the hours. But time management is more than that. It means being able manage client expectations and juggle their needs. It means planning ahead, so that you get the work done and meet your commitments. It means having structure. It means managing variables – for example, if you know there’s a big project coming down the pike, be sure to clear your plate before it hits and close out other projects first.
6. Can you wear lots of hats?
Freelancing isn’t a lifestyle, it’s a business. You have to work at it and where many hats in doing so. One minute you’re managing your tax obligations, the next you’re thinking about how to price out a proposal or win back that client who’s gone dormant for a few months. You’re a sales person, marketer, financial manager, secretary, IT department, and more, all in one! Phew! It takes commitment and determination to be successful. If you prefer to stick to one function, freelancing might not be for you.
7. Do you know any other freelancers?
Freelancers learn from each other and from other business owners. Do you know anyone who’s already freelancing? Pick their brains and find out what motivates them, what challenges they have, how they manage their finances/taxes, etc. It will open your eyes to the reality. Then, once you start freelancing, keep building those connections and learn from your peers – they’re also a useful sounding board when you need to let off steam and vent!
The Bottom Line
Freelancing can be hugely rewarding an exposes you to many skill sets, people, and experiences that you may not otherwise get. But freelancing is a business and as such requires planning and an element of risk. Think carefully and have a plan. It’s always a good idea to dip your toes in the water and freelance on the side while still employed. This will help you gauge whether it’s a good fit for the long haul.
Ready for more?
Apply for funding and find out if you qualify today