Giles O’Halloran looks at the factors you should consider when thinking about life as a freelancer...
Rather than work for an employer, more people than ever are taking the opportunity to set up their own business based on the talents that they possess. They are working in what is being called “the gig economy”.
There are lots of reasons why. Some don’t want to work for one employer any more, some want to have choice about the work they do, and others want more variety in the work that they do. However, there are also lots of risks to consider when doing so that makes the decision both very difficult and personal.
Is Freelance right for me?
This is the big question you need to ask yourself. A freelancer is a free agent. This means that unlike a contractor or an interim specialist, they do not owe specific loyalty to one client for a certain timeframe. They are likely to have multiple clients and projects either on the go or on the horizon. They are in control of the work they do and are not bound by exclusivity.
Whilst this is an exciting prospect it does have its risks. For one, you are responsible for everything you do and managing multiple clients or projects simultaneously. You will also have different contractual terms or terms of reference from those employed, and you may be on very different terms with different organisations. You are also responsible for all your tax, insurance (including professional indemnity) or other liabilities, so again you need to be mindful of how that effects what you do.
There are lots of things to consider before you become a freelancer, and rather than taking the leap, do consider contract or interim first as a way to soften the blow and minimise risk. Whatever the case, you need to think about what works for you and whether it can work for you.
Money in the Bank
If you are new to the freelance world, it is wise to have a reserve of cash in the bank and not rely on a credit card to fund your business or lifestyle. No matter how capable and unique you might be as a professional, you need to have some form of financial security to help you through the initial few months or the first year. Work may come through but as you will see later, timings are different for different people.
You therefore need to ensure you have enough to keep the roof over your head, pay the bills, feed your family etc. – but how much this should be depends on you and your personal acceptable level of risk. Figures vary between 3 and 12 months of bills, mortgage/rent etc. in the bank. The more you can save and put by the better as it will always be there for a rainy day. So you need to talk to your partner, your family etc. to get a true feel for what level of reserve works for you.
Do something special to earn a premium
The freelancer world is exciting but you need to be able to show you can do something well or better than others. Ideally if you have a unique or emergent skillset that the market will need, you should profile this and charge a higher rate. This is why it is important to truly consider the talents you possess– by this I mean the skills, knowledge or specialist experience you have that marks you out as an expert or a skilled resource that organisations will want to engage.
Once you have considered these things, you need to then look at what services or knowledge that you can provide to organisations that either they have problems hiring in house, is more cost effective to outsource, or where a short term resource and capability is needed versus a full time employee. Thinking about these things helps define your niche and where you can command better rates of remuneration for the projects you win.
You also need to consider where and how you are going to get work. Relationships, networks and bids are ways of doing this, but the digital space also provides platforms to allow you to profile, sell and expand your profile to prospective employers. So you need to think about what you are going to do, what organisations will want your skills and how you will get the work you want to do. This is no mean feat but will help define how you will win your work.
Client concept of time
You may have a timeframe in your mind of when things need to happen so that you get paid, but I assure you that it will not be shared by most of your clients. Clients will take longer to decide, engage, brief you or finalise the projects you know could be achieved in a much shorter space of time. Discussions that you think can be done in a day will take weeks, and scoping work that should take a week may last months. Therefore be mindful that your concept of time is not shared by your clients. They will have their own concept and this will also likely follow on to payment once things have been completed.
Do not be frustrated by this, simply build this mindset into the work and schedules you are doing. Some of the work may not come off at all, but do not think this has anything to do with you or something that you might have control over. The simple truth is you do not, but understanding and accepting that time differs for everyone will make it easier to manage.
Peaks and Troughs
No matter how successful you prove to be as a freelancer, there will be peaks and troughs in your business. There will be times when you are seeking to secure work but clients are taking their time to finalise budgets or sign offs, and then suddenly a number of clients will all want your skills or speciality at the same time. This a natural course of running your own business and it could dictated by reasons such as the seasonal nature of your client’s work, the annual finance cycles of the organisations you work with, or due to changing economic or market circumstances beyond your control.
Building these periods of feast and famine into your business framework will help you manage them to some extent and ensure you maintain a secure level of income. This is why managing your finances, chasing up those who owe you payment and ensuring you build a reserve will all help you manage your business more effectively.
Managing and pricing your time
As a freelancer, it is not just your skills, knowledge and experience that are a premium. It is your time. As an individual, you have a finite amount of hours you can work. You cannot afford to burn out otherwise you and your business will suffer in the long term. You therefore need to consider time as part of your pricing structure.
In the same light, you will also need to spend time meeting clients, preparing proposals, marketing your capabilities, managing expenses, finances, invoicing etc. This means you cannot work every day of the month and you need to put time aside manage your business. As a result, you should factor these into your pricing proposals as you need to ensure your time is funded appropriately to make your business work for you.
Have a plan
You need to have a strategy. It does not to be a highly complex business plan, but you need to have a strategy that will help you achieve the things you want to over a 12 – 24 month period. This plan needs to look at your market, how you will engage, manage and deliver work so that you can create a sustainable business.
You also need to be mindful that not everything goes to plan. Not only does this mean you need to have some flexibility in what you are doing to manage or mitigate that risk, but you also need to be mindful that opportunities might emerge that create new strategies and paths that you never even considered. This can be both exciting and stressful as you then add more risk or worry to what you are trying to achieve. It is therefore worth creating a vision, defining your purpose as a mission and crafting a flexible strategy that builds a framework for you and your business. This is not the silver bullet, but it might help you manage your work prospects as you develop your freelance profile.
Network – network – network
We have already discussed time as being something you need to manage, and networking is something you need to factor into that time. Many feel uncomfortable with networking, but this is often due to the misconception and misunderstanding of what networking is. Networking is not about selling, it is about creating mutually beneficial relationships with others to help create opportunities for one another. A network is not just about who you meet, but it is also about the connections they can help you craft via their own network. It is therefore important for you and your business to network.
Is all networking face to face though? The simple answer is no and in this day and age, digital networks allow you to tap into talents, skills and expertise across the globe that can help one another. It has never been easier than it is today to connect with someone, but the important thing is to follow up and build upon that relationship. Meeting someone face to face makes a relationship more memorable, so it is important to try and make a network physical in the real world.
Although you might not feel comfortable with networking initially, it will come in time if you remember it is not about selling you, but helping facilitate productive relationships.
Speak to a good accountant
Managing your finances as a freelancer is so important. It is therefore imperative you engage a good accountant to help you. Many will provide an initial meeting and some advice for free, so take this opportunity and meet with a few until you find one you feel you can work with. They will then be able to help manage your expenses, taxes and income effectively – and you can even claim the charges of their expertise against your business! Having the support and advice of a good accountant not only keeps your business running effectively and legally, it also allows you to focus on what you do best – earning income to drive your business.
There is so much advice available to freelancers, I just wanted to provide a few key pieces of advice that have helped me over the last year. Good luck and hope all goes well!
About The Author
Giles is an experienced HR and Recruitment professional who works as a freelance consultant, strategist, writer and coach. He started his HR career with IBM after first reading Modern Languages at Warwick University and becoming a successful technology recruiter He has since worked in other senior HR roles across Europe, advised at Board level, and implemented both strategic and operational HR business solutions. He also spent 12 years as a reservist with the UK's Reserve Forces, serving first with the TA and later with the RAuxAF.
Giles is a columnist with a leading, MoD sponsored, international career transition publication, and has also written blogs for a number of websites and organisations on employment and the changing nature of work. He is passionate about technology, the value of networks and the future of work.
Giles focuses on career transition support for individuals (CVs/Resumes, LinkedIn, Interviews, Networking etc.), and effective people solutions for organisations (HR strategy, Talent, HR Technology, Digital HR, HR Mentoring/Business Partnering and Outplacement services) and has worked across a wider variety of diverse sectors.