How to start a freelance career
Filed under: Career
The reality of most freelance careers is a multi-discipline role involving a wide range of skills, from client management and accounting to strategic planning and marketing. So how do you prepare for the plunge into life as a freelancer?
How the rich get richer
There are currently around 1.6 million freelancers working in the UK, according to data from freelance association, PCG, with a 12% increase since 2008.
It leads to a far happier workforce, according to a survey by accountancy firm SJD, in which over two thirds (77%) of people said they found being a contractor or freelancer more satisfying than being an employee, with less than 10% saying they would go back to permanent employment if they were offered the chance.
The benefits are clear with 84% of respondents enjoying higher rates of pay, 70% the flexibility contracting offers, 65% greater freedom and just over a third citing the kudos of being viewed as an industry expert as important. So if you are serious about adjusting the work-life balance and being your own boss, what steps do you need to take?
Make a plan
Starting a freelance career is not something to do on a whim. It requires careful planning to ensure you are ready to make the change, both professionally and financially.
Draw up a household budget to work out how much income you need to sustain your lifestyle and talk it through with your partner if you are likely to need their financial support in the beginning. Be aware that you will be giving up a secure monthly salary for what may be an irregular income from potentially short contracts or sporadic jobs.
If possible, make a gradual transition from full-time employment, advises Jon Norris, editor of Freelance Advisor and Crunch Accounting: "It may mean a few months of hard work as you work your 9-to-5 during the day and freelance in the evening, but it will allow you to build up a client base and steady income before you cut the employment cord."
Build a financial buffer
Make the most of your current full-time position to build up savings before you make the leap. A fund equal to around six months salary is the ideal size buffer, but aim to save as much as you can.
"Freelancing can be a fickle game, and clients can come and go with surprising frequency," says Norris. "If you run into financial trouble in the first few months of freelancing, an emergency stash of money can be the difference between life and death for your new enterprise. "
Building strong contacts is vital to a successful freelance career and should be a top priority both during full-time employment and once you leave. An industry friend helped PR & social media consultant Clare Homer make the decision to go freelance in July.
"After eight years in the industry I had grown bored of my in-house PR role and wanted a new challenge. At the time, my friend, who is a business coach, was launching a new app and said he could offer me regular work and advice. This was just the boost I needed to set off and start my own business, CfHMedia."
A proactive approach to networking is key, explains Clare. "I researched potential clients, contacted them about my services and asked for a call or meeting. If I just waited for clients to knock on the door, then I'd still be in the same job. I make a conscious effort to network online and at events and it's invaluable."
It is also worth speaking to the specialist agencies in your industry, advises Matthew Huddleston, chief financial officer of FPS Group. "Find out what kind of contracts might be available, whether you are suitable for them, and how much you can earn."
If your freelance career sees you working from home, it can be tempting to lie-in and knock-off early. However the novelty will likely wear off after week or two, when you may find yourself working longer hours in order to meet client deadlines and earn the income you need to live on.
Creating a routine and structured working day from the outset is key. The bonus is that you can pick your own hours. Cake maker Marian Shaw, works around her children, by starting her day at 5.30am and dropping off orders after the school run. "I then have a second 'shift' and drop off the next batch of orders before I pick the kids up," explains Marian. "I have been doing this three days a week for the past year and it is working really well. I have to be strict with my time but it is worth it to be there for my children."
When the work is done, arranging payment requires rigorous organisation. "An unexpected shortfall in cashflow is the number one killer of new businesses, so do everything you can to get paid and get paid on time," says Norris. "Set strict 30-day payment terms on your invoices and include late payment penalties in your contracts and enforce them where necessary."
Know your worth
Being able to set your own rate of pay and keeping the money for yourself is one of the major perks of working freelance. However, setting this rate is one of the hardest things to do. You will be charging for your time and services – so it is crucial not to undersell yourself and work for less than you deserve, as well as not set your rate too high and price yourself out of work.
Industry research is vital to determine the right rate for you and your clients. Large corporate companies are likely to have bigger budgets for example, while small businesses and fellow freelance clients are probably working on tight budgets – so it makes sense to set your rates accordingly.
Experience should play a part in determining your rate too. So newbies for example, should consider dropping your rate a little to attract work, with the knowledge that you can increase it once you have built up a portfolio.
The state of the economy is also a major factor at the moment. In a survey of contractors by The Pulse Umbrella Group, almost three-quarters (73%) are confident about the demand for their skills in 2012, yet only 16% expect to see their fees increasing this year, and over half (53%) would consider reducing their rates to get work if they had to.