Posted on Management Essentials: August 6, 2009 3:41 PM
The perks are tempting: mid-morning jogs, hours billed from a café in Paris or from your back porch, not needing permission to skip a day to take care of a sick child. But does it make sense for you to take the plunge into freelance life?
Freelancing isn't easy or right for everyone, and it can take at least a year to get into the full swing of things. First, you should consider whether freelancing is a buoy while you job search or whether you want to make a life of it. Your goals should guide your approach.
Short-term freelancers should concentrate on getting as much work as soon as possible, while still making time for that job search. Freelancers with long-term aspirations, however, would be wise to proceed more carefully.
Before quitting your job or ending your hunt for a new one, consider how well established you are in your field and how in-demand your skills are. Is what you can offer still sought when budgets are tight? If not, freelancing may not be a viable option.
Next, assess your financial situation. Think about how much money you need to make to support yourself and any dependents. Do you have money saved up, a financial backer, or a partner who is sharing expenses with you? If so, you can take more risks than those with fewer resources. Those best able to stick with freelancing for the long haul, even if it takes some time to earn real money, may be those with fewer expenses.
To be a successful, happy freelancer, you should be honest with yourself about exactly what it is that most appeals to you. Maybe you want more freedom, flexibility or variety. You may want to explore your entrepreneurial passion, or perhaps you simply hate reporting to a boss or being part of a corporation. Rank the relative importance of your desires and aversions. How much do you value each when comparing them to a theoretically steady, salaried job? How much are you willing to endure for a freelancer's lifestyle?
When to Freelance
Getting laid off can be the perfect time to turn to freelancing, especially when full-time employment is hard to come by. But a recession also makes fewer freelance jobs available, even for freelancers with established client lists. The number of temporary employees on payroll in the United States went down from 2.5 million in March 2008 to 1.8 million in March 2009, according to the Bureau of Labor Statistics. So if you start your own business now, you've got to be ready to distinguish yourself from the legions of other folks in need of work.
Victor Cheng was a consultant at McKinsey & Company and a high-tech executive before going freelance. He says he made his decision with lifestyle and family considerations as a top priority. "I was on the road 180 days of my wife's first pregnancy," he recalls. "I figured I'd have a better shot at being a good father if I were actually present."
Now Cheng's hourly rate is significantly higher than it would have been had he made partner at McKinsey, he says. Plus, he works 30 to 40 hours per week instead of 80, doesn't travel for work, and plays with his two daughters every afternoon. As a business coach, recession marketing expert, public speaker, and author, Cheng is a hot commodity with a very comfortable life.
His secret? "The most important thing to be a successful freelancer is to have a sense of market demand," Cheng says. "I think too many freelancers go in with the idea, 'I want to sell X,' as opposed to 'people want to buy Y.'"
If you, like Cheng, have a resume with name recognition, a broad skill set, and a willingness to take risks, you may consider developing a freelance consultancy as he has. If, however, you have no proven track record, it may be difficult to attract clients.
How to Freelance
But early-stage freelance aspirants should not despair. There are ways to work your way up the freelance ladder.
For the novice freelancer, starting with online job boards makes sense, says Kate Lister author of Undress for Success: The Naked Truth About Making Money at Home and a former banker turned freelancer. She recommends oDesk, Elance, Guru, and Rent a Coder. The benefits of these sites: they are secure (you sign work agreements), and ensure freelancers get paid. The downside: competition is steep, and the site takes a cut of your pay.
Lister suggests that freelancers not charge as though they were working full-time. "You might think you can start with a certain rate, but you have to be careful because you will be spending part of your workday marketing, sending out bills, and chasing payments, so you can't assume you'll earn your hourly price 40 hours per week," she says.
And how will you know when to charge more? "When you get too busy to handle everybody, a good way to figure out who to stick with is to raise your price until you don't have enough customers," she advises.
If you are early in your career, you would be wise to test your skills in a controlled way before you take the leap. Do some moonlighting on these sites or try some freelance work part time.
Freelancers often do their own accounting, marketing, and administrative tasks, which can be a burden and a time drain. Consider trying out some personal finance software to see if you can handle billing and record keeping. Quicken is a popular program, and you could hire a freelance bookkeeper to help set you up. Sites like Mint can help you figure out tax deductions easily. If your freelance life is lucrative, you could consider hiring an accountant.
Network to the Top
After about three years working in venture capital and corporate sales and several years writing and editing his own and other people's books, Michael Ellsberg realized he knew enough people (and enough people knew him) to be able to sell himself as a book-proposal writing coach and marketing expert. He charges by the project for books, and his hourly rate for marketing is $200.
He says that spending a few hours each workday staying connected to well-placed friends and potential clients leads to enough freelance jobs to make a good living.
His biggest networking trick: "Offer to help someone else first because they'll help you later," he says. "It's also good to offer a free consultation for an hour. I'd say 50 to 75 percent of the people I offer that to become clients, so it's time well spent."
The Buck Stops...With You
Many freelancers struggle with the concept that if they stop working, even to take a vacation, they stop earning money. That can make vacations hard to justify (and ruin the whole dream of working from a Parisian café).
So what type of person thrives under these constraints? Terry Musch, a leadership, career, and life-purpose coach says it's about understanding your patterns. "You have to identify the optimal environment that will let you uniquely express your own potential," he shares. Some people are suited to self-employment; some are not.
To identify your patterns, assess your ability to focus without a boss' urging, your resilience, and your stomach for self-marketing. Also think hard about legal issues such as privacy agreements or contractual requirements that may need to be cleared before you can set up shop, and how well you can set and command the rates you want.
Despite the numerous details to consider, freelancing may be surprisingly sustainable for those in the right position. Whether you are young and can't find a job, a parent who wants to be home more, or someone with an independent streak, freelancing can provide variety, opportunity, and relative stability. But it also requires hustle, and a hefty dose of confidence. You have to know that you've got something people want—and you have to make them know it, too.