Thinking about becoming a freelancer rather than an employee of a company? While the flexibility and variety of projects and organizations may be appealing, you need to do your due diligence and prepare before making the switch.
Start by looking inward and realistically determining if you have the characteristics required to be an entrepreneur:
· Do you like frequent change in assignments, teams, and schedule?
· Do you enjoy learning new things?
· Are you willing to do whatever it takes to complete client assignments on time in a high quality manner?
· Are you willing to devote the time necessary to find new assignments?
Websites such as entrepreneur.com and inc.com can help you determine if you have the characteristics necessary to be a freelancer. You may also want to take an interest inventory at a local college’s career and placement office to see if business and management come out high on your results.
As part of your introspection, reexamine your career and life goals. When you are older and contemplating retirement, what do want to have accomplished both professionally and personally? What is your passion? Depending on what is important to you, you may not want the instability that can come with freelancing or may not have the time to develop your business.
Next, determine what skills you can offer potential clients. Beyond education, this is where your experience as an employee can really pay off. What skills have you learned or deepened in your career so far? What do you enjoy doing? The services you have to offer are the crux of your business plan. In addition, you need to consider:
· Who are the customers you will target for your services?
· How will you differentiate yourself from competitors?
· What is your financial plan? How much money will you need to begin your business and what is the minimum you need to live?
In addition to the websites mentioned previously, the Small Business Administration site at sba.gov has advice and resources on writing your business plan.
Finally, you need to execute your plan. You can even begin before quitting your job. In fact, this is preferred to see it you really have what it takes and really want to be on your own. Think of it as a trial period or pilot of your plan to see if it will work. You can complete part-time assignments and begin to build your clientele while earning a second income! You may find that you prefer the “stability” of being a full-time employee and the ability to do freelance work when desired on a part-time basis.
Whether you decide to freelance on a full- or part-time basis, you will need to operationalize your business plan. Determine what type of business structure (i.e., sole proprietorship, partnership, corporation) makes sense for you. The websites mentioned previously help with this along with the Internal Revenue Service’s site at irs.gov and your state’s tax department site. From a liability standpoint, you may want to incorporate as a subchapter S corporation or limited liability company (LLC), or purchase errors and omissions insurance. You may also need to register with the
To track income and expenses, initially you may want to use Excel or another spreadsheet package. Over time, you can migrate to QuickBooks or other more sophisticated software package. You should also plan to make estimated tax payments during the year to the federal and state governments on your income as a 1099 contractor.
In addition to working on current assignments, you will need to develop new business by networking in person and through websites such as linkedin.com. Websites such as guru.com, sologig.com, and elance.com also provide leads on projects. Over time, word-of-mouth from clients will help bring in additional business.
It is also important to interact with other freelancers to stay up-to-date on new developments and regulations, support one another, and take a break from work. Associations such at Freelancers Union provide an on-line connection, and you will also want to seek out events in your local area.
Although the grass may appear greener as a freelancer, you need to do your due diligence and prepare before making the switch. You may find that you prefer the security of a regular paycheck and navigating the political waters of your current employer after all.