If you are reading this, then the chances are that you are already considering making a life changing shift in terms of your career.
There are plenty of articles and books around which will outline the benefits of a freelance career once you make the break. Here I am assuming that you are well of aware of the benefits in terms of a more flexible working life, being your own boss, working at what you enjoy most for example and that you are keen to get started.
There are also some good books and websites which will help you to manage a freelance career once you get started.
What I am focusing on here is the run up to leaving your job – that crucial few months which can potentially lay the groundwork for starting a fulfilling and possibly financially rewarding career by helping you to plan carefully and to avoid some of the major pitfalls.
Starting a freelance career causes us to challenge some of the most deep seated instincts we have about our responsibilities to our families, our mortgages, our retirement planning. Perhaps the biggest challenge is to let go of the feeling of being in total financial control. In a salaried job, we know that unless things go drastically wrong, come what may we can rely on our monthly income. For most people this will be a set amount which enables you to budget for all your financial outgoings, and hopefully if you are lucky or astute or both, save some for things like holidays and unexpected costs. But the freelance career affords no such comfort.
The money side of things
To help with this, before you leave your current job it is expedient to save an amount of money that you can fall back on in those inevitably lean months whilst you are getting started. It isn’t a bad idea to do a cashflow forecast of your personal finances for the coming twelve months, so that you have a clear idea of how much you need to earn as a freelancer in order to keep afloat. Factor in everything, including holidays, birthdays, Christmas spending etc. Include an amount for unexpected spending – car breakdowns, a new washing machine if the old one breaks for example.
Before leaving your job, aim to save at least two months worth of outgoings – more if you can. Keep this in an easy access bank account and don’t touch it unless you have to. Use this ‘saving’ time to take a good hard look at your finances and to trim your outgoings right down. Get better deals if you can on your mortgage, utilities, phone and broadband suppliers etc. uSwitch.com is a good place to start. If you can, aim to pay off or at least reduce any loans or credit card balances that you have. Cancel anything that you don’t use, like gym membership or film clubs etc. The lower your monthly outgoings, the more you can save before you go freelance and the less you need to earn as a new freelancer to cover them.
If you work in a job where you can earn commission or a bonus, work really hard to earn them before you leave. Time your leaving to suit your financial position but also to suit your employer too. This will be good both for your current employer and for you, since not only do you want to save as much as you can, but you may well want to contract yourself to your old employer as part of your freelance portfolio, so you want to leave in a good light.
Talk to an accountant.
Being a freelancer isn’t solely about being your own boss and doing the job you enjoy. You will be responsible for your own income and as such an accountant will be able to advise you on matters such as tax and national insurance. This is very important, since you don’t want to fall foul of your tax obligations and be landed with an unexpected tax demand. In addition you may well want to keep up your national insurance contributions, which at present are deducted before you receive your salary. An accountant will also advise you on what basis you will set yourself up as a business, whether you need business banking facilities and so on. If your present company doesn’t have a finance department you may be able to talk to the outside accountant who does your company’s accounts – they may even take you on as a client. In any case, ask around – it is always good to get a recommendation before choosing an accountant.
It’s not what you know it’s who you know
Actually, it’s both. If you intend to freelance within the industry that you currently work in, then make sure you take with you any useful contact names, numbers and e mail addresses. Think creatively here. You will need contacts not only for people who might be able to employ your skills as a freelancer, but also for people whose skills you may require – an accountant for example, or website designer, or suppliers of different sorts. Be careful though – if you are setting yourself up in competition with your current employer, you must not steal information that belongs to them. Check your contract carefully as well in case there are clauses which prevent you from approaching their clients – there almost certainly will be. Definitely discuss with your current employer whether they could use you for any freelance work once you have left. They may well be positive about this idea as a way of retaining your skill and making cost savings.
Part of your planning must include how you are going to get clients. There are a number of excellent websites and books which deal both generically and specifically with how to get your name and your service out there. Spend time researching and make a marketing plan for yourself. This will undoubtedly include creating a freelance CV for yourself. Think creatively about the skills you will be offering and what in your past and current roles demonstrates those skills. Make your CV skill and outcome focused rather than being a list of your jobs and educational achievements. You can also start to collect testimonials from people you have completed tasks for in your current and/or past jobs and find out whether your past and current bosses, colleagues and clients would be willing to provide references for you.
You could consider having your own website set up to promote yourself and your skills. It is best if this is done professionally and there may well be staff in your current job that might do this for you in their own time, or if not recommend someone who can. At the least they could possibly advise you about what you should pay for design and hosting charges etc. If you do decide to have your own website, then you can include in it a version of your CV and the testimonials you have collected. Set yourself a clear budget for setting up a website and getting it hosted. You really don’t want to pay out a lot of money in initial freelance set up costs. On the other hand getting a professional job done is likely to do you favours in terms of getting work.
Your freelance workspace
Consider the kind of space required to carry out the tasks you will be undertaking as a freelancer. Whatever you intend to do, you will require a peaceful, private, organised space. Give some consideration to this and ensure that you have adequate space for any supplies, equipment, files etc and that you will comfortably be able to carry out your freelance tasks in relative peace. Ideally you will have a dedicated room or space for your work but if this isn’t possible, then think about how you will manage to combine your living and working space. Will you need separate cupboards or other storage for example? Will you need somewhere that won’t be interfered with when the kids are around? Do you need a separate phone line or a lap top that the family won’t be using? Organisation is the real key here, and before you start, have a good hard look at what will be your work space and try to design in efficiency.
If you are short of space and don’t have the luxury of a dedicated room, it could be a good idea to de-clutter your house before you start your freelance activities. Be pretty ruthless in getting rid of anything you don’t need or want, and organising what you decide to keep. It is unlikely that you will be able to work effectively in a chaotic environment, so creating some order before you start will give you a head start in terms of your own efficiency.
So, we’ve looked at planning your finances, your contacts, your CV and your workspace. There is obviously a lot more to consider as you move into your freelance career, such as how you market yourself, how much to charge, invoicing and other book keeping matters. But giving prior consideration to the matters dealt with here should go some way to ensuring a secure and efficient transition from employee to freelancer.