Ask yourself these questions before becoming a freelancer
You have been thinking about it for a long time and you’re ready to take the leap? Becoming self-employed is not a decision that is to be taken lightly. You probably have in mind the words: freedom, flexible schedules and telecommuting … yes! But, there is also a financial aspect to examine carefully before making the jump. The idea behind this article is not discouraging you, far from it, but we simply wish that you get prepared and start this great adventure on the right foot!
Should I leave my job from the start?
Of course, the best scenario is to invest 100% in your new company from the start, mostly because there is so much to be done. You will not only have to make contracts but also start prospecting and have a flexible schedule to meet your potential clients. But maybe your financial situation does not allow it. In this case, it would be wiser to lower your hours gradually, because working two jobs is not without risk, especially for the quality of work delivered and for your availability to your new customers. In addition, it is important to be transparent with your employer, especially if they are targeting the same clientele as you are!
Do I have a financial cushion?
Let’s be realistic, it can take a long time before cashing the first check, so it’s better to put money aside to cover your expenses. Placing at least three months of salary aside, or more if you can, can greatly help you diminish your fears about your new freelancer status and allow you to focus your energy on your work. You don’t want to spend the first few months constantly worrying about money. Having savings can also save you from accepting contracts from unpleasant customers or ones you aren’t qualified to serve.
Am I able to keep a budget?
It will be more important than ever to keep a budget up to date. While your income may be very high for a month, it is possible that they may be low the following month. It is therefore essential to have a realistic picture of your regular expenses in order to manage the financial instability. It will not be important to not go overboard and spend your surplus, because it can be useful to fill the gaps the following month. In your budget, you will also have to anticipate for expenses like contributions, taxes and tax refunds.
What will be my start-up expenses?
Start-up costs vary enormously depending on the area of activity. Many freelance writers, translators and graphic designers already have basic equipment: a desk and a computer! However, you may need more specialized software or equipment. Will you be able to work from home or will you need an office outside? In this case, the cost of renting a workspace must also be taken into account.
What will my rate be?
That’s a good question! Obviously, you will be able to adjust as you go, but consider your rates now to forecast your income. With your self-employed status, your hourly rate will certainly increase, but beware of the pitfalls. Your hours will not be guaranteed: you will not always work 35 billable hours per week. Besides the work itself, your schedule will also include unpaid time for prospecting and office work. It will be necessary to consider these elements to set a realistic price with regard to your expenses.