Taking the plunge: five tips for going freelance

28 May 2019 Consultancy.uk 8 min. read
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For its proponents, freelancing, with its increased flexibility and greater work-life balance, is more than just a way of doing business – it’s a way of life. Social network LinkedIn predicts that 43% of the workforce is predicted to go freelance by 2020. This trend is even higher among the younger generations. According to Upwork, almost half of millennials in the workforce are freelance, and 73% of generation Z are freelance by choice.

Despite its benefits, taking the plunge into self-employment can still be a scary move. For many would-be freelancers, the fear of not earning enough is the biggest obstacle to becoming their own boss. However, just a little preparation can ensure the transition from employment to freelancing is a financially sound one. Mathias Tao Agger Linnemann, co-founder of Worksome, a platform for freelancers in the professional services sector, shares his top tips ahead of taking the plunge.

Start saving

One of the most surprising pieces of advice for freelancers weve heard is this: you need less money than you think to stay afloat. Before quitting your job, calculate just how much you need each month. This should cover all your bills, rent/mortgage, and food. For a lot of freelancers, this will be a smaller figure than youd expect – but you need to work it out, first.

While its reassuring to know you dont need to earn as much as your previous role, you should start saving just in case. It can take even the best freelancers a few months to get things up and running, so allowing yourself a financial buffer will make the process less stressful. Especially since a freelancers income can be a little more precarious. You should plan for months where your income may be a little higher or lower than expected.

Taking the plunge: five tips for going freelance

Taking the plunge

Many people ease themselves into freelancing by running a "side-hustle" while working at their full-time job. You could do this while saving, to make the process more financially secure.

Once you feel ready to go fully freelance, consider how youll establish a pipeline of work. While its not always possible to have your next project lined up, this is something to aspire to. Network like your life depends on it, and keep in touch with old contacts – you never know who could become a client, or provide a referral. There are also a number of platforms and tools available that can help freelancers find their next gig – like Worksome.

Get your fees right

Knowing how much to charge for your services is a fine balance. Charge too much, and you could put off potential clients and damage your reputation. Charge too little, and youll struggle to make ends meet.

When calculating your fees, research what others in your area typically charge for their services. Dont just take your previous salary and backwards engineer it to calculate your hourly rate. In your early stages, dont be tempted to work for free in order to “get your name out there. Youre not a student trying to build up a portfolio!

Legalities and technicalities

As a freelancer, youre more than just your own boss. Youre also your own accountant, HR consultant, and admin department. While there are a few hoops that freelancers in the UK must jump through, these arent too difficult and there is plenty of support available.

Freelancers must register with HMRC as a sole trader so you can complete an income tax return. You must do this before 5 October in your businesss second tax year. Go to the Government website for advice and support.

While not a legal requirement, many freelancers consider to protect themselves with business insurance. Professional indemnity covers you against mistakes in your work, while public liability protects you if you accidentally damage someones property or cause injury. A specialist insurance provider for freelancers can advise you on the protection you may need.

You should factor in costs associated with insurance, accountants, or legal advice, when calculating your fees so you can ensure youre profitable.

Start reaping the rewards

It takes a certain sort of personality to achieve success as a freelancer. As well as being great at what you do, the successful freelancer must be motivated and an excellent communicator. However, it also takes confidence. When you dont have a manager to congratulate you on a job well done, you have to do it yourself. Dont be afraid to give yourself an appraisal, and maybe even a pay rise.

Remember that you dont have to say yes to every single freelance job that comes your way. You chose this path because you wanted greater control and flexibility about your work, so dont be afraid to take it.

Related: Independents more satisfied with career than employed consultants.