There are lots of attractions to stepping out into the business world by yourself. There’s no more kowtowing to the boss. You get to set your own rates. You can take time off whenever you want.
And then there’s the knowledge that your career is in your hands and not dependent on anyone else.
But there are plenty of disadvantages too. Your business could fail. You might not be able to repay your loans. And you might hate it.
Freelancing can be a useful position between working for the Man and building your own business. It gives you the freedom to control your own career without the risks that come with employing people and renting office space.
If it works, you can grow. And if it doesn’t, it’s only a short step back to the corporate world.
But if freelancing is to work, it does require mastering skills beyond those you’re selling. Here are some of the things you need to know:
Know How to Charge
When it comes to charging for your work, there are two schools of thought: you can charge by the hour; or you can charge by the project.
Often, that can mean the same thing. One easy way to calculate a rate is to estimate how long a project is likely to take and decide how much you want to earn in that time. That’s your minimum rate. If the client isn’t prepared to pay that, you shouldn’t feel concerned about walking away.
But you can then take into account other factors, such as additional costs, what the market is charging for that sort of work, and even whether the client is demanding or easy to work with. Projects that require little time — like designing logos or writing short scripts — can still produce handsome hourly rates if you know that buyers are prepared to pay a lot of money for them.
The best strategy then is to decide first on your minimum rate, then see whether you have any reason to charge more.
Know When to Increase your Charge
The negotiations don’t end once the agreement has been made. Part of building a successful freelance business is keeping your clients. Ideally, you want to have a solid base of regular buyers who give you a stable income and a small number of changing clients who keep the work varied and interesting.
But once you’ve been with a client for a few years, there is a temptation to charge more. Inflation, after all, will have increased your costs and the client won’t expect your rate to stay the same forever.
The same principle that you applied to setting your rate applies to re-setting it though. You still have to figure out the minimum you want to earn for the time you’re investing, but bear in mind too that after working in the same field for a while, you might be able to complete the client’s projects faster anyway. The client might not be paying more, but you’ll still be earning more.
And consider too that if the client refuses to pay, replacing him could be a lot more expensive than keeping him at the original rate.
Know How to Market
After the skills you’re selling, marketing will be the most important knowledge you’ll have as a freelancer — at least until your book is full and you start turning down work.
That means knowing where to find clients, understanding what they’re looking for, creating a portfolio that raises eyebrows as well as interest, and knowing how to communicate professionally with leads so that you build trust and create the right impression.
Initially, the marketing can look difficult but every market will have plenty of examples that you can follow. One good strategy then is to identify the sellers who are already doing well and do what they do. When you’re doing well too, you can start adding your own unique touches.
Know How to Do the Tax Thing
Unfortunately, the “free” part of freelancing usually refers to the price clients expect to pay rather than your tax status. Like everyone else, freelancers have to report and cough up to the Inland Revenue.
That means spending time keeping books, collecting receipts and sending out invoices. Those expenses of time, paperwork and accounting fees have to be factored into your hourly rate.
That’s the bad news.
The good news is that if you’re working from home, many of your household expenses will be deductible. These can include some of your mortgage, car expenses, electricity bill, your computer and Internet connection, and a whole host of other things. You might even get the sales tax back.
When those were things you were going to buy anyway, that means an instant discount on some of your purchases and some useful ways to cut your taxes. It might also mean that when it comes to taxes, profits can be a very bad thing — an approach to business that requires a whole new attitude.
There are a number of things you need to know to make freelancing work but there’s always a difference between knowledge and practice. The only way to know for sure how well you’ll get on as a freelancer is to try it and see.
[tags] freelancing [/tags]