If you’ve stumbled upon a freelance side gig you love and feel passionate about, your goal in life may be to quit your job and freelance full-time. People always say to do what you love and the money will follow, but that isn’t necessarily true.
As an employee, you receive a steady paycheck, benefits and someone else paying a portion of your taxes. As a freelancer, you’re responsible for finding your insurance, income can be sporadic and you’ll have to pay self-employment tax.
There are currently 62.2 million freelancers in the United States, with the number projected to rise to 90 million by 2028. No matter what type of freelance work you go into, whether writing, design or consulting, you can be almost certain there is competition. Not only do you need to be good at what you do, but you have to acquire some savvy skills if you want to succeed at running a business.
If you’re still determined to work for yourself and follow your dreams, there are some things you should line up ahead of time to have the best chance of success becoming a full-time freelancer.
Going from a full-time employee to a self-employed person is scary, but with a bit of planning, things will go much more smoothly.
1) Beef up Your Savings
In your first year of business, you’ll make mistakes — big ones. You’ll need a few solid months of seeking leads before you start to gain regular customers and income begins to pour in.
Before you consider quitting a steady job, make sure you have a comfortable amount of money in your savings account. Experts such as Dave Ramsey recommend an emergency fund of three to six months of total costs, including housing, car payment, food, etc.
However, you should also have some reserves for the business’ expenses. If you need to hire employees, for example, do you have enough set aside to pay them until clients start paying? Make sure you are financially able to take on building a new startup. It’s better to stay in your job for another year and save money than to struggle and wind up seeking a new position because you can’t handle the stress of lack of income for a few months.
2) Consider Your Life
Some of life’s seasons are incredibly stressful and full of “must-dos.” If you have an ill family member, a small child still at home or other significant circumstances, it might be better to delay any career shakeups until your situation improves and life settles down a bit.
Psychologists recommend taking stock of any major changes in your life. Even positive changes cause some stress, such as having a new baby, a child going off to college or getting married. It’s best to start a new business when there aren’t any big adjustments going on in your life.
3) Get Extra Training
Even if you think you know everything you need to strike out on your own as a freelancer, there is likely something you haven’t thought of. People who are already freelancing understand the benefits of learning new skills that help them do their jobs better.
In one survey of 6,000 U.S. workers, 93% said they valued skill-related training, compared with only 79% seeing a college education as an essential factor. If you already have a degree, great. But that’s not the end of the story. You should still add as many skills as you can before you start your business.
Think outside the box a bit with your training. You may be an expert designer, but your math is lacking. Take some introductory accounting courses through an online site such as Udemy and brush up on what you’ll need to track your business expenses and profits. When you first strike out on your own, you likely won’t have the funds to hire a bookkeeper, so knowing how to keep your accounts is an integral component of your success.
4) Find the Right Workspace
Make sure you have a productive place to conduct business. If your freelance work involves regularly meeting with clients, seeking out a shared workspace where you can meet gives you a professional edge and shows potential clients you’re serious about what you do. On the other hand, if you do most of your work solo and chat with clients via the internet, a home office setup might be all you need.
There are many benefits to shared office space for new entrepreneurs. Research on co-working shows the opportunity gives people a chance to collaborate and network more effectively.
If you’re serious about building a successful brand, you’ll need more than a corner table at your local coffee shop. Whether you set up a dedicated space in your home or you invest in shared space at least part of the time, consider how well the field suits your needs as a new business owner, and be flexible enough to upgrade as your business grows.
5) Establish a Support System
As soon as you turn in your resignation letter to your boss, you’ll probably start to second-guess your decision. Striking out on your own is scary. Even if you’ve already built up a small client base, you may wonder if you can repeat that success.
Finding new clients and keeping the ones you have for the long haul is a balancing act. There will be moments where you think you’ve made a terrible mistake, and many highs and lows throughout your first year or two of business.
Getting a support system in place beforehand is vital for your mental health. Find those who will cheer you on during those hard times. You need people who believe in you and help you stay motivated, whether a mentor, family member or close friend.
At the same time, seek out people who’ve gone down the same road you’re starting on. If you run into an obstacle, they’ve likely dealt with it already and can help you navigate the choppy waters of running a business, as well as encourage you that things get better.
Educator Rachelle Poth points out mentors are valuable because they help you through pivotal moments in your life. Seek out people who know more than you, then pay it forward by mentoring someone else.
6) Understand Invoicing and Billing
Take the time to study invoicing and billing systems and figure out which software is easiest for you to use for your business and the costs involved. Some of your clients will pay late, and you’ll need to send them repeated invoices before they send you a check. If you’re on a tight budget, setting up invoicing through something like PayPal or Square saves you on monthly accounting software subscription costs.
However, with paid services, you may gain features such as automatic invoice reminders and recurring billing abilities.
Talk to other freelancers about how they handle billing. Do they require half upfront before starting work and payments at certain phases of the project? How long do they let a client go before reminding them they owe money? How much of a debt do they allow their customers to run up before cutting off work until something gets paid?
Talking to others about how they’ve handled difficult payment situations gives you the skills you need to run a business before you quit your regular job.
7) Toughen Up
Margarita Tartakovsky, M.S., suggests there are some ways of developing a thicker skin, such as developing strong friendships to provide the support needed to get through challenging situations.
Those who accept criticism well and learn from it don’t take comments personally, even if they seem personal. They realize there is an underlying frustration or issue with the other person. They use the information that might help them improve and move on from any negativity.
If you’re an extremely caring and giving person, the freelance life can be difficult. You’ll develop a relationship with your clients, but sometimes those people aren’t good for you or your business. Learn to let bad clients go, and open up that slot for a better business relationship.
Every six to 12 months, evaluate your client list. Take note of any clients who are negative, consistently pay late or take up the majority of your time and energy. Drop the bottom one or two clients, so you have the bandwidth to take on better clients.
It isn’t easy to let those relationships you’ve cultivated go, but if you want your business to succeed, you must. With time, you’ll develop a list of clients who are positive, easy to deal with and pay on time.
8) Strengthen Communication Skills
As a freelancer, you’ll need strong communication skills. Not only do you need the ability to describe your vision for your customers, but you need to be able to listen clearly to their desires for a project. One of the best ways to strengthen your communication skills is by practicing them. Start with friends and family members. Listen more than you speak and work on giving concise, clear directions.
Take a course through Dale Carnegie or a local university and learn how to speak to people without offending or upsetting them. Seek out books on problem-solving and conflict resolution. Tell your current boss you’re working on improving communication and ask for feedback. Ask co-workers to help you improve your listening and direction giving skills.
9) Figure out Your Insurance Situation
One of the drawbacks of working for yourself is a lack of employer-provided health insurance. However, there are several options. Although it’s expensive, you can usually use COBRA for a while after you leave a position and stay on your former company’s insurance.
If you have a spouse with insurance through their place of work, ask if they can add you to their policy. You can also purchase private insurance and may find it’s more cost-effective than COBRA.
Before you leave your job, take advantage of all the perks you currently have. Go to the dentist, get new eyeglasses, visit the doctor for a physical. Join some small business owner associations, too, as they sometimes buy group insurance and you can get affordable rates.
10) Collect Any Bonuses
If your current employer offers profit-sharing or holiday bonuses, go ahead and stay long enough to collect any money you have coming.
You can throw the extra cash into your savings to help you past the initial hurdle of striking out on your own. Look ahead at the calendar and figure out when the best time to exit the company might be.
Enjoy the Freelance Life
When you spend time planning out your transition from a job to freelancing, the entire process goes better.
Working for yourself isn’t always easy, but it is personally rewarding, and with a little preparation, it can be financially lucrative as well.