Are you planning to quit your job to strike out on your own? Well, I’m excited for you! But, don’t write that resignation letter just yet. Here are 23 things you need to know before you start freelancing.
#1 Motivation Matters
Your motivation to go freelance will determine your long-term chances of success. Hating what you’re doing now isn’t a good enough reason on its own to go freelance. You should freelance because it helps you enjoy your ideal lifestyle – not solely because it gets you out of a bad situation.
#2 You Must Provide a Marketable Service
If you’ve got skills business owners need and want, you’re in good shape. If not, you’ll have to learn some. An internet search will tell you if your current skill set is coveted or outdated.
Related Reading: 6 Hot Freelance Services You Can Offer from Anywhere
#3 As a Freelancer, You’re a Small Business Owner
That means you must wear all the hats – marketing, sales, accounting, tech support, etc. – while you serve your existing clients. Eventually, you may be able to hire other folks to take stuff off of your plate, but that probably won’t happen for some time.
Pro Tip: Check the rules for registering as a business in your state, county, and local area.
#4 Freelancing ISN’T Necessarily Riskier Than Traditional Employment
Many folks are leery of going freelance because they’ve been taught that self-employment is risky. I won’t sugarcoat it. There is some risk, and most small businesses fail.
But! Freelancing offers built-in income diversification (when you have several clients) that helps to mitigate that risk. Lose your job – and you might be in trouble. Lose one client – and you’re still okay.
Related Reading: The Pros and Cons of Freelancing
#5 Self-motivation is Critical
When you freelance, it’s easy (and tempting) to goof off when you should be completing client work or improving your business. But, if you play hooky too often, you won’t make any money. You must have the work ethic and discipline to get things done – even when you technically don’t have to.
Related Reading: How to Set a Freelance Schedule That Works for You
#6 It’s OK to Freelance on the Side
You can absolutely freelance on the side – whether that’s at first as you build up your business – or indefinitely. Many people launch their freelance business while they’re still employed. That way, they still have money coming in during those slow early days. Plus, freelancing makes for a great side hustle because it’s so flexible.
#7 You Have to Be (or Get) Comfortable with Self-promotion
You should strive to be seen as an expert in your community so that you attract clients and gigs to you. To get there, you need to have patience and a willingness to promote yourself loud, proud, and often. If you stick with it, much of your lead generation will take care of itself. Then you can spend less time hustling and more time serving your clients — and living your life.
#8 You Have to Actively Seek Work
While clients and gigs can and will fall into your lap, it usually takes time for that to happen – and you can’t always count on it. So, you need to be good with regularly networking, applying to opportunities, and pitching prospective clients to keep your dance card full.
#9 Asking for Money Can Be Hard
One of the toughest things about going freelance is figuring out how to price your services. You may find it challenging to ask for money — especially when it’s a large amount. But you’ll have to learn to be confident when setting and negotiating your rates. Otherwise, your earning potential will be severely limited.
#10 Benefits Can Be Expensive
You’ll gain a lot when you go full-time freelance – but you’ll lose your employer’s benefits. Getting them on your own can be complicated and pricey. That means you need a plan to secure health care coverage, continue to save for retirement, and replace any other perks you want.
#11 There Will Be Lean Times
When you freelance, your income will go up and down. While that can be scary, you can still budget with a variable income. One main way to make lean times less nerve-wracking is to have a healthy cash cushion. That way, when you have a slow month, you can use those funds rather than take on debt.
#12 Effective Money Management is Everything
Aside from having an emergency fund to cover slow months, you also need to know:
- how much you must earn to cover your must-haves (housing, utilities, food, etc.)
- how much you need to pay for your nice-to-haves (shopping, eating out, financial goals, etc.)
- what expenses can be trimmed or cut to make ends meet
#13 You’re on the Hook for All Taxes
As a freelancer, you’re on your own when it comes to paying taxes. Your clients won’t withhold money from your pay, so you must set aside enough to satisfy Uncle Sam on a quarterly basis. Plus, you’re responsible for the self-employment tax, which covers Social Security and Medicare — a whopping 15.3% of your income (after business expenses).
#14 You Need an Accounting System
To make tax time and financial management easier, you must track all of your freelance income and business expenses. A spreadsheet is fine early on – but you’ll probably have to graduate to using more robust software or hiring an accountant when your business picks up.
#15 You Still Have a Boss
In fact, you’ll have several! While you run the show in your freelance business, each client becomes a supervisor. The good thing is, though, you can fire them, too.
Related Reading: As a Freelancer, Who’s the Boss?
#16 A Freelance Niche is Great…
…but you’re not married to it. Having that niche lets you showcase industry expertise, which clients often find desirable. But you can take gigs outside of that area or change your focus altogether whenever you want.
#17 You Need a Website
Your website is your online home where you can list your services, present your freelance portfolio, and entice visitors to work with you. Social media and other online platforms can help you network and advertise your business. But — you don’t own those venues. Changes can happen anytime — and could hurt your business. Your website, on the other hand, is fully under your control.
#18 Freelancing Can Be Lonely
As a freelancer, you’ll often work in solitude, which can impact your mental health – especially if you’re extroverted. You need a support network of family, friends, and other freelancers to stave off those loneliness blues.
#19 You need to Network Constantly
To have a thriving freelance business, you must meet new people all the time. The folks you encounter could become clients, service providers, referral partners, mentors, or even friends.
#20 Complacency is Your Enemy
It’s good to be proud of your achievements, but you must keep learning new skills and expanding your reach. Otherwise, you’ll get left behind – and your freelance business will contract.
#21 Self-care Must Be a Priority
It’s very easy to burn out as a freelancer. That means you need to practice regular self-care. Be sure to do things that enhance and maintain your physical, mental, emotional, spiritual, and social well-being. You should also call out sick when you need to and periodically take vacations (staycations count).
#22 Freelancing is a Long Game
Be patient as you build your business. Momentum doesn’t happen overnight – but when you have it, you’ll be unstoppable.
#23 Freelancing is What You Make of It
Freelancing can put some extra coins in your pocket – or become a whole new way to earn a living that actually works with your life. That’s the beauty of it – you have the freedom to decide.
There you have it! You’ve learned twenty-three things you need to know before you start freelancing. Armed with this information, you’ve got a head start on your freelance journey. I have confidence in your ability to build a thriving business — and I’m here for you if you need help.
Learn by listening? Check out this podcast episode to learn what you need to know before making the leap.