Many web professionals want to venture into freelancing for its number of obvious benefits. However, many are hesitant because of a few key factors: financial instability, more responsibility, and lack of experience.
This post is for those thinking about it — here’s a quick checklist that can make the transfer less painful.
Many web professionals work for companies because that is what they prefer to do, which is a completely respectable option. After all, a steady job at a company means a steady paycheck, less business responsibility, a schedule, and to an extent, we all find comfort in others telling us what we need to do, rather than figuring things out on our own.
These are just a few of the things I miss about working as a web developer for a company before I started freelancing. However, freelancing has many of its own benefits, as many who are wanting to venture into it have dreamt about: being your own boss, setting your own hours, being in charge of your own financial future, and having, branding, and running your own company.
How does one decide what to do? What’s the best career choice? That is up to each individual to decide, but for those who choose to freelance, many don’t jump into it just because of the lack of security. However, with any of the benefits of working for a company transferring over to freelancing, many would jump at the opportunity.
That is what this post is exactly about. It is a checklist of items that should be taken care of before freelancing full-time, to ensure more security on your part. Hopefully, it can help those who are unsure about switching over, to take the plunge without sacrificing other areas in life.
1. Determine an Hourly Rate
This a bit more of my personal advice, but I recommend those just beginning to freelance to go by an hourly rate. Many freelancers, of any type, will go by a fixed price, and this has its benefits over hourly rates. However, whether you plan to switch over to fixed rates later on or not, an hourly rate now will help to determine how long it truly takes for one project.
Working at a company is different. When working 8-hr. days at a certain wage, you’ll be paid in full for that day. However, with freelancing, you will have to start spending hours branding the business, updating your portfolio, marketing, researching, learning, and probably a bit of goofing off (Don’t deny it).
Opposed to working an 8-hr day at a job, you won’t be getting paid that hourly rate for your lunch break, or for any outside business advancement. You very well may be working for 8 hours straight, but you won’t be able to get paid for all of it. The only thing you’ll be getting paid for is billable hours on client projects. Because of this, keep in mind that a freelancer’s hourly rate is usually higher to accommodate for the same lifestyle when working for a company.
So aim for slightly higher than your previous hourly rate in order to maintain financial stability. Also, keep in mind taxes â€” in the U.S. they are actually higher for freelancers and small business owners than for those employed by a company. I’m assuming this the same for many other countries as well. (My own jumped up to around a whopping 30% when I registered my source of income as full-time freelancing) Depending on your location and many other factors, your tax rate is bound to fluctuate, so be sure to talk to a tax professional before determining your hourly rate as well.
2. Set Up a Base for Passive Income
Many freelancers don’t do this, but I think it is essential for two reasons: gaining a client base and making your clients come to you and creating an opportunity for your business to grow into the future.
My base for passive income is this blog. As I continue freelancing, I update and work on Website in my free time. As it grows, my business grows because I attract clients, and I can make some passive income on ad sales.
Some wouldn’t choose to begin a blog, so there are many other options. One could sell templates, write an e-book, or sell stock photography. A good option is whatever can be done within your free time to make a bit of extra income (even if it’s only $10 a month to start!). It should also promote future freelancing business.
Why is passive income so important? Part of the instability of freelancing is not obtaining a steady paycheck. Passive income can help. It is a crutch, especially for those just starting out. If we have a slow period with little to no clients, we can instead focus our time on building that passive income. Also, passive income is exponential, and as time goes on, our overall income will build, mimicking raises or promotions when working for a company.
3. Prepare Contract, Quote, and Proposal Templates
This one thing I didn’t prepare for ahead of time, and it really slowed my business for the first few months. If you’re serious about a freelancing business, you must create the documents necessary. When I began freelancing, I was overrun with clients and work. Not because I had too many, but because I wasn’t organized and my terms had too much leeway. It was hard to keep up.
First things first: prepare a contract. Set terms for your services: contact hours and information, when invoices are due, how and when invoices are sent and handled, copyright terms for your creative work and outside sources of creative work, etc.
Next, write out quote and proposal templates. Many freelancers choose to put the quote within the proposal, either way, works. A quote should include hourly or fixed rates, broken down into sections for the project. This will also help to keep organized for both the client and yourself and give the client an idea for their own budget.
A proposal will go into the deadlines and time frames for the project, detailed project description, and so on. There are a number of templates and how-to’s on how to create all of these documents, and it is essential that one takes the time to do so that is specific to the way they would like, and need to, run their freelancing business.
4. Start Part-Time
Do a few part-time jobs while undergoing the duties of your full-time job at a company. This will give you a better feel for the hours it takes for certain types of projects, what services you’ll be willing to offer, and allow you to tweak any needed items in the contract and other documents for running smoothly. Get to a place where managing clients is as easy and as systematized as possible.
Many are anxious to get started, but jumping in too soon will allow for an unorganized mess. This means within the first few months of freelancing, you will have to spend more time organizing and less time on client projects. For a steady transfer, prepare well by experiencing enough freelance projects to learn what is needed.
Best of all, by having a few clients part-time, there is a greater chance of those clients returning to you, or referring you when going full-time. Beyond gaining the business experience, it is the start of a client base.
5. Find the Tools Needed
Before running a freelancing business full-time, get organized with tools as well. It is helpful to find what invoicing system you’ll want to use, what collaboration tool, and any other organizational tools and materials. 101 Essential Freelancing Tools is a great post that has collected the top tools for freelancing in just about every category. Also be sure to prepare with any office essentials: printer, scanner, calendar, notebooks, planner, etc.
Some online tools require a monthly fee, but most of these services offer a free trial or free membership for those just starting out. Take advantage of these, and try out a few different options before going in full-time. It is important to find just the right set of tools you’ll need for running a business efficiently.
6. Research, Discover, and Learn
Read freelancing blogs, subscribe to freelancing podcasts, and read thousands of tips across the web. Millions of freelancers are willing to share their experiences, so don’t look over their advice.
For those just starting out, I recommend TweakCast for a freelancing podcast. Other podcasts, videos, and articles are also great resources, so be sure to check them out as well: WakeUpLater, FreelanceSwitch, FreelanceApple.