As a full-time product design freelancer, I understand the highs and lows of trying to figure this whole ´self-employed´ thing out. There are many pitfalls that make you miss that regular paycheck, job security and only working a handful of ´regular´ hours each day. Every time this happens, I think of the freedom, personal fulfillment and growth I´ve experienced as a freelancer and I´m reminded that the struggles are worth it. I´d like to share nine things I wish I knew before I began freelancing. (Note: I live and work in the United States, so my experience may not be applicable internationally.)
1. Safety Net
My biggest fear when I began freelancing was running out of money. How much should you have in the bank before you go it alone? I recommend at least six months´ expenses. I had saved up a good amount of money, but I also moved across the country before I began freelancing full-time, which cost more than I expected. There are many online resources that will help you calculate your living expenses, but you need to be honest, realistic and thorough when you do this in order for this exercise to be helpful. It will be worth it when you´re not homeless three months later.
2. Start Early
I began freelancing and concluded two design jobs while working a full-time career. Is this comfortable, or ideal? Of course not, but being paid for essentially three jobs at once helped me boost cash flow, confidence and build momentum. You learn a lot about what you´re getting into when having to manage a full-time job, sleep and a social or family life. This allows you to see how likely you are to stick with this new career path and how much you enjoy or hate doing this work. By starting to freelance while having the safety of a full-time job, you can test the waters and find out if it´s for you before burning any bridges.
3. Don´t Waste Money
Lots of people like to ´play business´. Making business cards, endlessly editing websites, filing for a LLC, or Corp, drafting contracts, setting up a bazillion social media profiles, buying up domains, building a home office, upgrading your computer, hiring a virtual assistant, reading a thousand books on business, (I could keep going), is a great way to burn through cash you probably don´t have. All successful businesses model a painfully-simple concept: maximize earnings and minimize expenses. Businesses all have crucial expenses, but becoming as frugal as possible while continually increasing your earnings is the only thing you should worry about in the beginning. Don´t fall victim to the temptations to spend unnecessary money on your business. Your clients only care about the results you provide them with.
4. Master Taxes
Plan for paying income taxes before you earn your first dollar. Although I was aware of taxes, I didn´t set aside money from each gig the first year I began freelancing. As tax-season approached I began sweating bullets since I knew I owed more income taxes than I had available. Just because you earn plenty of money for a month or two, doesn´t mean that trend will continue. You may have a few low-income months and if those occur leading up to the tax-filing deadline, you may find yourself scrambling to find cash to pay income taxes. As a rule of thumb, it is a good practice to set aside 30% (yes, that much) of each job´s earnings and pay quarterly estimated taxes. This way, you´ll likely overpay and are nearly guaranteed a tax return. Understanding your local tax laws also provides you with the opportunity to take advantage of tax efficiencies and business owner tax deductions. In the United States, you are able to deduct many business expenses to reduce the amount of income taxes you owe at the end of the year.
5. Tell Everyone
Tell everyone what you do. I don´t care if it´s your grandma, your ex, your professors, that weird uncle you never see or your landlord. Tell everyone. When I was living in California I was dragged along to one of those hyped-up meetings hosted by a Multi-Level-Marketing company. After the meeting, everyone ate dinner at a buffet. One of the guys tried to sell his product to the buffet cashier. I was surprised. The thing is, this guy was doing well and earning more money than most people his age. I don´t advocate getting involved in a MLM company. The point is that the guy who indiscriminately told people what he did and how he had a product of value, increased his chances of success and to a degree. You never know when your weird uncle´s mechanic will decide he needs a website or when your grandma´s doctor will require the help of a designer. If your connections know what you do, they will think of you and advertise your services for you, for FREE. That´s a good ROI. So, tell everyone what you do!
6. Advertise Results
What can you do for me? That´s what all your clients are thinking when they hear you flapping your gums about SEO Optimization, Responsive Design, a six-step dev. cycle, what software you use, etc. A smart business owner is willing to invest in the results you can guarantee them. If you can quantify the results–even better! Promising a 20% increase in website traffic, 15% faster load time, 5% better conversion rate or 15% less waste are all great figures that a company (and you) can put a value on. When a company knows what their money is buying, it´s easier to invest in your services. So, don´t confuse features with results and advertise the features, not results.
7. Network… Hard
Networking is vital for the growth of a freelancer´s business. The more people who know what you are capable of, the higher your likelihood is of receiving a referral. Right now, nearly all of my work comes from referrals. Unless you´ve got a product that sells itself online, there´s a great chance you should be constantly networking. You don´t need to be sleazy or pushy. Just begin by taking an interest in what others do for a living and they will often reciprocate and you´ll have a few seconds to share what you do and perhaps hand them a business card.
8. Personal Projects
Early in a freelancing career, it´s common to not have the luxury to be selective with the jobs you accept. When you take a job you´re not enthusiastic about, it affects your creative drive. Over time, this may lead to burnout. Many freelancers have days, weeks or months between client projects (I know I do) and those are golden opportunities to spend time working on a personal project. With each personal project, I experience a boost in optimism and creative energy and drive. Furthermore, you can include your personal work in your portfolio to show the direction you would like to take your career. It´s a chance to show clients the kind of work you enjoy while showcasing your skills. So, don´t forget to pursue personal projects in your down time.
9. Know Your Value
Finally, as a freelancer, you must understand what you are worth. Remember the part above on results? Those results are worth money to the right client. Generally speaking your value is equal to the amount of money your client is willing to spend on what results you provide. Business owners like to understand value in terms of ROI (Return On Investment). If you can offer a 5x or 10x ROI, then that means you could charge 5,000 dollars for a new website design and your client will experience an increase of 25,000-50,000 dollars or revenue thanks to that badass website you just designed them. Think about how much value you would like to offer your clients and then figure your pricing out from there. Take my examples with a grain of salt and understand the principal of ROI.
Now that you know nine things I wish I understood before I began freelancing, you have a better chance to succeed than I had! It would be irresponsible for me to not take my own advice. In honor of number five, Tell Everyone, I´m a design consultant who creates physical products and visuals for businesses. You can find my work and get in touch with me at willgibbonsdesign.com. If you enjoyed this article, be sure to subscribe to my newsletter.