Want to Be a Full-Time Freelancer? What You Need to Know

No matter what field you're in, freelance work opportunities are almost guaranteed. Businesses in practically every industry are looking for writers, marketers, programmers, designers, accountants, lawyers and more — all of whom they intend to hire on a contractual basis.

It's not just a passing fad, either: A recent study by contingent workforce management company Fieldglass and Ardent Report found that 92 percent of enterprise organizations cite nontraditional talent (i.e., freelancers and contractors) as a moderate-to-vital aspect of their overall corporate strategy, and nearly one-third of the average company's overall workforce is contingent- or contract-based. This has created a wealth of opportunities for individuals who want to make a living freelancing in their chosen field.

If you're thinking about becoming a full-time freelancer, there are a few basics about this career path you'll need to consider. Freelance workforce experts shared their thoughts on what every professional freelancer and independent contractor should know.

The rise of the freelance economy

The last several years have created a perfect storm of conditions for freelancers to thrive. Businesses had to cut their budgets and staff following the recession, and have since turned to freelance and contract labor to fill in the gaps while saving on payroll costs. This, coupled with a surge in dedicated freelance job websites, online communities and social network referrals, has allowed many individuals to capitalize on their skill sets and market themselves as an independent, full-time freelancer. 

"We're living in a connected era ... in which it's possible to find each other and work together via the Internet," said Rich Pearson, senior vice president of categories and geographies at freelance hiring website Elance-oDesk-Video Conference Mart (VCM). "Working online enables professionals to find opportunities easier and create a diversified portfolio of freelance work."

"It's a lot easier getting freelance work," added Nick Walter, a freelance programmer who created a course for Udemy and the founder of the blog Teach to a Million. "People don't care about your education or last job. [They just want you] to show examples of your work."

But it's not just the economy and technological advances that have contributed to the rise in professional freelancers. Many individuals find the freelance lifestyle — no commute or set hours, working from anywhere, more control over the projects and work you do — highly appealing, said Matt Faustman, CEO and co-founder of legal services marketplace UpCounsel.

Pearson agreed, noting that the freelance economy is a win-win situation: Talented individuals prefer the life balance of freelancing and businesses are able to get more done effectively with flexible, on-demand talent, he said.

The costs and challenges of a freelance career

The freedom and flexibility of professional freelancing are huge draws for people who choose this career path, but they don't come without costs. There are a few obstacles that any potential freelancer should be prepared to face.

The costs of building a business. When you become a professional freelancer, you're actually starting your own one-person business. That means not only building up your own client base, but also covering all the costs that come along with business ownership — home office equipment, website design, marketing, accounting, etc. In an article on Skillcrush, freelance writer Meredith Lepore noted that many freelancers forget about these and other practical costs, such as increased food and living expenses, because they're so focused on the upsides of professional freedom. Taking all these factors into account, Lepore estimated that a full-time freelancer might have about $15,000 worth of fixed expenses each year.

Time management. While you can certainly save money by taking care of certain business tasks yourself, doing so sucks up valuable time that could be better spent working and earning money. You also don't get paid vacation or sick days, so managing your time becomes even more important when you're freelancing for a living.

"Time is everything," Faustman told Business News Daily. "[Freelancers] and independent contractors have to develop their own business, and [many] are never taught how to do that. At a big company, you have the infrastructure — legal, accounting, bookkeeping [and] everything that's not a direct output from your work — running in the background. As a contractor, you do it all yourself."

Eric Siegel, a freelance tutor for truePrep SAT tutoring company, said that one of his biggest challenges has been managing a schedule that worked for him, while still meeting the needs of his various clients.

"[I experienced] the anxiety and stress of putting together a constantly changing schedule," Siegel said. "There was a lot of string pulling to get a schedule into place [where] I was comfortable."

Other employment-related costs. Many new freelancers rejoice when they see their first check from a client. Unlike an employer paycheck, freelance payments arrive without any taxes taken out, so you're getting more money, right? Not so fast. It's easy to spend your hard-earned cash as quickly as it arrives, but come tax season, the 1099 form your client sends to the IRS means you need to cough up your unpaid taxes — in full. Employers cover half of the Federal Insurance Contributions Act (FICA) taxes, but when you're self-employed, the full tax rate is on you, so you'll have to account for that added expense during the year.

The other major cost that freelancers tend to forget about when they first start is health insurance and retirement savings. Employers typically contribute to the costs of these benefits plans, but as with taxes, self-employed workers are responsible for the full amount. Lepore wrote that freelancers must secure their own insurance, either through The Freelancers Union or Obamacare, both of which cost upward of $300 a month for an individual.

While retirement savings isn't a mandatory expense even in the world of traditional employment, experts strongly advise planning for your future as early as possible. Freelancers should look into opening an Individual Retirement Account (IRA) as soon as they are making enough to start putting away money.

Lack of stability. When you've got a steady roster of clients, freelancing seems like a dream job. But what happens if one of those clients cuts the organization's budget, or hires a full-time staff member to do your work? While any job is subject to market changes and instability, professional freelancers are hit particularly hard if their stream of work dries up.

"Managing your flow of work can be difficult, [especially] if you're not prepared for a break," Walter said. "After taking a couple of freelance jobs ... one ended sooner than I thought [and] I was in a tough spot financially."

The uncertainty of not knowing when your next paycheck will come through can be nerve-wracking for anyone, so it's important to make sure you have a financial safety net before you make a full-time career out of freelancing. You should also start saving money right away to cover your month-to-month expenses, just in case something doesn't pan out.

"With time, you figure it out, if you're financially responsible," Walter said.

Tips for success as a professional freelancer

Despite the difficulties of working as a full-time freelancer, it's no more or less challenging than any other entrepreneurial venture. Here are a few pieces of advice to help you successfully market yourself — and ultimately grow your client base and portfolio.

Build your online reputation. When you apply for a freelance position, the first thing potential clients will do is research your past work. Make sure they find something worthwhile by maintaining a strong online presence, whether it's through a personal portfolio website, your social media accounts and/or a freelance marketplace profile.

"[Budget] time to build your personal brand and market yourself," Pearson said. "View your profiles ... as a more innovative, better version of your resume, since it provides proof of your work. Promote yourself online so you can tap into a much broader pool of potential clients than are available locally."

Know your worth. Many freelancers sell themselves short because they're afraid they'll lose the gig if they charge too much. Walter said that businesses are often willing to pay more than you think, and in fact, charging more than you think you're worth could boost a client's confidence.

"When you think of yourself as a more valuable person in terms of skills, the people you work for really respond," Walter said. "The more you charge, the more comfortable they are, [because they think] you know what you're doing."

Focus on your best customers. When you're first starting out as a freelancer, it's not a bad idea to take on as many jobs as you can to build up your portfolio and potential referral network. But once you've established yourself, you can afford to be a little more selective about the clients you take on.

"You can work with many different types of companies, but you'll have a 'best' customer that's a great fit," Faustman said. "You need to arrange your marketing and intake process to maximize the number of clients in the 'best customer' category. If there are customers who don't fit, take them if you have to, but start dropping them [when you're able] and be OK with that."

Maintain relationships with clients. In any business, word-of-mouth referrals are often the best way to generate new leads. When your working relationship with a client ends, keep in touch and reach out from time to time.

"You never know where your next client will come from," Siegel said. "Maintain a good reputation for yourself — check in with old [clients]. It's always appreciated, and who knows where it will lead?"

Source: www.businessnewsdaily.com