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Tuesday, April 13, 2021

Breaking free: financial survival as a freelancer

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freelancer

You have finally decided to escape the routine of your current 9-5 job and set yourself up as a freelancer. You are certainly not alone: freelancing is become an increasingly viable option in the digital era, with many people choosing to work from home and avail of the relative freedoms of doing so.

Relative is an important word, because if you are considering setting yourself up as a freelancer, you should know that doing so is not without its challenges and not without its potential pitfalls either. The freedom of working for yourself has to be set against the demands it can make on your time and your available resources, monetary or otherwise.

There is no shortage of advice on becoming a freelancer, but one of the most important tips to remember is to have self-discipline. To be self-employed requires strong self-discipline, from motivating yourself to source work to staying on top of tasks, such as book keeping, that are essential to keeping your business going.

As a first step, identity if there is a market for your services. You may think that you have something unique to offer potential clients, and perhaps you do, but businesses rise and fall on the basis of demand, so identify if there are sufficient opportunities out there for you to make a living.

As you get your business up and running, do not expect income to start flowing immediately – have sufficient funds in place to cushion the effects of the inevitable loss in income from making the transition from paid employment to self-employment. Draw on whatever contacts you have in your line of work to get a toehold in your industry, even if that means asking your former employer for contract/freelance work. Many companies are choosing to employ professional staff on a contract/freelance basis, and provided that your departure from employment went amicably, there is no reason to think that your former employer would not consider you for contract work.

Cultivating business relationships means networking too, so join local business organizations and professional associations in order to get your name out there. A business will never thrive in the absence of publicity and marketing.

Once your freelance business is up and running and you are getting paid, leave some income aside as a rainy-day fund so that when times are not so good, at least you will have a cushion to fall back on and funds to pay your ongoing business costs and living expenses from.

You have heard the old saying about keeping the personal separate from the business. This is certainly applicable when it comes to working for yourself. By maintaining separate business and personal banking arrangements, you will be better able to keep track of your finances, and you will also not be tempted into spending money for personal use that should really be dedicated to meeting business costs. Put all payments received into your business bank account and withdraw money for cost-of-living and leisure purposes.

A particular challenge that comes from working for yourself is the difficulty of producing a steady income stream. If you are honest with yourself, you will accept from the start that your income stream will vary from month to month and even year to year. You may find yourself chasing up clients for payment, and this may well eat into time that could be spent generating additional work. If you are working for a number of clients, payment cycles may vary, with the resultant fluctuations in income. Coping with what can be an erratic income stream can be frustrating, but there are solutions available. One solution is to have an invoice system in place, allowing you to bill clients on time and follow up with additional payment requests, if necessary. If nothing else, an invoice system allows you to keep track of what you are owed. Service providers, such as Invoice Home, allow you to produce professional looking invoices that can then be e-mailed to clients in seconds, thus speeding up the entire payment process.

Planning for the future is critical to the success of any freelance operation. Have work secure and planned for as far in advance as possible, even if it is a matter of weeks, because this will allow you to work relatively free of anxiety in respect of where the next payment is coming from. Securing work in advance also allows you to plan your time better so that if you need some time off, you can do so knowing that you have already made preparations.

Becoming a successful freelancer is a challenging task, but the potential rewards make it a worthwhile exercise.

 

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