January is the month when many people make promises to themselves about how they’re going to change in the coming year. Some want to change aspects of their lifestyle, others set themselves career goals – gain a promotion, change jobs or have a better work / life balance.
A recent study found that over half of UK workers want a career change, with the desire to start a business coming out as the top reason people want to leave their current job. Freelancing – essentially working for yourself in a sector that you specialise in – is a great way to switch things up career wise. And with over 4.6 million freelancers in the UK – a 21% increase from 2010 – it’s an economy that is currently booming.
Being self-employed has many, many perks: choosing who you work for, creating your own work schedule that can fit around other commitments like family and childcare, having a higher level of flexibility and being your own boss, to name but a few. But how do you know exactly when the right moment is to take the plunge and go freelance? Here are five ways to suss out whether you’re ready.
A positive step in the right direction for freelancing is firstly having a healthy balance of being employed and also being self-employed. Often known as ‘moonlighting’, this is when you work your regular Monday to Friday 9-5 job and freelance in your spare time. Great if you’re starting out as this gives you the ability to test the water and see what your cash flow might look like.
Be careful though, some organisations might have rules and regulations about working on projects outside of the company. Best to check with HR before undertaking paid work outside of your current role.
2. Build your contacts
Freelancing is unique in the sense that you rely heavily on other people for work. Finding clients is no easy task, but with the right amount of patience and time, soon your address book will be full of repeat business.
Make sure you’re up to date with local networking events and are getting your name out there. Work hard and consistently to ensure that contacts don’t outsource to anyone other than you. Set a fair day rate. You can roughly calculate this by setting yourself a realistic salary expectation, add on an estimation of your expenses and any tax payments you’ll make, and dividing by the number of days you’ll work.
Use your time moonlighting to build your little black book of contacts and clients to ensure your name is first on the list when a project comes up.
3. Set yourself up as a business
The requests for freelance work are coming in thick and fast and you’re feeling on top of your game. Have you thought about whether it’s best to set yourself up as a sole trader or a limited company?
In a nutshell, a sole trader is when you operate as a one-person business; you’re self-employed. You’re solely responsible for all your finances – both business and personal. Don’t forget to register with HMRC if this is how you’re going to freelance.
A limited company is an organisation that is setup to run your business. This makes its finances separate to your personal money. You pay Corporation Tax, again through HMRC.
4. Market yourself well
We all have our personal social media profiles, and whilst these are (sometimes) great for visibility, it might be worthwhile organising a more professional Facebook page, Twitter handle and video channel for your new venture. Make sure your email address is business appropriate - no client will take ‘firstname.lastname@example.org’ seriously.
Once you’ve got the ball rolling on your marketing, think outside the box. What are other ways you could get noticed? Is an online portfolio really enough to bring in a steady stream of clients? How about building yourself a snazzy website? You could strike a deal with a local designer and do some work for them in return? Think of yourself as your own brand and consider how clients will view you.
5. You feel it
Do you feel ready to go freelance full time? There isn’t any point in throwing yourself into the big bad world of self-employment if it doesn’t feel right. Biding your time can be more beneficial than racing into something you might later regret. Think about whether your cashflow will be sustainable and if you’re ready to take the plunge. There might never be ‘the right time’, yet you can anticipate a time that will feel good enough. Good luck!
By Darren Fell, CEO and founder at Crunch Accounting