Is freelancing the life for me?
So you want to be a freelancer?
What's it all about? Being a freelancer is very different from being employed. There are more risks, but there are also a great many advantages. You are a freelancer if you work for somebody else for a fixed period under a fixed contract to help them complete a project. You will effectively be selling your skills and time, and will usually be paid by the hour - although contracts with a fixed price to complete a fixed project are also possible depending on your field of expertise.
Whats in it for your client?
There are several reasons why companies like to use freelancers. For example:
- They are usually more flexible over hours etc. than permanent staff.
- They are easier to hire and fire - and are not a long-term commitment.
- They provide skills the in-house team may not have.
- They complete one-off or small, regular tasks that do not require a full-time employee.
The other major reason companies like freelancers is that they save money. If a company employs you they have to pay sick pay, holiday pay, redundancy pay and employer's national insurance. But if they use you as a freelancer they don't have to pay any of this.
Whats in it for you?
Every freelancer has his or her own reasons for liking it. Some of the most common are:
- Being your own boss - which can be extremely enjoyable and satisfying.
- More money - freelancers are usually paid more than employees working alongside them on a project.
- Freedom - e.g. Freelancers can, to varying degrees, choose when and where to work, when to take holidays etc.
- Variety - by moving from contract to contract and company to company, freelancers can develop very varied experience and an impressive CV.
- Less tax - freelancers who take professional advice can also greatly reduce the amount of tax they pay.
Of course, were freelancing an easy and completely safe way to earn a living most people would be freelancers. Some skills are not suitable for freelancing (e.g. where the employer needs a stable workforce and the customer expects to deal with the same member of staff each time). But even if your skills and experience are suitable for freelancing, it may not be right for you. Only you can weigh up the pros and the cons.
Some of the disadvantages you will need to consider include:
- Less security - freelancers are not protected in the same way as employees.
- Uncertainty - there are usually no guarantees of another contract when your current contract ends.
- Hassle - because you will be running your own business, there will be forms to fill in, rules to obey and accounts to keep.
- You will be on your own - as well as sometimes being lonely, being your own boss means, for example, that nobody will pay you when you take a holiday or are ill.
What qualities make a successful freelancer?
The successful freelancer:
- Knows what they want to achieve from being in business. Whether that is to achieve a certain lifestyle or hit a certain financial target within a specified timescale. You need to set objectives to help you measure success, and reward yourself when you reach your targets.
- Feels comfortable in a leadership role. Not only will you be your own boss, but you will have to guide and direct some clients as and where appropriate.
- Is decisive. Now that you are your own boss it will be down to you to make the decisions to ensure your business is a success. Nobody else will ensure important forms are filled in or that clients are chased for overdue payments.
- Is self-motivated. If you have been used to having a boss breathing down your neck this may be harder than you think.
- Has thoroughly thought through the financial implications of going it alone.
- Has the ability to go from site to site, adapting to the different conditions, the different tools, the different culture, and the different ways of working. Those that can't do this will struggle.
- Has the ability to get on with other people and make new working relationships easily.
- Has a willingness to help other people without criticising their mistakes. Freelancers have a wealth of knowledge of how things are done at different sites, and it can be very useful for both permanent management and permanent employees to be able to tap into this reservoir of knowledge.
- Has the ability to know when his or her advice is wanted and when it is not. Sometimes, or at some sites, they'll want your advice about how to do things and sometimes they won't. A successful freelancer will be sensitive to this, and not try to force unwanted advice on an unwilling audience. If it is clear that they don't want your advice, just get on with your job or go elsewhere.
- Is always aware of a potential business at a client's site. Any problem that the client has is potential new business for the alert contractor. The successful freelancer may even have bid successfully to win pieces of work at various sites, e.g. to run part or all of a project, or to maintain an area of the system.
- Looks for his or her own work rather than just lets agencies look for him or her. That way he or she has the opportunity to tout for new business without having a restrictive agency clause in his contract which prevents him approaching the client for new work.
- Will have taken his or her opportunities to pick up extra bits of work for multiple clients over the years, and, therefore will be as far outside IR35 as you can get.
- Will have a database of potential clients, with those he or she has worked for before, near the top of the list. He or she will have permission to contact those potential clients every so often, say three months or so, and will do so.
- Will keep potential clients up to date with contact information when it changes, e.g. address, phone number and email address, so that there is never a situation when the client is desperately seeking them for work in an area of the system where they have the knowledge, without being able to find him.
- The successful freelancer will have such a good reputation for his or her work and have such a good rapport with clients that contracts are renewed whenever the client is able or is contacted again when clients need to have work done on an area of the system where the freelancer has expertise.
The next step
If freelancing is still attractive to you, and you believe you can cope with the disadvantages, the next step is to do some research. Don't give up your job (or spend money setting up a company or talking to an accountant) until you are sure that there is a market for your skills as a freelancer. At the very least you will need to talk to the specialist freelance agencies in your industry to see what kind of contracts might be available, whether you are suitable for them (or perhaps need additional training), and how much you could earn.
More on starting up as a freelancer.