Research your market
If you are thinking about taking the plunge and going solo, you obviously need to make sure it's financially viable.
You will need to know what your outgoings are and calculate the minimum you need to comfortably live on, especially while you get started. Estimate the demand for your service and what you need to be charging to meet your outgoings in order to break even. First and foremost though, you need to ask some basic questions.
Are freelancers used in your industry?
Most industries have a 'trade association' or professional body that may well be a useful first port of call. If you already operate in the industry you probably already have contacts that can tell you some basic information. For example, if they would be likely to use your services, how often, what they would pay and any resources/skills they find difficult to source.
It is also useful to talk to freelancers already working in your chosen industry to see what the current market is like. Online forums will be a good place to put out tentative feelers.
What do you know about the market?
Your market knowledge will need to be thorough. You will need to establish how many freelancers already operate in your chosen marketplace and what they charge before you can start to a position where you might be able to enter the marketplace.
Talk to the specialist freelance agencies in your industry to see what kind of contracts might be available, whether you are suitable for them, and how much you could earn. Can they tell you if there are any skills shortages within your general field that might give you a competitive advantage, and therefore the ability to charge a higher rate?
What competitive advantage can you offer based on the key elements of price, quality, delivery, customer service, terms of business, other features or services?
Basic research will give you an initial idea of what demand is likely to be and therefore be an initial indicator of what you would be able to charge.
You'll need to undertake more in-depth market research to explore the full potential of your business idea.
You need a plan
If your initial findings are encouraging we recommend you invest time in a business plan to explore the key issues (and any potential pitfalls) of starting up a business before you commit to going it alone. Business plans generally serve two main purposes: one is to set and track business objectives and the other is to raise finance. Even if you do not require funding we recommend you set out the 'blueprint' for your company's growth, and more importantly how and when it will become profitable.
You'll need to be just as talented at running a business as you are in your chosen profession to make a good living out of it.
Remember while you are establishing yourself any money coming in may have to be reinvested in the business - how will you manage financially?
Some continue with their existing job to provide a regular income while building their own business - is this a viable option for you?
You will also need to be willing to live for extended periods of financial uncertainty so make sure you have enough set aside as a safety net to cover dry spells work wise or illness - generally speaking, this should be enough to live on for 6 months.
You may have to consider diversifying to ensure a good cash flow - e.g. if you are a technical writer, can you supply ad copy as well? The same applies to supplementing your cash flow with quick turnaround projects that you can instantly bill if most of your projects are longer term delivery. Although ultimately the choice to freelance is to gain freedom, bear in mind you may have to make sacrifices for the work you take on. This could be agreeing to work for a reduced rate in the early days until you establish yourself or having to take on 'bread and butter' work (less interesting projects) during quieter periods to keep cash flow problems at bay too.
Succeeding as a freelancer can be a challenge, but as the 400,000 entrepreneurs who took the plunge during the last year will testify, it can also be the most rewarding
More on starting up as a freelancer.