My debut into freelancing began much like paddling a kayak toward upcoming rapids looming just out of sight – reluctantly, then all at once. It started with a part-time, remote social media marketing position that I grew to enjoy even more than my full-time job at the time. I thought, hey, if I can get a few more clients like this, I could quit my day job.
When I received the news that the startup company I was working for was going under, I didn’t feel panicked, anxious, or even upset – I felt relieved. I had been quietly ramping up to pursue a dream I didn’t even realize I had – to work for myself.
Being self-employed certainly has its perks. I no longer have to ask permission to go on vacation, to take a long lunch, or to work remotely. I can structure my day however I’d like. Sometimes I work the traditional 9-to-5, and other times I work from noon until midnight. I can go for a run at 10 am on a Tuesday, and I no longer have to sit in traffic during rush hour. As long as I meet my deadlines and accommodate any meetings or calls with clients, my time is my own.
That all sounds glamorous, and don’t get me wrong, it really is awesome. I don’t take my newfound freedom for granted. However, before you get carried away with the benefits of being self-employed, make sure you are prepared to handle the very real challenges ahead.
These are the six most important lessons I’ve taken away from my first six months of working for myself:
- Always have multiple streams of income.
In the world of freelancing, many clients will come and go. Don’t put all of your eggs in one basket. Even if you have a strong relationship with a major client, you need to cover your bases in the event that the client needs to reduce your hours or cancel a project. Since your income will most likely fluctuate from month to month, having multiple income sources will also help establish greater consistency.
Even if you are a full-time salaried employee, you should still make time for a side hustle to generate supplementary income. The harsh reality is that you could lose your job next week, and it could have nothing to do with your performance. Your company could restructure, downsize, get acquired, go public, or undergo another major change that could leave you standing in the unemployment line. Protect yourself.
- Manage your finances properly.
Properly managing your finances is essential to professional success and personal fulfillment, regardless of whether you are a W2 or 1099 employee. However, independent contractors and freelancers must be especially organized and diligent when it comes to finances.
Many personal accounting software programs are available these days to help self-employed people keep track of their profits, expenses, deductions, and estimated quarterly taxes. I personally like QuickBooks Self-Employed, as it allows me to classify every single transaction I make as “Business” or “Personal.” Reviewing each transaction line by line has made me more cognizant of my spending habits, income projections, and overall financial health.
Another life-saving app is Mint, which allows you to view all of your financial accounts from a single dashboard. It’s great for setting budgets and keeping your overall financial picture in perspective.
- Manage your time well.
As a contractor, your time is especially valuable. Learn to prioritize projects based on deadlines, compensation, and expected time commitment. I typically have one or two long-term projects in progress simultaneously, usually in the form of content marketing campaigns. While those projects are in progress, I still make room in my schedule to take on more reactive, short-term projects like writing a press release or a blog post for different clients.
Taking on smaller projects will help break up the monotony of working on a single campaign day after day, and it will also ensure that you are continuing to build relationships with other clients and generating different streams of income. Plus, these short-term gigs could evolve into long-term projects in the future.
- Learn to negotiate.
Once you have a few projects under your belt, you will have a better idea of what your hourly rate should be. Know your value, and don’t be afraid to negotiate. You need to factor in the estimated duration of the project along with the amount you will owe in taxes. Many freelancers underestimate the impact of the self-employed tax when setting their rates. Plan to set aside at least 30% of your income specifically to pay your estimated quarterly taxes.
Whether you’re negotiating an hourly rate or an annual salary, the same tactics apply. You need to convey your target number in terms of the value you provide a client. Your potential employer or client doesn’t want to hear about your personal financial situation. Articulate your argument based on industry trends and your own professional experience. Back up your claims with numerical evidence when possible.
- Learn how to market yourself.
In order to thrive in today’s workforce, you need to know how to market yourself properly. Building an authentic personal brand takes thoughtful planning and consistent action. As a freelancer, you must develop a strong online presence so potential clients can discover your work. Depending on your craft, you could set up an e-commerce store, build a web portfolio to showcase your projects, or perhaps, write blog posts about being self-employed.
- Set boundaries.
Even when I had a full-time office job, I still took my work home with me more often than not. While it’s admirable to be “always on,” it can quickly lead to burnout. I had to learn to say no to requests that were unreasonable, to refrain from answering emails after hours unless they were truly urgent, and to clarify processes when managing multiple inquiries.
Now that I work from home and essentially make my own schedule, I have had to be particularly careful about setting boundaries. I’ve learned that what you allow is what will continue. If you set a precedent of accepting last-minute requests, late payments, or out-of-scope work, these inconveniences will keep occurring.
The common thread among these important lessons is self-advocacy. In order to succeed as a freelancer, you must be your own best advocate. Whether you are freelancing temporarily or you are in it for the long haul, the lessons you take away from being self-employed will help you in all of your future professional endeavors.