I was recently asked by a younger colleague ‘When should I go freelance?” . It’s a difficult one as it is such a gamble. I have been freelance for many years but I am still aware of what a precarious life it is. I still get the fear, that nagging worry that if nobody emails or calls for a couple of weeks that you may never get any work again! It is a very hand to mouth existence. You are always thinking of your next job, searching for work, networking, worrying ! I have only ever had one proper job followed by redundancy and then a period of unemployment. For me the decision to go self employed was easy. I might as well. It saved worrying about signing on.
My advice these days would be do it while you are still poor. Do it before you get used to a regular wage!
If you have a regular job and earning a living wage you become accustomed to certain things. Money in your pocket, cable TV subscription, regular night out with your friends where you can afford to get into a club, have a few drinks, maybe go out for a meal. Even worse you may have a loan for a car! Financial burdens beyond just your student loan. These all become very difficult when you first start to tour.
One of the most important things to remember is that there is a reason the freelance daily wage is attractively high compared to your regular 9-5 job. On an average year I will probably only work seven months. Unfortunately my outgoings still span the twelve months. Although you get more as a freelancer, you will be lucky to be earning this 5 days a week 52 weeks a year. You will not be getting paid holidays. You will need to cover your own insurances. You will need to do your own tax return, probably pay an accountant. It’s the little things that add up. Also twice a year you will need to pay tax, not just on what you have earned, but an advance payment on what you will earn the following year! You will of course have spent all your wages and not budgeted for this. The cruelest twist being that the biggest bill comes just after Christmas when it is almost guaranteed you will be skint!
So go freelance when you are either used to surviving on little money or when you have some money saved up to tide you over for maybe six months until you establish yourself. Don’t do it unless you have a firm offer of a significant chunk of work. Don’t resign your job on a promise, have a plan. It takes a long time to build up contacts and establish yourself. Be realistic about the work you may get? Is it enough to pay the rent and feed you after you have taken a third of it away to save for tax and a rainy day?
Having said all this it is a decision I have never regretted. All the stuff about being “your own boss” is rubbish. I am as beholden to an employer as anyone else. However there is an excitement of not knowing what will come up next, what your next gig will be. Despite the panic I have so far managed to keep my head above water. I love my job and unlike many of my 9-5 peers I look forward to work almost every day. So, have a plan, but don’t leave it until it’s too late!
Note from Darryn: Employment Status law is getting tricksy these days. Seriously consider becoming a limited company rather than a sole trader if you are working a lot. This has added burdens on the accounting side, but can be very helpful in many other ways, particularly for the people giving you regular work. Speak to an advisor!